Have you met anyone in your organization who likes the budgeting process? Probably not. Business areas don’t like to get stuck with allocations granted from guessing the amounts they’ll need long before a solid plan is in place.
The finance department gets blamed when the business areas don’t get what they want. Executives dislike the infighting and arguments that result when people seek funding for projects that only somewhat align with the organization’s goals.
What is Agile funding?
Agile funding is gaining in popularity because it addresses a lot of those challenges and reflects the reality of organizations: Things change. Setting rigid budgets in advance of work being carried out doesn’t make good business sense.
As the name suggests, Agile funding is designed to be flexible to allow businesses to respond to changing circumstances and invest where the most value is achieved. It elevates funding, aligning it with high-level strategic investments rather than tactical, project-level work.
By facilitating adaptive planning, Agile funding moves budgeting decisions to a just-in-time approach. This minimizes the time between finance approval and work execution.
A focus on business value
In recent years, organizations have recognized the importance of enterprise agility—the ability to adapt and adjust to an evolving operating environment with minimal disruption or delay. Whereas traditional budgeting impedes that, Agile funding embraces it.
Funding can be directly aligned with organizational objectives and key results, as well as Agile approaches such as the Scaled Agile Framework (SAFe). Funding also directly supports the creation of customer and business value through value streams.
This focus on customer and business value is key. Agile funding isn’t the funding of Agile work delivery. It’s the ability to fund all work, regardless of how it’s delivered, in an Agile way that reflects the reality of modern business.
Budgets may need to be adjusted. Investments will inevitably need to shift. New and emerging threats and opportunities will require a different investment focus.
Value-based planning and reallocation
Agile funding models aren’t new processes. They’re fundamentally different ways of thinking about the budgetary process. Instead of focusing on planned, actual, and forecast expenditures, they shift thinking to the value side of the ledger.
This value-focused approach requires consideration of:
How large an investment can be justified to achieve a specific outcome
Whether that outcome is being achieved with the current investment level
Additionally, Agile funding streamlines the ability to reallocate funds, ensuring the maximum amount of funding goes to realizing value rather than processing changes to allocations. Administration costs are directly removed from the funds available to generate a return.
Find out more about how Agile funding integrates with a strategic portfolio management approach in our Agile finance: Getting what you pay for ebook. You can also listen to our podcast for more information about Agile funding.
© 2022 ServiceNow, Inc. All rights reserved. ServiceNow, the ServiceNow logo, Now, and other ServiceNow marks are trademarks and/or registered trademarks of ServiceNow, Inc. in the United States and/or other countries. Other company names, product names, and logos may be trademarks of the respective companies with which they are associated.