Many customers are quickly maturing as SAFe organizations but find a significant amount of guesswork in how budgets should be established and managed using ServiceNow. Additionally, organizations have varying approaches to funding, different levels of adoption, different requirements from their financial department on reporting planned costs and actual, etc. This document addresses the following:
- Manage budget allocation from the product or the portfolio
- See the actual cost at the product level
- Manage the actual cost for the ARTs
- Aggregate cost at the product or portfolio level
This is important to those who:
- Are in the Agile Transformation journey
- Has adopted ServiceNow Essential or Portfolio SAFe.
- Understand Scaled Agile framework concepts and recommendations
- Want to include a financial governance
- Understand ServiceNow Strategic Portfolio Management Solutions
The proposed solution requires configuration or light customization.
Principles and Basic Concepts
Enterprises that approach uncertainty and risk in software development based on lean and agile methods often experience financial control as a restriction. Traditional budgeting and cost reporting is a system based on rigid frames. It, along with the process of project cost accounting, burdens the lean and agile enterprise with unnecessary and counterproductive overhead and friction.
In agile development, we typically want to flex the content, not the resources or schedule. So, in the classic triangle (resources – schedule – content), the two first corners are fixed, and the third one is floating.
Using this, forecasting costs should be more manageable.
The actual cost can then be calculated and forecasted; the Actual cost would be the sum of the people's salaries on the train, perhaps augmented by some expenses (Software license cost, training costs, etc.) if they are large enough to matter.
To reflect the actual cost per epic feature, we can use the relative percentage of the story points rated to each Epic/feature or capitalizable/non-capitalizable to derive the price as a percentage of the overall fixed fee cost of the ART. The aggregation and roll-up features will quickly achieve the aggregation of the product or portfolio.
To learn about the successful implementation and configuration of Finance governance with Essential SAFe, Portfolio SAFe, and hybrid, click here.
