It’s time to free yourself from a legacy operating business model and embrace Agile.
Organizations are at a tipping point. Forrester’s Modern Technology Operations Playbook for 2022 shows that most global IT and digital decision-makers (89%) are adopting or planning to adopt Agile development. When Agile investments were small, a coterie of scrappy Agile teams was enough. As product investments have increased and the demand for new teams has ramped up, technology leaders must bridge the gap between traditional IT financial management (ITFM) and Agile execution by connecting teams, products, and portfolios into one continuous financial planning strategy.
Persisting with project-led investments managed with traditional project portfolio management (PPM) solutions won’t effectively accelerate Agile transformation — it slows the switch from project- to product-led innovation. Most organizations are already in a hybrid world of projects and products. Your next step is to modernize how the rest of your business operates — including Finance — to support the scale out of Agile to more teams. You’ll need to transform your investment model to support Agile at scale while — temporarily — still supporting projects.
Here are six steps you need to take to prepare your organization for Agile transformation at scale.
1. Support financial governance for products
You may aspire to only support product-led investments, but scaled Agile transformation means supporting a hybrid model of projects and products in the short to medium term. Project-based funding processes are well-entrenched, and traditional PPM tools support these processes very well. However, project-based funding negatively affects Agile delivery.
PPM systems geared towards traditional project-centric methods are unable to satisfy the needs of Agile development teams. You need a different way to track Agile resources capacity planning and work execution. As the number of teams adopting Agile grows, you need to coordinate efforts to efficiently map resources (e.g., labor and technology costs) and ensure alignment to overall business objectives, whether that is using Scaled Agile Framework (SAFe), Large Scale Scrum (LeSS), or other custom enterprise Agile frameworks. Senior executives want oversight of investment planning, value stream execution, and visibility into the value delivered to the organization or the fiscal impact of re-allocating resources.
2. Build understanding of the Agile process with the business
Agile transformation means continuous planning and incremental delivery of value. This is a drastic change from the project-led innovation that business partners are used to. Thankfully, Agile transformation does not happen in one fell swoop. The change management requirements of Agile transformation must include educating business product owners on their new responsibilities.
Product managers often manage the entire lifecycle of spending, including traditional maintenance and support activities that fall under running the business. Product managers can optimize those run-the-business activities (e.g., by rationalizing their applications or modernizing their platforms) to free up resources (people, time, and money) for change-the-business investments.
3. Invest in your product teams
Demonstrate your commitment to Agile transformation by increasing, and funding, the number of product teams. Lessons learned by these early product teams (e.g., increasing cross-team collaboration and smart resource planning) will help the organization scale Agile. As Agile adoption grows, it becomes more challenging to ensure that multiple teams coordinate efforts and give appropriate resourcing. Team-level Agile tools alone cannot manage overall resource coordination and program increment (PI) planning events, but certain enterprise Agile management solutions can.
4. Focus work on outcomes, not output
Align team-level work to business strategy by using an outcome-driven approach. For example, a team may be building a multi-factor authentication (MFA) capability, but it is delivering an outcome of heightened data security and improved customer experience. Individual teams can easily focus on the wrong thing (e.g., building an MFA that is clunky for customers), yet too much governance and rigid objectives can stifle creativity and slow an organization down — something that only gets worse as the number of teams increases. Help your teams focus on an outcome-driven approach from the beginning — good habits are easier to maintain than pick up anew. Ensure developers in complex organizations are aligned to the core business objectives and deliver real-time insights into labor demand and capacity for greater transparency to the business.
Map objectives and key results (OKRs) to work items and manage demand and capacity based on business priorities. Take a bank as an example. Its OKR is to grow its mortgage business; the work item is increased use of its mortgage application mobile app. Add value above your team-level tools using frameworks like SAFe, LeSS, or your framework that provides governance and scales with the organization.
5. Increase business agility by confidently shifting resources
Hybrid planning for Agile and waterfall must accurately track and communicate ROI and business value. However, PPM tools estimate hours and do not specialize in the financial view of Agile. IT Finance needs to understand the real financial implications of all the headcount changes made to various value streams; existing enterprise agile planning (EAP) tools rely on rough estimate models for labor costs and do not compare these estimates against actuals when a product is delivered. These estimates undercut ROI calculations and make it difficult to confidently shift resources when the competitive landscape shifts or staff changes — sick leave, vacations — override stable assumptions about team capacity. Be confident in your resourcing decisions by adopting a solution with real-time budget variance analysis, continuous forecasting, and labor capacity management.
6. Jettison practices that don’t support modern investment strategies
IT Finance and the Project Management Office (PMO) have always been responsible for aligning investments to business value. But existing financial practices aren’t fit for Agile. Annual financial planning practices cannot coordinate team resources when they plan by PI; team-level Agile tools cannot manage overall resource coordination and PI planning; and time-tracking is a thing of the past. Evolve how you fund investments through frameworks like Lean Portfolio Management (LPM) to ensure your investment funding is tightly aligned with your business strategy and isn’t undercut by IT financial management practices.
The most efficient way to deliver customer value is with Agile at scale
As organizations expand Agile adoption, they recognize that multiple autonomous teams can quickly become difficult to coordinate. Agile at scale must retain the essence of team-led Agile — incremental value, increased flexibility, reduced risk — without promoting siloed efforts that undermine corporate-level business goals.
As organizations learn how to increase business agility with SAFe, they are also looking to manage technology spend and demonstrate the real value IT brings to the business. Technology Business Management (TBM) provides technology leaders with standards and validated best practices to measure and communicate the cost, consumption, and performance of business technology investments to their business partners. Read Accelerating Business Value with SAFe and Technology Business Management to learn how SAFe and TBM work together to help IT deliver more value with more transparency and achieve greater business agility and partnership with the business.