Businesses are becoming more digital, and technology is intertwining with every function, process, and activity. Many organizations are developing their own custom software internally, which opens further digitization opportunities.
All these factors are leading organizations to shift to Agile. Agile represents a fundamentally different approach to working, which also affects how work is planned. When Agile work needs to be planned alongside traditional waterfall-style projects, it creates challenges. As Agile programs begin to reflect larger areas of work and investment, it is important that all business planners proactively understand the key differences between Agile practices and anticipate how best to incorporate them into the business plan.
There are common elements to all Agile work and planning. Understanding these elements allows you to successfully account for Agile programs within traditional annual planning cycles and even embrace elements of Agile to make traditional planning processes more responsive.
The three elements of Agile planning
It is important to know how significant timeboxes are when incorporating Agile practices. While there are numerous methodologies and frameworks for Agile at both the team and enterprise levels, they all emphasize distinct, iterative blocks of time. Team-level Agile methodologies use sprints or increments that are typically two to four weeks long. Enterprise Agile frameworks often emphasize programs, made up of a set number of increments, that typically reflect a calendar quarter. The good news is that Agile product and program teams, as well as portfolio managers who manage Agile-heavy portfolios, proactively plan everything according to these timeboxes.
Business planners should anticipate that on paper, this will likely take the form of a variety of traditional projects with their own specific timelines. This will also operate concurrently with Agile programs in neat, fixed length timeboxes.
The strict adherence to timeboxes by Agile practices is highly beneficial for all levels of planning because Agile is also iterative. Each timebox leverages the same structure and approach to plan the sprint or iteration, deliver the outcome, as well as conduct retrospectives to review the sprint and capture lessons learned. This iterative nature allows teams to continually improve, constantly dialing in the accuracy of future work planning.
For business planners, this means they can take a higher degree of confidence in planning and forecasts associated with Agile programs, especially those leveraging established teams. At the strategic level, this can mean less risk is associated with objectives publicized in the annual business plan that is delivered through Agile programs. Business planners can also make their established planning cycles more iterative by performing lightweight reviews and updates of strategic plans on a quarterly or even monthly basis going forward.
The timeboxed, iterative nature of the work is what grants these practices their namesake agility. If the need arises, Agile work can be paused, and the following sprint and remainder of the program can be re-planned to align with an updated strategy. Agile teams can react quickly to change, and in many cases are accustomed to doing so.
This is key for business planners to acknowledge. Agile programs can be adjusted mid-flight, allowing business planners to respond to shifts in macroeconomic trends or unprecedented events like the COVID-19 pandemic. In practice, a growing segment of Agile programs can de-risk portfolios rather than many traditional projects that are inherently non-responsive. Overarching business plans, including both Agile programs and traditional projects, can also be made more responsive by adopting iterative re-planning on quarterly or even monthly timeboxes. As organizations mature more iterative planning cycles, they can even facilitate triggered planning updates at any time in response to market changes.
Considerations for Agile financials
Agile practices still account for costs both through forecasting and capturing of actuals. But due to the time-boxed, iterative, and responsive nature of the work, both when and how costs are estimated and actualized are different. Instead of budgeting by initiatives, Agile budgeting focuses on funding value streams or products for a specific timeframe. In addition, costs are actualized by effort completed or work performed per team.
An important consideration for business planners is that much of the financial management and cost optimization focus within Agile practices today focuses heavily on labor costs. However, as businesses continue scaling Agile practices, they are realizing the significant impact Agile delivery can have on product TCO, overall business spend, and revenue. A new feature can impact everything from revenue and subscriptions, consumption of cloud services, support and contract fees, unit costs, and required capital asset expenditures, to long-term operational costs. This is one area where business planners may need to anticipate taking steps to collaborate with Agile planning teams and emphasize the need to adopt a more holistic view of financials into the planning cycle.
Enhance annual planning by embracing Agile practices
Accounting for growing segments of Agile work and practices throughout the business in annual planning cycles is crucial for today’s leaders. While it’s unlikely that non-technology businesses or even large technology departments within a business will ever be fully Agile, business planners should anticipate how Agile programs fit into strategic plans as well as the opportunities (reduced risk) and considerations (holistic financials need to be prioritized) they merit. For even more background and guidance on incorporating Agile into planning cycles, be sure to check out this video with Maryville Consulting Group.
Enterprise Agile Planning (EAP) tools like Apptio Targetprocess can make this process easier. Apptio Targetprocess was recognized by Gartner as a Leader in their April 2022 Magic Quadrant for Enterprise Agile Planning (EAP) tools. While it was purpose-built for enterprise Agile, Targetprocess offers a variety of solutions for business planners to define strategy and objectives, visually confirm that work at all levels of the business is linked to those objectives, and adopt Agile principles to other areas of planning, like resource management. It is also the only EAP solution that integrates directly with the industry leading ApptioOne platform for technology financial management, allowing organizations to connect CFOs and financial teams to Agile program planning and fully optimize their investments.