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Agile Budgets


Gartner are saying that waterfall budgets are leading to corporate extincion events. IBM have observed that agile organisations are outperforming others.

This starts with how you finance your future initiatives.

"Employing agile practices in finance is the first step in the journey to becoming a truly agile organisation." -- IBM

Traditional Budgets Agile Budgets
Projects Horizons
Us vs them mindset We're in this together
Specialists visit the project The right team to start with
Lower morale Higher morale
Upfront planning Adapt to situation
Lower throughput Higher throughput
Spend managed by management Spend managed collaboratively

In the past, companies have typically budgeted for software projects by deciding what to do, getting a quote, and then allocating a budget. They they comission the project, it is completed, and then they company moves on to the next one. This is a waterfall approach and has been popular for decades.

Today, businesses are finding that agility and product thinking can give better results. Agility and Agile Budgets help tackle these challenges:

  • Agility removes slow and complicated budgetting processes
  • Agility avoids making poor detail decisions upfront where the least amount is known.
  • Agility puts the right specialists in place at the start to avoid delays
  • Agility focuses on outcomes over outputs. Success means getting solid business results, not just shipping all the scope.

An agile project doesn't start out with a clear scope, instead it has a loose direction. Then, the details are figured out along the way by creating small increments of value and seeing what customers think.

The advantage of this is that customer feedback and real-world use determines what is built, which tends to lead to better software with better results for the business.

In order to implement agile development, you need agile budgets. Rather than agreeing a scope, price and timescale, a business agrees on desired outcomes and a budget for a time period. For example, one to three years. As the digital product is evolved, the business reviews the outcomes rather than checking it is on-time and on-budget.

We're running agile budgets on most of our digital product development efforts, and would recommend it because it is the only way to truly allow a product to be shaped by feedback, rather than an upfront plan. This results in software that creates more impact for the business and its' customers.

For more information, check out the following articles.

Our opinion

Adopt  We wouldn't hesitate to adopt this and would use it ourselves when appropriate.