Agile Budgeting: A Dynamic New Approach to Financial Planning and Resourcing
Companies that adopt agile budgeting principles and break from traditional annual budget cycles can achieve greater business agility, faster time to market, and higher returns on investments. This extensive guide examines what agile budgeting entails, its benefits, key enablers and technologies, metrics to track, as well as a future outlook for this modern, fluid budgeting methodology.
Defining Agile Budgeting and Contrasting it With Conventional Annual Budgeting
Agile budgeting incorporates tenants of agile project management into financial planning workflows across an organization. Instead of top-down annual budget cycles, funding is reviewed and distributed in faster iterations based on evolving business priorities. Resources get allocated dynamically rather than based on predictions far in advance.
This facilitates rapid adaptation to market demands, new opportunities or changing conditions that annual budgets rarely match. It also requires cross-functional input and accountability around spending decisions - breaking down organizational silos often reinforced by annual unit-based budgeting.
Traditional budgeting cycles operate on 12-month look aheads with poor visibility into actual spend. They foster departmental silos instead of enterprise collaboration around investments. Agile budgeting addresses these limitations with greater transparency into funding requests, approvals, and connections between budget and measurable business impact.
Examining Core Agile Budgeting Principles and Expected Benefits
Some fundamental principles that define an agile approach to budgeting include:
Flexible Funding Allocation
Budgets get divided into shorter planning cycles - often quarterly versus annually - to fund initiatives and respond to new priorities. Rather than massive upfront project budgets, spending revises based on value delivered in each iteration.
Cross-Functional Collaboration
Agile budgeting depends more on matrixed input into investment trade-offs rather than finance teams driving top-down allocation. Cross-functional teams provide perspectives on priorities to balance available funding with organizational capabilities and broader strategic objectives.
Ongoing Visibility Through Reporting
Real-time reporting on budget versus actuals at both departmental and project levels provides the visibility needed to make better decisions on fund allocation. Automated updates on spend and performance replace periodic budget reviews.
Distributed Accountability
Rather than centralized decisions on distributing budget, ownership resides closer to leaders overseeing initiatives receiving the funding. They determine evolving investment needs and are held accountable for spend and return on those investments.
Applying these tenets facilitates a wide range of financial and operational advantages, including:
Quicker Adaptation to Market Trends
The ability to adjust spending and investments in smaller increments matches the cadence of agile delivery. This allows organizations to pivot strategies in response to market demands. Annual budgeting simply can’t change at the pace required today.
Higher Returns from Funding Decisions
With funding tied to strategic priorities showing continuous value, dollars flow toward the highest ROI initiatives. Spending gets tracked and revisited rather than set blindly upfront. This maximizes benefits from investments.
Improved Team Productivity
By directly linking budgets to progress made and business outcomes achieved, teams stay laser focused on producing measurable results versus output metrics alone. Their success secures future funding.
Enhanced Funding Flexibility
Finance can move funding between activities, departments, or initiatives rather than depending on massive upfront project budgets. This better accommodates growth opportunities or innovations.
Adopting agile budgeting principles ultimately leads to greater business agility, faster time to market, and higher returns on investments. But it requires updates totools, governance, and workforce readiness first.
Correlating Agile Teams and Agile Budgeting
Implementing agile budgeting works best when engineering and product teams already apply agile methods to their project delivery approach. The two reinforce each other. Agile teams that ship features faster need flexible funding to continue resourcing iterative work rather than annual budgets.
Likewise, agile funding depends on business units taking ownership over output and budget decisions rather than leaving it to finance to dictate. Agile team autonomy needs to expand to financial ownership.
When budgets and team processes clash - with bureaucratic planning applied to agile projects for example - misalignments arise. Agile teams struggle within annual unit funding models and centralized change control. Attempts at agile budgeting without cross-functional involvement fall flat.
Updating budgeting and teams in tandem avoids these disconnects. It ensures finance matches the cadence of business execution and that funds flow to support continuous delivery.
Assessing Readiness for Transitioning to Agile Budgeting
Determining if your organization can successfully embrace agile budgeting includes assessing foundational elements like:
Existence of Agile Delivery Methods
Do engineering, product, and marketing teams already work in an agile framework - at least in parts of the organization? Or is budgeting agility trying to lead broader agile adoption? Implementation works best when budgeting follows established agile processes rather than the other way around.
Executive Sponsorship
Is there C-level and board sponsorship to change budgeting from the status quo? Leadership must back the move to agile funding operationally and culturally. They set the vision and incentives around intended benefits.
Cross-functional Collaboration
Does the culture support matrixed input into spending decisions today? Or does annual budgeting happen in functional silos currently? Agile budgeting requires workforce readiness to collaborate across teams and business units in deciding funding allocation.
Outcome-Based Incentives
Are team members and leaders already measured and rewarded based on business outcomes achieved rather than output metrics alone? Making this shift is foundational to the mindset change agile budgeting requires.
The more these elements exist in pockets already, the easier adopting agile budgeting will be. Look for domains practicing agile delivery to pilot dynamic funding models first before scaling the change more broadly.
Examining Common Challenges with Shifting to Agile Budgeting
Transitioning from established annual budgeting cycles to more flexible, agile funding represents a major cultural shift. The degree of change often surfaces challenges like:
Required Mindset Shifts
Both finance leaders controlling the purse strings and business unit leaders accustomed to fixed annual budgets need to view investment oversight very differently. This takes time and leadership persuasion to drive adoption.
Perceived Loss of Control
Centralized finance teams face pressures from distributed accountability. Giving up strict allocation authority to empowered business owners challenges legacy notions of budgetary control and introduces new risk considerations.
Lack of Reporting Transparency
Organizations used to managing budgets in spreadsheets face new transparency expectations with automated agile budgeting systems. Potential gaps in access to real-time reporting on spend emerge.
Integration with Legacy Financial Systems
New agile budgeting software tools often don’t easily integrate with decades old ERP, accounting, or financial planning systems. IT and finance partners work through technical complexities.
These issues cause resistance even with executive mandates. But approaches like total budget transparency, strong governance guardrails, and incentives tied to outcomes all help ease the transition.
Steps for Getting Started With Agile Budgeting
Organizations new to agile budgeting often implement it across a series of phases:
Set Transformation Vision and Objectives
First, finance and executive leaders agree on issues with current budgeting and what shifts help achieve financial strategy. Setting a clear vision for change and success metrics combats resistance.
Map Governance Guidelines
Next, determine what overarching principles, accountabilities, and cross-functional decision rights enable more flexible funding allocation while still providing oversight.
Run Initial Pilots
Then, run pilots for agile budgeting within business units already working in an agile operating model. Concentrate on domains where the culture and systems can adapt easily at first.
Evaluate and Improve
Apply lessons from early agile budgeting implementations to improve funding cycles, policies, tools, and training to support broader adoption. Let pilots demonstrate value.
Incentivize Adoption
Finally, motivate skeptical teams on the merits of agile budgeting through proof points and align incentives around outcomes it enables versus output metrics alone.
Continually reinforcing the “why” around agile funding and showcasing early wins gives the momentum needed to scaffold adoption.
Best Practices for Governing Agile Budgeting
Some proven ways finance leaders can govern dynamic agile budgeting in alignment with financial controls include:
Maintain Portfolio Guardrails
Define overall funding limits, reserves, or thresholds at the department, business unit, or portfolio levels to contain flexibility within set boundaries. Related governance teams review exceptions.
Standardize Intake and Approval Cycles
Document consistent processes for funding requests, application reviews, and decision cadences to streamline agility. Automate routing of asks exceeding defined parameters.
Codify Funding Adjustment Guidelines
Predefine controls around what budget changes get approved automatically versus escalated based on scenarios like overruns, material changes, redirected allocations between units, etc.
Increase Reporting Transparency
Use automated dashboards, interactive self-serve analytics, and role-based reporting to provide necessary transparency for financial oversight of agile planning cycles.
Embed Owner Accountability
Connect defined budgets clearly to single business budget owners. Tie approvals to track progress against those budgets with accountability for outcomes.
Enable Decentralized Decision Rights
Push spending authority closer to initiatives while letting finance govern bigger funding swings. Threshold guidance facilitates this for operational agility.
Formalize Escalation Paths
Document workflows for scenarios where additional budget gets requested, disputes between owners arise, or changes fall outside defined agile budgeting guardrails with governance team review.
Continuously Refine Governance
Review and streamline aspects of governance over time. Find the right equilibrium between oversight needed early on and total autonomy that enables fuller business agility.
The goal is balancing finance responsibility with funding flexibility. Mature models blend enterprise controls with owner freedom.
Tracking Agile Budgeting Results Using Key Performance Indicators
Critical budgeting focus areas to monitor with relevant KPIs when gauging effectiveness of agile funding models include:
Speed
Time to review and approve funding requests
Acceleration in budget planning cycles
Frequency of resource allocation changes
Strategic Alignment
Budget allocation matching strategic priorities
Resource investments tied to portfolio objectives
Spending tied to market demands
Accountability
Actual versus planned spending per budget owner
Budget-to-actual variance trends
Initiative timelines and budget adherence
Financial Agility
Funding request approval rates
Speed of inter-department allocation changes
Responsiveness to new investments
Tracking metrics related to these facets provides quantifiable evidence around benefits realized from agile budgeting transformations. The faster, more accountable, and strategically aligned funding enables greater overall business agility and productivity.
Top Agile Budgeting Software Tools
Automating aspects of agile budgeting provides the foundation for shifting from sluggish manual processes to streamlined, flexible planning and resource allocation. Here are the top 25 leading tools in this fast-growing category:
Planview LeanKit - Facilitates cross-functional planning with Kanban-style agile budgeting boards
Anaplan - Connects financial data across sales, HR, marketing for collaborative budget planning
Host Analytics - Specializes in FP&A driven agile planning, analysis, and reporting
Vena - Offers user-friendly Excel-based agile budgeting integrated with core financial systems
Oracle Fusion Cloud - Leverages AI for automated insights from budget vs. actuals data
Adaptive Insights - Enables finance to update forecasts and model budget scenarios on the fly
Workfront - Aligns project portfolio resource planning to budgets across multiple timeframes
MPOWR - Purpose-built for collaborative modeling, simulation, and planning at enterprise scale
IBM Planning Analytics - TM1 leverages predefined workflows for agile planning events
Prophix - Automates workflows and ties financials to operational metrics for business context
OneStream - Unifies enterprise data with detailed drill-down analysis for flexibility
SAS Budgeting and Planning - Uses statistical analysis to improve spending forecast accuracy
CAMMS - Offers specialty modules for agile planning, simulation, workforce alignment
Unit4 FP&A - Provides continuous planning with rolling forecasts
River Logic - Applies advanced algorithms to optimize budget scenarios
Planful - Specializes in financial planning and analysis for agility
insightsoftware - Scales to deliver controls and consistency alongside flexibility
Board - Aligns strategic planning to funding allocation decisions
Jedox - Simplifies planning, modeling, forecasting natively in Excel
Centage - Right-sized for automating budgeting in mid-market organizations
TIBCO - Integrates predictive analytics for more insightful agile planning
Tagetik - Unified CPM tailored for finance ownership of agile budgeting
Solver - Built to empower collaborative, continuous planning workflows
Visibility - Automates complex multi-dimensional modeling
This list highlights the expanding options enterprises have to enable greater budgetary agility using today’s technologies. Capabilities vary widely, so assess solutions against your current finance ecosystem and future automation roadmap objectives.
Business Operations Prerequisites for Agile Budgeting
Beyond introducing new agile budgeting software tools, organizations need to evaluate processes and operations that either facilitate or hinder funding agility:
Budgeting Frequency
Transition planning cycles from 12-month to 90-days. Quarterly or even monthly cycles provide flexibility versus once-a-year plans.
Intake Mechanisms
Implement funding request templates and an intake process for project owners. Standardize data collected to enable faster assessment of asks.
Allocation Governance
Build regular, perhaps quarterly budget allocation reviews attended by finance and business leaders to rebalance investments based on evolving needs.
Contracting Approaches
Explore pay-for-service based contracts and on-demand resourcing arrangements that allow funding specialized skills as needed rather than big upfront commitments.
Analysis and Reporting Cadence
Increase frequency of budget versus actual expenditure analysis. Automate dashboard visibility rather than rely just on periodic manual reports.
Performance Evaluation
Evolve individual goals and reviews to better emphasize returns generated from budget spending versus merely output metrics alone.
Updating processes in tandem with enabling agile budgeting technologies is critical. Automate what you can while also mapping ideal workflows.
Documenting envisioned future state operations also helps guide tool selection decisions around required budget management capabilities.
The Outlook for Agile Budgeting and Planning
The future is bright for agile approaches to financial planning and budget oversight. The turmoil of markets, digital disruption for business models, and the economic impacts of the pandemic have accelerated enterprise willingness to adopt more flexible, continuous budgeting methods.
According to research firm Gartner, over 70% of surveyed finance leaders report now taking a more agile budgeting approach - a dramatic increase versus just 30% in 2019. And the expansion of this modern budgeting style will continue as organizations recognize traditional cycles poorly match the pace of change.
Technologies like machine learning, intelligent process automation, and natural language interfaces will reduce manual effort while making funding allocation smarter. Solutions will integrate financial planning with complementary data domains - from inventory to contracts to human capital management - for holistic decision-making.
And augmented analytics will help more business leaders embrace their roles as budget owners in this new paradigm while still providing finance needed visibility into spending.
Conclusion and Summary of Key Agile Budgeting Takeaways
Transitioning from established annual budgeting conventions to flexible, agile funding empowers enterprises to steer resources quicker toward opportunities, fund innovation better, and weather market uncertainty.
Agile budgeting principles promote cross-functional collaboration around spending aligned to outcomes delivered rather than output metrics alone. This focus on value speeds funding allocation changes.
Tools connect finance data and other planning cycles - along with the ability to adjust forecasts dynamically based on progress and evolving priorities. This enables continuous adaptation.
Leaders reduce resistance by implementing agile budgeting guardrails gradually across pilot teams versus overnight mandates.imacy by showcasing early statistical wins secured.
They track benefits through productivity gains, improvements in time to market, better launched product-market fit, and higher returns visible from budget investments.
The future belongs to finance leaders that position their businesses to respond swiftly to both market demands and opportunities by embracing agile planning. Dynamic budgeting sets a critical foundation.
Agile Budgeting: A Dynamic New Approach to Financial Planning and Resourcing
Companies that adopt agile budgeting principles and break from traditional annual budget cycles can achieve greater business agility, faster time to market, and higher returns on investments. This extensive guide examines what agile budgeting entails, its benefits, key enablers and technologies, metrics to track, as well as a future outlook for this modern, fluid budgeting methodology.
Defining Agile Budgeting and Contrasting it With Conventional Annual Budgeting
Agile budgeting incorporates tenants of agile project management into financial planning workflows across an organization. Instead of top-down annual budget cycles, funding is reviewed and distributed in faster iterations based on evolving business priorities. Resources get allocated dynamically rather than based on predictions far in advance.
This facilitates rapid adaptation to market demands, new opportunities or changing conditions that annual budgets rarely match. It also requires cross-functional input and accountability around spending decisions - breaking down organizational silos often reinforced by annual unit-based budgeting.
Traditional budgeting cycles operate on 12-month look aheads with poor visibility into actual spend. They foster departmental silos instead of enterprise collaboration around investments. Agile budgeting addresses these limitations with greater transparency into funding requests, approvals, and connections between budget and measurable business impact.
Examining Core Agile Budgeting Principles and Expected Benefits
Some fundamental principles that define an agile approach to budgeting include:
Flexible Funding Allocation
Budgets get divided into shorter planning cycles - often quarterly versus annually - to fund initiatives and respond to new priorities. Rather than massive upfront project budgets, spending revises based on value delivered in each iteration.
Cross-Functional Collaboration
Agile budgeting depends more on matrixed input into investment trade-offs rather than finance teams driving top-down allocation. Cross-functional teams provide perspectives on priorities to balance available funding with organizational capabilities and broader strategic objectives.
Ongoing Visibility Through Reporting
Real-time reporting on budget versus actuals at both departmental and project levels provides the visibility needed to make better decisions on fund allocation. Automated updates on spend and performance replace periodic budget reviews.
Distributed Accountability
Rather than centralized decisions on distributing budget, ownership resides closer to leaders overseeing initiatives receiving the funding. They determine evolving investment needs and are held accountable for spend and return on those investments.
Applying these tenets facilitates a wide range of financial and operational advantages, including:
Quicker Adaptation to Market Trends
The ability to adjust spending and investments in smaller increments matches the cadence of agile delivery. This allows organizations to pivot strategies in response to market demands. Annual budgeting simply can’t change at the pace required today.
Higher Returns from Funding Decisions
With funding tied to strategic priorities showing continuous value, dollars flow toward the highest ROI initiatives. Spending gets tracked and revisited rather than set blindly upfront. This maximizes benefits from investments.
Improved Team Productivity
By directly linking budgets to progress made and business outcomes achieved, teams stay laser focused on producing measurable results versus output metrics alone. Their success secures future funding.
Enhanced Funding Flexibility
Finance can move funding between activities, departments, or initiatives rather than depending on massive upfront project budgets. This better accommodates growth opportunities or innovations.
Adopting agile budgeting principles ultimately leads to greater business agility, faster time to market, and higher returns on investments. But it requires updates totools, governance, and workforce readiness first.
Correlating Agile Teams and Agile Budgeting
Implementing agile budgeting works best when engineering and product teams already apply agile methods to their project delivery approach. The two reinforce each other. Agile teams that ship features faster need flexible funding to continue resourcing iterative work rather than annual budgets.
Likewise, agile funding depends on business units taking ownership over output and budget decisions rather than leaving it to finance to dictate. Agile team autonomy needs to expand to financial ownership.
When budgets and team processes clash - with bureaucratic planning applied to agile projects for example - misalignments arise. Agile teams struggle within annual unit funding models and centralized change control. Attempts at agile budgeting without cross-functional involvement fall flat.
Updating budgeting and teams in tandem avoids these disconnects. It ensures finance matches the cadence of business execution and that funds flow to support continuous delivery.
Assessing Readiness for Transitioning to Agile Budgeting
Determining if your organization can successfully embrace agile budgeting includes assessing foundational elements like:
Existence of Agile Delivery Methods
Do engineering, product, and marketing teams already work in an agile framework - at least in parts of the organization? Or is budgeting agility trying to lead broader agile adoption? Implementation works best when budgeting follows established agile processes rather than the other way around.
Executive Sponsorship
Is there C-level and board sponsorship to change budgeting from the status quo? Leadership must back the move to agile funding operationally and culturally. They set the vision and incentives around intended benefits.
Cross-functional Collaboration
Does the culture support matrixed input into spending decisions today? Or does annual budgeting happen in functional silos currently? Agile budgeting requires workforce readiness to collaborate across teams and business units in deciding funding allocation.
Outcome-Based Incentives
Are team members and leaders already measured and rewarded based on business outcomes achieved rather than output metrics alone? Making this shift is foundational to the mindset change agile budgeting requires.
The more these elements exist in pockets already, the easier adopting agile budgeting will be. Look for domains practicing agile delivery to pilot dynamic funding models first before scaling the change more broadly.
Examining Common Challenges with Shifting to Agile Budgeting
Transitioning from established annual budgeting cycles to more flexible, agile funding represents a major cultural shift. The degree of change often surfaces challenges like:
Required Mindset Shifts
Both finance leaders controlling the purse strings and business unit leaders accustomed to fixed annual budgets need to view investment oversight very differently. This takes time and leadership persuasion to drive adoption.
Perceived Loss of Control
Centralized finance teams face pressures from distributed accountability. Giving up strict allocation authority to empowered business owners challenges legacy notions of budgetary control and introduces new risk considerations.
Lack of Reporting Transparency
Organizations used to managing budgets in spreadsheets face new transparency expectations with automated agile budgeting systems. Potential gaps in access to real-time reporting on spend emerge.
Integration with Legacy Financial Systems
New agile budgeting software tools often don’t easily integrate with decades old ERP, accounting, or financial planning systems. IT and finance partners work through technical complexities.
These issues cause resistance even with executive mandates. But approaches like total budget transparency, strong governance guardrails, and incentives tied to outcomes all help ease the transition.
Steps for Getting Started With Agile Budgeting
Organizations new to agile budgeting often implement it across a series of phases:
Set Transformation Vision and Objectives
First, finance and executive leaders agree on issues with current budgeting and what shifts help achieve financial strategy. Setting a clear vision for change and success metrics combats resistance.
Map Governance Guidelines
Next, determine what overarching principles, accountabilities, and cross-functional decision rights enable more flexible funding allocation while still providing oversight.
Run Initial Pilots
Then, run pilots for agile budgeting within business units already working in an agile operating model. Concentrate on domains where the culture and systems can adapt easily at first.
Evaluate and Improve
Apply lessons from early agile budgeting implementations to improve funding cycles, policies, tools, and training to support broader adoption. Let pilots demonstrate value.
Incentivize Adoption
Finally, motivate skeptical teams on the merits of agile budgeting through proof points and align incentives around outcomes it enables versus output metrics alone.
Continually reinforcing the “why” around agile funding and showcasing early wins gives the momentum needed to scaffold adoption.
Best Practices for Governing Agile Budgeting
Some proven ways finance leaders can govern dynamic agile budgeting in alignment with financial controls include:
Maintain Portfolio Guardrails
Define overall funding limits, reserves, or thresholds at the department, business unit, or portfolio levels to contain flexibility within set boundaries. Related governance teams review exceptions.
Standardize Intake and Approval Cycles
Document consistent processes for funding requests, application reviews, and decision cadences to streamline agility. Automate routing of asks exceeding defined parameters.
Codify Funding Adjustment Guidelines
Predefine controls around what budget changes get approved automatically versus escalated based on scenarios like overruns, material changes, redirected allocations between units, etc.
Increase Reporting Transparency
Use automated dashboards, interactive self-serve analytics, and role-based reporting to provide necessary transparency for financial oversight of agile planning cycles.
Embed Owner Accountability
Connect defined budgets clearly to single business budget owners. Tie approvals to track progress against those budgets with accountability for outcomes.
Enable Decentralized Decision Rights
Push spending authority closer to initiatives while letting finance govern bigger funding swings. Threshold guidance facilitates this for operational agility.
Formalize Escalation Paths
Document workflows for scenarios where additional budget gets requested, disputes between owners arise, or changes fall outside defined agile budgeting guardrails with governance team review.
Continuously Refine Governance
Review and streamline aspects of governance over time. Find the right equilibrium between oversight needed early on and total autonomy that enables fuller business agility.
The goal is balancing finance responsibility with funding flexibility. Mature models blend enterprise controls with owner freedom.
Tracking Agile Budgeting Results Using Key Performance Indicators
Critical budgeting focus areas to monitor with relevant KPIs when gauging effectiveness of agile funding models include:
Speed
Time to review and approve funding requests
Acceleration in budget planning cycles
Frequency of resource allocation changes
Strategic Alignment
Budget allocation matching strategic priorities
Resource investments tied to portfolio objectives
Spending tied to market demands
Accountability
Actual versus planned spending per budget owner
Budget-to-actual variance trends
Initiative timelines and budget adherence
Financial Agility
Funding request approval rates
Speed of inter-department allocation changes
Responsiveness to new investments
Tracking metrics related to these facets provides quantifiable evidence around benefits realized from agile budgeting transformations. The faster, more accountable, and strategically aligned funding enables greater overall business agility and productivity.
Top Agile Budgeting Software Tools
Automating aspects of agile budgeting provides the foundation for shifting from sluggish manual processes to streamlined, flexible planning and resource allocation. Here are the top 25 leading tools in this fast-growing category:
Planview LeanKit - Facilitates cross-functional planning with Kanban-style agile budgeting boards
Anaplan - Connects financial data across sales, HR, marketing for collaborative budget planning
Host Analytics - Specializes in FP&A driven agile planning, analysis, and reporting
Vena - Offers user-friendly Excel-based agile budgeting integrated with core financial systems
Oracle Fusion Cloud - Leverages AI for automated insights from budget vs. actuals data
Adaptive Insights - Enables finance to update forecasts and model budget scenarios on the fly
Workfront - Aligns project portfolio resource planning to budgets across multiple timeframes
MPOWR - Purpose-built for collaborative modeling, simulation, and planning at enterprise scale
IBM Planning Analytics - TM1 leverages predefined workflows for agile planning events
Prophix - Automates workflows and ties financials to operational metrics for business context
OneStream - Unifies enterprise data with detailed drill-down analysis for flexibility
SAS Budgeting and Planning - Uses statistical analysis to improve spending forecast accuracy
CAMMS - Offers specialty modules for agile planning, simulation, workforce alignment
Unit4 FP&A - Provides continuous planning with rolling forecasts
River Logic - Applies advanced algorithms to optimize budget scenarios
Planful - Specializes in financial planning and analysis for agility
insightsoftware - Scales to deliver controls and consistency alongside flexibility
Board - Aligns strategic planning to funding allocation decisions
Jedox - Simplifies planning, modeling, forecasting natively in Excel
Centage - Right-sized for automating budgeting in mid-market organizations
TIBCO - Integrates predictive analytics for more insightful agile planning
Tagetik - Unified CPM tailored for finance ownership of agile budgeting
Solver - Built to empower collaborative, continuous planning workflows
Visibility - Automates complex multi-dimensional modeling
This list highlights the expanding options enterprises have to enable greater budgetary agility using today’s technologies. Capabilities vary widely, so assess solutions against your current finance ecosystem and future automation roadmap objectives.
Business Operations Prerequisites for Agile Budgeting
Beyond introducing new agile budgeting software tools, organizations need to evaluate processes and operations that either facilitate or hinder funding agility:
Budgeting Frequency
Transition planning cycles from 12-month to 90-days. Quarterly or even monthly cycles provide flexibility versus once-a-year plans.
Intake Mechanisms
Implement funding request templates and an intake process for project owners. Standardize data collected to enable faster assessment of asks.
Allocation Governance
Build regular, perhaps quarterly budget allocation reviews attended by finance and business leaders to rebalance investments based on evolving needs.
Contracting Approaches
Explore pay-for-service based contracts and on-demand resourcing arrangements that allow funding specialized skills as needed rather than big upfront commitments.
Analysis and Reporting Cadence
Increase frequency of budget versus actual expenditure analysis. Automate dashboard visibility rather than rely just on periodic manual reports.
Performance Evaluation
Evolve individual goals and reviews to better emphasize returns generated from budget spending versus merely output metrics alone.
Updating processes in tandem with enabling agile budgeting technologies is critical. Automate what you can while also mapping ideal workflows.
Documenting envisioned future state operations also helps guide tool selection decisions around required budget management capabilities.
The Outlook for Agile Budgeting and Planning
The future is bright for agile approaches to financial planning and budget oversight. The turmoil of markets, digital disruption for business models, and the economic impacts of the pandemic have accelerated enterprise willingness to adopt more flexible, continuous budgeting methods.
According to research firm Gartner, over 70% of surveyed finance leaders report now taking a more agile budgeting approach - a dramatic increase versus just 30% in 2019. And the expansion of this modern budgeting style will continue as organizations recognize traditional cycles poorly match the pace of change.
Technologies like machine learning, intelligent process automation, and natural language interfaces will reduce manual effort while making funding allocation smarter. Solutions will integrate financial planning with complementary data domains - from inventory to contracts to human capital management - for holistic decision-making.
And augmented analytics will help more business leaders embrace their roles as budget owners in this new paradigm while still providing finance needed visibility into spending.
Conclusion and Summary of Key Agile Budgeting Takeaways
Transitioning from established annual budgeting conventions to flexible, agile funding empowers enterprises to steer resources quicker toward opportunities, fund innovation better, and weather market uncertainty.
Agile budgeting principles promote cross-functional collaboration around spending aligned to outcomes delivered rather than output metrics alone. This focus on value speeds funding allocation changes.
Tools connect finance data and other planning cycles - along with the ability to adjust forecasts dynamically based on progress and evolving priorities. This enables continuous adaptation.
Leaders reduce resistance by implementing agile budgeting guardrails gradually across pilot teams versus overnight mandates.imacy by showcasing early statistical wins secured.
They track benefits through productivity gains, improvements in time to market, better launched product-market fit, and higher returns visible from budget investments.
The future belongs to finance leaders that position their businesses to respond swiftly to both market demands and opportunities by embracing agile planning. Dynamic budgeting sets a critical foundation.
Agile Budgeting: A Dynamic New Approach to Financial Planning and Resourcing
Companies that adopt agile budgeting principles and break from traditional annual budget cycles can achieve greater business agility, faster time to market, and higher returns on investments. This extensive guide examines what agile budgeting entails, its benefits, key enablers and technologies, metrics to track, as well as a future outlook for this modern, fluid budgeting methodology.
Defining Agile Budgeting and Contrasting it With Conventional Annual Budgeting
Agile budgeting incorporates tenants of agile project management into financial planning workflows across an organization. Instead of top-down annual budget cycles, funding is reviewed and distributed in faster iterations based on evolving business priorities. Resources get allocated dynamically rather than based on predictions far in advance.
This facilitates rapid adaptation to market demands, new opportunities or changing conditions that annual budgets rarely match. It also requires cross-functional input and accountability around spending decisions - breaking down organizational silos often reinforced by annual unit-based budgeting.
Traditional budgeting cycles operate on 12-month look aheads with poor visibility into actual spend. They foster departmental silos instead of enterprise collaboration around investments. Agile budgeting addresses these limitations with greater transparency into funding requests, approvals, and connections between budget and measurable business impact.
Examining Core Agile Budgeting Principles and Expected Benefits
Some fundamental principles that define an agile approach to budgeting include:
Flexible Funding Allocation
Budgets get divided into shorter planning cycles - often quarterly versus annually - to fund initiatives and respond to new priorities. Rather than massive upfront project budgets, spending revises based on value delivered in each iteration.
Cross-Functional Collaboration
Agile budgeting depends more on matrixed input into investment trade-offs rather than finance teams driving top-down allocation. Cross-functional teams provide perspectives on priorities to balance available funding with organizational capabilities and broader strategic objectives.
Ongoing Visibility Through Reporting
Real-time reporting on budget versus actuals at both departmental and project levels provides the visibility needed to make better decisions on fund allocation. Automated updates on spend and performance replace periodic budget reviews.
Distributed Accountability
Rather than centralized decisions on distributing budget, ownership resides closer to leaders overseeing initiatives receiving the funding. They determine evolving investment needs and are held accountable for spend and return on those investments.
Applying these tenets facilitates a wide range of financial and operational advantages, including:
Quicker Adaptation to Market Trends
The ability to adjust spending and investments in smaller increments matches the cadence of agile delivery. This allows organizations to pivot strategies in response to market demands. Annual budgeting simply can’t change at the pace required today.
Higher Returns from Funding Decisions
With funding tied to strategic priorities showing continuous value, dollars flow toward the highest ROI initiatives. Spending gets tracked and revisited rather than set blindly upfront. This maximizes benefits from investments.
Improved Team Productivity
By directly linking budgets to progress made and business outcomes achieved, teams stay laser focused on producing measurable results versus output metrics alone. Their success secures future funding.
Enhanced Funding Flexibility
Finance can move funding between activities, departments, or initiatives rather than depending on massive upfront project budgets. This better accommodates growth opportunities or innovations.
Adopting agile budgeting principles ultimately leads to greater business agility, faster time to market, and higher returns on investments. But it requires updates totools, governance, and workforce readiness first.
Correlating Agile Teams and Agile Budgeting
Implementing agile budgeting works best when engineering and product teams already apply agile methods to their project delivery approach. The two reinforce each other. Agile teams that ship features faster need flexible funding to continue resourcing iterative work rather than annual budgets.
Likewise, agile funding depends on business units taking ownership over output and budget decisions rather than leaving it to finance to dictate. Agile team autonomy needs to expand to financial ownership.
When budgets and team processes clash - with bureaucratic planning applied to agile projects for example - misalignments arise. Agile teams struggle within annual unit funding models and centralized change control. Attempts at agile budgeting without cross-functional involvement fall flat.
Updating budgeting and teams in tandem avoids these disconnects. It ensures finance matches the cadence of business execution and that funds flow to support continuous delivery.
Assessing Readiness for Transitioning to Agile Budgeting
Determining if your organization can successfully embrace agile budgeting includes assessing foundational elements like:
Existence of Agile Delivery Methods
Do engineering, product, and marketing teams already work in an agile framework - at least in parts of the organization? Or is budgeting agility trying to lead broader agile adoption? Implementation works best when budgeting follows established agile processes rather than the other way around.
Executive Sponsorship
Is there C-level and board sponsorship to change budgeting from the status quo? Leadership must back the move to agile funding operationally and culturally. They set the vision and incentives around intended benefits.
Cross-functional Collaboration
Does the culture support matrixed input into spending decisions today? Or does annual budgeting happen in functional silos currently? Agile budgeting requires workforce readiness to collaborate across teams and business units in deciding funding allocation.
Outcome-Based Incentives
Are team members and leaders already measured and rewarded based on business outcomes achieved rather than output metrics alone? Making this shift is foundational to the mindset change agile budgeting requires.
The more these elements exist in pockets already, the easier adopting agile budgeting will be. Look for domains practicing agile delivery to pilot dynamic funding models first before scaling the change more broadly.
Examining Common Challenges with Shifting to Agile Budgeting
Transitioning from established annual budgeting cycles to more flexible, agile funding represents a major cultural shift. The degree of change often surfaces challenges like:
Required Mindset Shifts
Both finance leaders controlling the purse strings and business unit leaders accustomed to fixed annual budgets need to view investment oversight very differently. This takes time and leadership persuasion to drive adoption.
Perceived Loss of Control
Centralized finance teams face pressures from distributed accountability. Giving up strict allocation authority to empowered business owners challenges legacy notions of budgetary control and introduces new risk considerations.
Lack of Reporting Transparency
Organizations used to managing budgets in spreadsheets face new transparency expectations with automated agile budgeting systems. Potential gaps in access to real-time reporting on spend emerge.
Integration with Legacy Financial Systems
New agile budgeting software tools often don’t easily integrate with decades old ERP, accounting, or financial planning systems. IT and finance partners work through technical complexities.
These issues cause resistance even with executive mandates. But approaches like total budget transparency, strong governance guardrails, and incentives tied to outcomes all help ease the transition.
Steps for Getting Started With Agile Budgeting
Organizations new to agile budgeting often implement it across a series of phases:
Set Transformation Vision and Objectives
First, finance and executive leaders agree on issues with current budgeting and what shifts help achieve financial strategy. Setting a clear vision for change and success metrics combats resistance.
Map Governance Guidelines
Next, determine what overarching principles, accountabilities, and cross-functional decision rights enable more flexible funding allocation while still providing oversight.
Run Initial Pilots
Then, run pilots for agile budgeting within business units already working in an agile operating model. Concentrate on domains where the culture and systems can adapt easily at first.
Evaluate and Improve
Apply lessons from early agile budgeting implementations to improve funding cycles, policies, tools, and training to support broader adoption. Let pilots demonstrate value.
Incentivize Adoption
Finally, motivate skeptical teams on the merits of agile budgeting through proof points and align incentives around outcomes it enables versus output metrics alone.
Continually reinforcing the “why” around agile funding and showcasing early wins gives the momentum needed to scaffold adoption.
Best Practices for Governing Agile Budgeting
Some proven ways finance leaders can govern dynamic agile budgeting in alignment with financial controls include:
Maintain Portfolio Guardrails
Define overall funding limits, reserves, or thresholds at the department, business unit, or portfolio levels to contain flexibility within set boundaries. Related governance teams review exceptions.
Standardize Intake and Approval Cycles
Document consistent processes for funding requests, application reviews, and decision cadences to streamline agility. Automate routing of asks exceeding defined parameters.
Codify Funding Adjustment Guidelines
Predefine controls around what budget changes get approved automatically versus escalated based on scenarios like overruns, material changes, redirected allocations between units, etc.
Increase Reporting Transparency
Use automated dashboards, interactive self-serve analytics, and role-based reporting to provide necessary transparency for financial oversight of agile planning cycles.
Embed Owner Accountability
Connect defined budgets clearly to single business budget owners. Tie approvals to track progress against those budgets with accountability for outcomes.
Enable Decentralized Decision Rights
Push spending authority closer to initiatives while letting finance govern bigger funding swings. Threshold guidance facilitates this for operational agility.
Formalize Escalation Paths
Document workflows for scenarios where additional budget gets requested, disputes between owners arise, or changes fall outside defined agile budgeting guardrails with governance team review.
Continuously Refine Governance
Review and streamline aspects of governance over time. Find the right equilibrium between oversight needed early on and total autonomy that enables fuller business agility.
The goal is balancing finance responsibility with funding flexibility. Mature models blend enterprise controls with owner freedom.
Tracking Agile Budgeting Results Using Key Performance Indicators
Critical budgeting focus areas to monitor with relevant KPIs when gauging effectiveness of agile funding models include:
Speed
Time to review and approve funding requests
Acceleration in budget planning cycles
Frequency of resource allocation changes
Strategic Alignment
Budget allocation matching strategic priorities
Resource investments tied to portfolio objectives
Spending tied to market demands
Accountability
Actual versus planned spending per budget owner
Budget-to-actual variance trends
Initiative timelines and budget adherence
Financial Agility
Funding request approval rates
Speed of inter-department allocation changes
Responsiveness to new investments
Tracking metrics related to these facets provides quantifiable evidence around benefits realized from agile budgeting transformations. The faster, more accountable, and strategically aligned funding enables greater overall business agility and productivity.
Top Agile Budgeting Software Tools
Automating aspects of agile budgeting provides the foundation for shifting from sluggish manual processes to streamlined, flexible planning and resource allocation. Here are the top 25 leading tools in this fast-growing category:
Planview LeanKit - Facilitates cross-functional planning with Kanban-style agile budgeting boards
Anaplan - Connects financial data across sales, HR, marketing for collaborative budget planning
Host Analytics - Specializes in FP&A driven agile planning, analysis, and reporting
Vena - Offers user-friendly Excel-based agile budgeting integrated with core financial systems
Oracle Fusion Cloud - Leverages AI for automated insights from budget vs. actuals data
Adaptive Insights - Enables finance to update forecasts and model budget scenarios on the fly
Workfront - Aligns project portfolio resource planning to budgets across multiple timeframes
MPOWR - Purpose-built for collaborative modeling, simulation, and planning at enterprise scale
IBM Planning Analytics - TM1 leverages predefined workflows for agile planning events
Prophix - Automates workflows and ties financials to operational metrics for business context
OneStream - Unifies enterprise data with detailed drill-down analysis for flexibility
SAS Budgeting and Planning - Uses statistical analysis to improve spending forecast accuracy
CAMMS - Offers specialty modules for agile planning, simulation, workforce alignment
Unit4 FP&A - Provides continuous planning with rolling forecasts
River Logic - Applies advanced algorithms to optimize budget scenarios
Planful - Specializes in financial planning and analysis for agility
insightsoftware - Scales to deliver controls and consistency alongside flexibility
Board - Aligns strategic planning to funding allocation decisions
Jedox - Simplifies planning, modeling, forecasting natively in Excel
Centage - Right-sized for automating budgeting in mid-market organizations
TIBCO - Integrates predictive analytics for more insightful agile planning
Tagetik - Unified CPM tailored for finance ownership of agile budgeting
Solver - Built to empower collaborative, continuous planning workflows
Visibility - Automates complex multi-dimensional modeling
This list highlights the expanding options enterprises have to enable greater budgetary agility using today’s technologies. Capabilities vary widely, so assess solutions against your current finance ecosystem and future automation roadmap objectives.
Business Operations Prerequisites for Agile Budgeting
Beyond introducing new agile budgeting software tools, organizations need to evaluate processes and operations that either facilitate or hinder funding agility:
Budgeting Frequency
Transition planning cycles from 12-month to 90-days. Quarterly or even monthly cycles provide flexibility versus once-a-year plans.
Intake Mechanisms
Implement funding request templates and an intake process for project owners. Standardize data collected to enable faster assessment of asks.
Allocation Governance
Build regular, perhaps quarterly budget allocation reviews attended by finance and business leaders to rebalance investments based on evolving needs.
Contracting Approaches
Explore pay-for-service based contracts and on-demand resourcing arrangements that allow funding specialized skills as needed rather than big upfront commitments.
Analysis and Reporting Cadence
Increase frequency of budget versus actual expenditure analysis. Automate dashboard visibility rather than rely just on periodic manual reports.
Performance Evaluation
Evolve individual goals and reviews to better emphasize returns generated from budget spending versus merely output metrics alone.
Updating processes in tandem with enabling agile budgeting technologies is critical. Automate what you can while also mapping ideal workflows.
Documenting envisioned future state operations also helps guide tool selection decisions around required budget management capabilities.
The Outlook for Agile Budgeting and Planning
The future is bright for agile approaches to financial planning and budget oversight. The turmoil of markets, digital disruption for business models, and the economic impacts of the pandemic have accelerated enterprise willingness to adopt more flexible, continuous budgeting methods.
According to research firm Gartner, over 70% of surveyed finance leaders report now taking a more agile budgeting approach - a dramatic increase versus just 30% in 2019. And the expansion of this modern budgeting style will continue as organizations recognize traditional cycles poorly match the pace of change.
Technologies like machine learning, intelligent process automation, and natural language interfaces will reduce manual effort while making funding allocation smarter. Solutions will integrate financial planning with complementary data domains - from inventory to contracts to human capital management - for holistic decision-making.
And augmented analytics will help more business leaders embrace their roles as budget owners in this new paradigm while still providing finance needed visibility into spending.
Conclusion and Summary of Key Agile Budgeting Takeaways
Transitioning from established annual budgeting conventions to flexible, agile funding empowers enterprises to steer resources quicker toward opportunities, fund innovation better, and weather market uncertainty.
Agile budgeting principles promote cross-functional collaboration around spending aligned to outcomes delivered rather than output metrics alone. This focus on value speeds funding allocation changes.
Tools connect finance data and other planning cycles - along with the ability to adjust forecasts dynamically based on progress and evolving priorities. This enables continuous adaptation.
Leaders reduce resistance by implementing agile budgeting guardrails gradually across pilot teams versus overnight mandates.imacy by showcasing early statistical wins secured.
They track benefits through productivity gains, improvements in time to market, better launched product-market fit, and higher returns visible from budget investments.
The future belongs to finance leaders that position their businesses to respond swiftly to both market demands and opportunities by embracing agile planning. Dynamic budgeting sets a critical foundation.