Agile method and budget: incompatible?

Podcast with Olivier Conq

Budget management in an Agile context is still poorly understood in companies.

In this podcast, Olivier Conq shares his experience of dealing with the annual budget when managing a team in agile mode. Olivier advocates new management practices such as agility, servant leadership and benevolent management. In particular, he focuses on budgetary processes in the context of agile approaches and agility at scale, where there is a certain lack of understanding on the part of finance or GM teams, whose budgetary model is poorly adapted to this type of method. So how do we go about it?

Olivier Conq, CIO/CTO of Transition and member of the Infortive Community, takes a closer look at this topic and shares his convictions and experience of over 25 years in the field with Bertrand Ruiz, CEO of AirSaas and Podcaster of CIO Révolution.

Enjoy!

"Agility has changed my life a bit! I can't imagine working any other way."

While he belonged to some rather "unhappy" teams, Olivier realized that a neighboring technical team was happier and more fulfilled... Digging deeper, he discovered that they were working in extreme programming.

"They were happy, everything was going well, every time they deployed in prod they were confident!"

He then adopted this culture.

"It's made the teams I work with more fulfilled, and for me, that's what counts."

Olivier Conq details the advantages of agile methods, putting into perspective the difficulties of entering into a budgetary process.

The fundamentals

"The starting point is capability!"

Olivier Conq recommends determining in advance how much work needs to be done on a given product, and at what speed, in order to determine the size of the team required, and consequently the budget. We then set a timeframe for reaching the MVP (Minimum Viable Product), or another stage of product development.

Fundamentally, this "macro costing" implies knowing in advance your team's ability to deliver, and its velocity with regard to the different levels of complexity.

"At the outset, we don't know the team's velocity, so we make a rough estimate. Then, when the teams start up, we'll measure the actual velocity and then readjust the plan."

"What you can't do is the famous iron triangle of project management: commit to a budget, a precise functional content and a release date. You have to blow up one of the three... and in agile it's the precise functional scope that blows up!"

"In agility, we break the lock of the fixed functional perimeter; we have to accept that, even on big projects, things will change as we go along."

The main difficulty lies in building trust, based on team continuity.

" Stability is important in agile teams!"

Two common mistakes in agile budget management

The first mistake is to ask for detailed estimates!

"The budget is there to provide personnel, and at no point to detail functionality."

Olivier points out that, in general, finance departments don't need all the details: in agile, we're not able to say what's going to happen at a detailed level.

"That's where trust is important."

Second common mistake: confusing team size with productivity

"For those not in IT, the idea that if you have a team of five and you add one person, you automatically increase capacity. Unfortunately, the team dynamic can totally reverse with each arrival! Even with great resources, we can't achieve the impossible!"

Olivier draws a parallel with another mistaken belief: that offshore development is easy! For our guest, these two ideas are shortcuts, and we don't measure their true impact sufficiently.

Towards a new form of financial and project governance

A shorter commitment scale

The requirement is quickly broken down so that it can be presented to the customer as quickly as possible.

"Before the ideal situation, we look for the minimum solution, the faster you deliver in prod the more you reduce the risk of idealization compared to the initial need. And that means less waste!"

Cutting out the need and changing the relationship to time allows :

• offer customers a response as quickly as possible
• reduce the risk of idealizing the initial need
• minimize technical risk
• avoid unnecessary expenditure
• adapt quickly if necessary
• offer quarterly rather than annual roadmapping

A quarterly roadmap

In terms of roadmaps and visibility, Olivier recommends quarterly roadmaps:

"This quarterly period is useful because everyone is used to it, and SAFe offers it too! Managers like SAFe because they can find their business drivers: budget, planning, release, etc."

Asked about the budgetary return on investment (ROI) of these initiatives, Olivier stresses:

"We are able to say that a feature will be released on such and such a date, cost X and yield Y".

Operation by "minimum level" of what will be delivered

To reassure stakeholders and senior management, Olivier recommends communicating a minimum level of what will be delivered.

In conclusion, the success of budget management in agile mode largely depends on your organization's ability to grasp, and even accept, the notion of variability inherent in the detailed functional scope.