Budgeting in the Era of Agile
Gerrit Beine, MBA
Managing Consultant
11th China - Europe International Symposium on Softwar...
Who is Gerrit?
‣ Managing Consultant at adesso
‣ Software philosopher, never-tiring optimizer
‣ Main topics
‣ Agile
‣ Soft...
Manifesto for Agile Software Development
Individuals and interactions over processes and tools
Working software over compr...
Principles behind the Agile Manifesto
Our highest priority is to satisfy the customer

through early and continuous delive...
Principles behind the Agile Manifesto
Welcome changing requirements, even late in 

development. Agile processes harness c...
Principles behind the Agile Manifesto
Deliver working software frequently, from a 

couple of weeks to a couple of months,...
Principles behind the Agile Manifesto
Business people and developers must work 

together daily throughout the project.
Principles behind the Agile Manifesto
Build projects around motivated individuals. 

Give them the environment and support...
Principles behind the Agile Manifesto
The most efficient and effective method of 

conveying information to and within a d...
Principles behind the Agile Manifesto
Working software
is the primary measure of progress.
Principles behind the Agile Manifesto
Agile processes promote sustainable development. 

The sponsors, developers, and use...
Principles behind the Agile Manifesto
Continuous attention to technical excellence 

and good design enhances agility.
Principles behind the Agile Manifesto
Simplicity--the art of maximizing the amount 

of work not done--is essential.
Principles behind the Agile Manifesto
The best architectures, requirements, and designs 

emerge from self-organizing team...
Principles behind the Agile Manifesto
At regular intervals, the team reflects on how 

to become more effective, then tune...
Simple
Complicated
Predictable Uncertain
Lean Agile
Just do it
Trial &
error
When agile is worth the effort?
Time Budget
Scope
How do we deal with budgets in agile projects?
‣ The goal is to maximize the customer value.
‣ 1st principle behind the Ag...
The product owner’s tool chain
NPV = −investment +
cashflow
(1+interest)t
t=1
N
∑
priority =
NPV
size
size = f (E, R,U)
Weighted shortest job first
time
cost of delay
A
B
C
Feature Duration
Cost
of
Delay
Weight
A 1 10 10
B 3 3 1
C 10 1 0,1
we...
So, we have a complex system,
simple rules…
… and no money.
The intrapreneur’s main problem:
How do I gather money?
The answer is:

Go Beyond Budgeting
Traditional budgeting philosophy
Vision
Strategy
Budget
Target/Performance
„Be on budget!“
Bonuses
Department
hierarchyBud...
Beyond Budgeting
‣ Organizations are complex systems
‣ Agile organizations are innovation-driven
‣ Allocation of financial...
Beyond Budgeting - the principles
‣ Few and simple values
‣ Responsibility of employees
‣ Autonomy of teams
‣ Organization...
A perfect match
‣ Beyond Budgeting & the Agile Manifesto
‣ Embrace change, don’t overvalue plans
‣ Plan continuously, not ...
Beyond Budgeting - Beyond Agile
‣ Innovation is the key to success in the 21st century
‣ Agility supports innovation proce...
info@adesso.de
www.adesso.de
Vielen Dank für Ihre Aufmerksamkeit.
Literature & Links
‣ http://www.betacodex.com
‣ http://agilemanifesto.org
‣ https://hbr.org/product/beyond-budgeting-how-m...
Bildquellen
‣ http://www.clipartpanda.com
‣ http://www.clipartbest.com
‣ http://www.betacodex.com
‣ http://www.scrumallian...
Budgeting in the Era of Agile
Budgeting in the Era of Agile
Budgeting in the Era of Agile
Budgeting in the Era of Agile
Budgeting in the Era of Agile
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Budgeting in the Era of Agile

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Over the years agile became a common way of software development. More and more companies adopt to the agile manifesto.

But there are some challenges on the way to become an agile organization. One is the question of how to deal with financial planning. The previous answer was: Budgeting. But butgeting does not scale with the velocity of agile projects. The idea to solve this problem exists much longer then the idea of agile itself: Go Beyond Budgeting.

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Budgeting in the Era of Agile

  1. 1. Budgeting in the Era of Agile Gerrit Beine, MBA Managing Consultant 11th China - Europe International Symposium on Software Engineering Education (CEISEE 2015), Zwickau
  2. 2. Who is Gerrit? ‣ Managing Consultant at adesso ‣ Software philosopher, never-tiring optimizer ‣ Main topics ‣ Agile ‣ Software Architecture ‣ Antifragility & Black Swans ‣ Technical Debt & Legacy Code ‣ Software Engineering Economics ‣ Intercultural aspects of Software Engineering ‣ iSAQB e.V. Board Member, openSUSE Member, Agile Saxony Organiser
  3. 3. Manifesto for Agile Software Development Individuals and interactions over processes and tools Working software over comprehensive documentation Customer collaboration over contract negotiation Responding to change over following a plan We are uncovering better ways of developing
 software by doing it and helping others do it.
 Through this work we have come to value: That is, while there is value in the items on
 the right, we value the items on the left more.
  4. 4. Principles behind the Agile Manifesto Our highest priority is to satisfy the customer
 through early and continuous delivery
 of valuable software.
  5. 5. Principles behind the Agile Manifesto Welcome changing requirements, even late in 
 development. Agile processes harness change for 
 the customer's competitive advantage.
  6. 6. Principles behind the Agile Manifesto Deliver working software frequently, from a 
 couple of weeks to a couple of months, with a 
 preference to the shorter timescale.
  7. 7. Principles behind the Agile Manifesto Business people and developers must work 
 together daily throughout the project.
  8. 8. Principles behind the Agile Manifesto Build projects around motivated individuals. 
 Give them the environment and support they need, 
 and trust them to get the job done.
  9. 9. Principles behind the Agile Manifesto The most efficient and effective method of 
 conveying information to and within a development 
 team is face-to-face conversation.
  10. 10. Principles behind the Agile Manifesto Working software is the primary measure of progress.
  11. 11. Principles behind the Agile Manifesto Agile processes promote sustainable development. 
 The sponsors, developers, and users should be able 
 to maintain a constant pace indefinitely.
  12. 12. Principles behind the Agile Manifesto Continuous attention to technical excellence 
 and good design enhances agility.
  13. 13. Principles behind the Agile Manifesto Simplicity--the art of maximizing the amount 
 of work not done--is essential.
  14. 14. Principles behind the Agile Manifesto The best architectures, requirements, and designs 
 emerge from self-organizing teams.
  15. 15. Principles behind the Agile Manifesto At regular intervals, the team reflects on how 
 to become more effective, then tunes and adjusts 
 its behavior accordingly.
  16. 16. Simple Complicated Predictable Uncertain Lean Agile Just do it Trial & error When agile is worth the effort?
  17. 17. Time Budget Scope
  18. 18. How do we deal with budgets in agile projects? ‣ The goal is to maximize the customer value. ‣ 1st principle behind the Agile Manifesto
 „Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.“ ‣ We know ‣ when we will deliver the software ‣ how much this will cost ‣ We guarantee that it will be the most valuable piece of software that is possible within time and budget
  19. 19. The product owner’s tool chain NPV = −investment + cashflow (1+interest)t t=1 N ∑ priority = NPV size size = f (E, R,U)
  20. 20. Weighted shortest job first time cost of delay A B C Feature Duration Cost of Delay Weight A 1 10 10 B 3 3 1 C 10 1 0,1 weight = costof delay durationcod = 1 x 3 cod = (1+3) x 1 time cost of delay A B C cod = (10+3) x 10 cod = 10 x 3
  21. 21. So, we have a complex system, simple rules… … and no money.
  22. 22. The intrapreneur’s main problem: How do I gather money?
  23. 23. The answer is:
 Go Beyond Budgeting
  24. 24. Traditional budgeting philosophy Vision Strategy Budget Target/Performance „Be on budget!“ Bonuses Department hierarchyBudget
 request Budget
 assignment
  25. 25. Beyond Budgeting ‣ Organizations are complex systems ‣ Agile organizations are innovation-driven ‣ Allocation of financial resources based on annual plans does not scale anymore ‣ Agile organizations need project funding based on value/cost analysis
  26. 26. Beyond Budgeting - the principles ‣ Few and simple values ‣ Responsibility of employees ‣ Autonomy of teams ‣ Organization based on small teams ‣ Focus on customers ‣ Transparency of information ‣ Relative goals ‣ Rewards based on team success ‣ Continuous planning ‣ Allocate ressources on request ‣ Dynamic coordination ‣ Measure trends Leadership principles Performance management principles
  27. 27. A perfect match ‣ Beyond Budgeting & the Agile Manifesto ‣ Embrace change, don’t overvalue plans ‣ Plan continuously, not once a year ‣ Focus on customer value, measure outcomes instead of drift from plans ‣ Self-organized, autonomous and responsible teams, no micro-management ‣ Work with sustainable pace and honor team successes ‣ Use retrospectives to improve, measure trends
  28. 28. Beyond Budgeting - Beyond Agile ‣ Innovation is the key to success in the 21st century ‣ Agility supports innovation processes ‣ Agile organizations need agile budgeting ‣ The principles of the Beta Codex are a perfect match to the Agile Manifesto
  29. 29. info@adesso.de www.adesso.de Vielen Dank für Ihre Aufmerksamkeit.
  30. 30. Literature & Links ‣ http://www.betacodex.com ‣ http://agilemanifesto.org ‣ https://hbr.org/product/beyond-budgeting-how-managers-can-break-free-from-/ an/8660-HBK-ENG ‣ Bogsnes, Bjarte; Implementing Beyond Budgeting; Wiley Publishing ‣ Hope, Jeremy & Fraser, Robin; Beyond Budgeting; Hardvard Business Review Press ‣ Pfläging, Niels; Beyond Budgeting, Better Budgeting
  31. 31. Bildquellen ‣ http://www.clipartpanda.com ‣ http://www.clipartbest.com ‣ http://www.betacodex.com ‣ http://www.scrumalliance.org ‣ http://www.mountaingoatsoftware.com

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