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.

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. 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

4. 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.

5. Principles behind the Agile Manifesto
Our highest priority is to satisfy the customer
through early and continuous delivery
of valuable software.

6. Principles behind the Agile Manifesto
Welcome changing requirements, even late in
development. Agile processes harness change for
the customer's competitive advantage.

7. 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.

8. Principles behind the Agile Manifesto
Business people and developers must work
together daily throughout the project.

9. 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.

10. 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.

12. Principles behind the Agile Manifesto
Working software
is the primary measure of progress.

13. Principles behind the Agile Manifesto
Agile processes promote sustainable development.
The sponsors, developers, and users should be able
to maintain a constant pace indefinitely.

14. Principles behind the Agile Manifesto
Continuous attention to technical excellence
and good design enhances agility.

15. Principles behind the Agile Manifesto
Simplicity--the art of maximizing the amount
of work not done--is essential.

16. Principles behind the Agile Manifesto
The best architectures, requirements, and designs
emerge from self-organizing teams.

17. Principles behind the Agile Manifesto
At regular intervals, the team reflects on how
to become more effective, then tunes and adjusts
its behavior accordingly.

19. Simple
Complicated
Predictable Uncertain
Lean Agile
Just do it
Trial &
error
When agile is worth the effort?

20. Time Budget
Scope

21. 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

22. The product owner’s tool chain
NPV = −investment +
cashflow
(1+interest)t
t=1
N
∑
priority =
NPV
size
size = f (E, R,U)

23. 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

25. So, we have a complex system,
simple rules…
… and no money.

26. The intrapreneur’s main problem:
How do I gather money?

27. The answer is:
Go Beyond Budgeting

28. Traditional budgeting philosophy
Vision
Strategy
Budget
Target/Performance
„Be on budget!“
Bonuses
Department
hierarchyBudget
request
Budget
assignment

29. 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

30. 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

31. 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

32. 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

34. info@adesso.de
www.adesso.de
Vielen Dank für Ihre Aufmerksamkeit.

35. 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

36. Bildquellen
‣ http://www.clipartpanda.com
‣ http://www.clipartbest.com
‣ http://www.betacodex.com
‣ http://www.scrumalliance.org
‣ http://www.mountaingoatsoftware.com