Workday: How CFOs can make agile budgeting successful

Editor’s note: Have you already adopted agile budgeting? Pannie Sia (pictured), general manager, ASEAN, Workday explains what it is, how it’s different from traditional budgeting, the benefits it brings, and how CFOs can make agile budgeting effective and successful.

FutureCFO: What’s agile budgeting?

Pannie Sia (PS): In today’s ever-evolving world, how quickly organisations are able to adapt can often determine how likely they are to succeed.  

A rigid, inflexible budgeting process is no longer optimal when you consider how quickly things change.  

This is where an agile approach to budgeting comes to the fore. This methodology for managing financial resources prioritises flexibility and adaptability in fast-paced environments, compelling finance teams towards agility. 

Unlike traditional, static budgeting that locks teams into year-long plans, agile budgeting embraces shorter planning cycles, continuous feedback loops, and strategic prioritisation to respond effectively to market shifts and evolving business needs. 

FutureCFO: Why do finance functions do agile budgeting?

PS: Understanding the key tenets of agile budgeting will allow finance teams to position themselves as stronger strategic partners within the organisation. 

Agile budgeting goes beyond a financial framework, representing a cultural shift that prioritises increased adaptability, improved focus on strategic goals, enhanced transparency through continuous communication, and reduced waste by minimising resources allocated to unproductive projects through early evaluation and feedback loops.

Finance teams need to adopt a mindset focused on iterative planning, data-driven decision-making, and a commitment to continuous improvement.  

Adopting new technologies, including AI-powered financial solutions, can help automate vital financial planning processes, accelerate reporting cycles, and ensure budgeting and forecasting are more accurate. 

With these efficiencies, finance teams have more time to focus on high-value analysis and strategic decision-making and boost productivity. This approach enables them to navigate unpredictable environments, seize emerging opportunities, and attain strategic goals more effectively.

While the shift to agile budgeting is often a big leap, CFOs need to work hand in hand with executives in other areas of the business to ensure its success in the long term. 

FutureCFO: How can CFOs make agile budgeting effective and successful?

PS: Reimagining the way finance teams operate may be a challenging task, and finance teams can be risk averse and unreceptive to change. 

To ease finance teams into adopting a more flexible approach to financial planning, CFOs can first demonstrate the value of it on a smaller scale before scaling across the entire organisation. This would help in building stakeholder buy-in for a broader rollout.

CFOs can look to adopt shorter planning cycles, termed 'sprints,' spanning weeks to months, steering away from the constraints of rigid annual budgets. This approach allows for quick adjustments, so planning can easily adapt to evolving market dynamics, eliminating reliance on outdated plans.

Furthermore, CFOs can prioritise a focused set of high-impact initiatives rather than trying to do everything at once. This concentration of resources on well-defined goals would optimise resources and time utilisation towards these focused outcomes, allowing teams to reach goals faster and deliver real value.

Implementing fast feedback loops that encourage teams to evaluate the effectiveness of ongoing initiatives is another key area of agile budgeting, especially as part of the refining process. 

This dynamic approach allows for ongoing and timely course corrections and adjustments, which will prevent unnecessary expenditure on projects. 

Ultimately, the benefits gained from an agile budgeting approach will elevate the adaptability and success of finance teams in our fast-paced world. 

While the shift to agile budgeting is often a big leap, CFOs need to work hand in hand with executives in other areas of the business to ensure its success in the long term.