Ep. 106: Loreal Jiles - An Agile Approach to Finance Transformation

January 18, 2021 | 19 Minutes

Loreal Jiles, IMA’s Director of Research for Digital Technology & Finance Transformation, joins Count Me In to talk about the trending theme of agile. In this episode, she explains what an agile finance function looks like, defines "scrum", and shares how finance teams are already using agile and scrum. If you're hoping to get started and are looking for more information on implementing an agile approach to finance transformation, download and listen now!

Contact Loreal Jiles: https://www.linkedin.com/in/loreal-jiles-804648a1/

Adam: (00:00)
Welcome back to Count Me In, IMA's podcast about all things affecting the accounting and finance world. I'm your host, Adam Larson, and today I'll be kicking off episode 106 for you. As our series continues to grow and evolve, we try to target new topics and areas of interest for our listeners. In this episode, Loreal Jiles, IMA's Director of Research for Digital Technology and Finance Transformation joins us to talk about the popular topic of agile. In our conversation with Mitch, she talks about how management accountants can take an agile approach to finance transformation. To learn more about agile, scrum and project management, keep listening as we head over to their conversation now.

Mitch: (00:50)
So it seems like one of the trending things people are talking about these days is agile. Can you tell us a little bit exactly about what is agile and where did it originate?

Loreal: (01:00)
Sure, sure. So, while I'd say agile approaches to delivery date as far back as the 1950s. In the 1950s Toyota, kind of undertook this transformational introduction of lean manufacturing, and it hadn't really been done in that manner before. And so I'd say way as far back as the 1950s, it had been in use in general, but I'd say agile didn't really pick up speed for software development until maybe the nineties or so the 1990s. And so prior to the nineties software development was, was delivered largely in alignment with something they call the Waterfall Model. And so we'll talk about that in a few minutes, but, what agile is specifically agile methodology as a software development life cycle, and it focuses on iterative incremental delivery, and that delivery happens by self-organizing and usually cross-functional teams. So it's a people centric, results oriented approach to software development. And again, it's become recently popular and has been, I'd say proven adaptable for business teams, delivering products and projects as well. So it started to kind of broadly from a manufacturing perspective, it grew in popularity from a software development perspective, and now what people are seeing is that the same attributes and values that, that agile have, are applicable widely in a host of project management settings. And that can be for any type of project or any type of product as it's typically characterized. And I'd say the only other thing I'd call out as we talk about what agile really is, is there's this concept of being agile and demonstrating agility. And then there's another specific agile methodology, which is used for software development or project management. So, so we could talk through through both of those as we keep going here, but I'm just really excited to be talking through what agile is and then start kind of breaking down some of those barriers.

Mitch: (03:12)
Yeah, absolutely. So let's talk a little bit about applicability to our listeners now. So accounting and finance professionals, what does an agile finance function look like and what role, or what role is really, does add agility play for finance transformation?

Loreal: (03:29)
Yes. So everyone's aware of finances going through probably the largest transformation in its history, and that's not limited to just the digital technology aspects that we've traditionally focused on, but it's also about how the finance function delivers value more efficiently supports strategic decisions of the businesses that they operate in. And so, as we think about agile finance functions, they're creating value by, I'd say employing scalable, efficient operations. They usually have transparent and accessible data and metrics. There's frequent inspection of, of the work product that's being produced and that's to ensure fit for purpose insights. The agile finance functions are also quick and, and responsible. They demonstrate quick and responsible adaptation to change, and so this concept of failing fast is really prevalent and agile finance functions, and I think lastly, I'd say they're empowered, and capable multidisciplinary teams. And so often we see teams operating in silos and that's not customary of an agile finance function. So there's much more collaborative environment where multiple people may weigh in on, on a certain decision, but it's structured such that there is increased transparency and, and everyone is working together for the same objectives. And so when you pair kind of those attributes with advancing technologies, position, finances, kind of position to streamline their day-to-day tasks, and then accelerate project delivery, and so when we think about agile functions, they're typically well-versed in, in one or more branches of agile methodology as well,and that can be anything from Kanban, all the way to the most increasingly popular scrum.

Mitch: (05:27)
Well, you just read my mind because I know I've done a little bit of research on agile and anytime you look at agile methodologies, often you come across scrum. So what exactly is scrum?

Loreal: (05:38)
Yeah, so scrum is a process framework, and that framework has been used to manage work on complex products easily since the early 1990s and probably a bit before that. So scrum is not a process. It's not a technique or, or a method. The way that it's characterized by its founders is scrum is a framework, and it's a framework within which you can employ various processes and techniques to, to get the outcome that's needed. So scrum is a framework within which people can address complex adaptive problems while productively and creatively delivering products of the highest possible value. and so when we think about what the scrum framework consists of, there are scrum teams and their associated roles. there are scrum events. And so those are different, meetings or sessions that you'd need to have or ceremonies, they call them, in some instances, scrum artifacts are the, there could be things like a backlog where you've got a list of all the things that needs to be delivered for a product, and then there are some rules that, that kind of govern each of those aspects of scrum. Each component within the framework serves a specific purpose and it's essential to scrums success and usage. And so the one other thing that I'll call out is when, when agile became popular back in the nineties, there a group I'd say maybe a decade later of 17 people wrote something called the agile manifesto and that agile manifesto kind of outlined the principles and the values of agile and two of those 17 members, Ken Schwaber and Jeff Sutherland partner together to deliver something called the scrum guide. And so that's widely viewed as kind of the Bible of scrum and most people, if anyone wants to learn more about it can access it at scrum.org, but in its purest form a framework for how we get things done that are really complex where we can break it down into bite sized chunks.

Mitch: (07:47)
Okay. That makes sense to me. And I know we talked about agile finance functions. So now let's take a step further and let's apply scrum to the finance function to, how exactly do the agile methodology and scrum framework relate to, as you said, complex adaptive problems, something in finance like finance transformation.

Loreal: (08:06)
Yep, absolutely. So, agile and scrum are used to expedite delivery within the finance function. if you're employing these, these techniques, then you're fostering a culture of failing fast, projects get delivered with fit for purpose solutions, the function is better positioned to accommodate time sensitive analysis requests as data analytics is, is certainly becoming more prevalent within the function, and within the profession broadly, we get lots of ad hoc requests. And so accommodating those in a responsible manner happens regularly through the use of agile and scrum. We, we coordinate better with IT groups who are progressing more holistic, digital transformation journeys within our organizations. And so your  IT  group in most instances already employing agile, and it's important as we embark upon this digital transformation, that component of what finance is doing more broadly, that we become well versed in what IT is doing as well. And so in a lot of instances, we have to wear a certain hats, as finance members to work with the it organizations and we would enable their delivery if we're more well versed with that also. And lastly, I'd say we manage our projects more efficiently and ultimately deliver greater value to the businesses we support when we're using agile and scrum.

Mitch: (09:33)
Do you have any use cases or specific examples, something that our listeners could hear and potentially apply as you know, an example of a finance team that's using agile and scrum?

Loreal: (09:45)
Absolutely. So I'll start with saying the roles that we play in a scrum team. So in a scrum team, there is no project manager and in a scrum team, there's only a product owner, a scrum master, and the development team. And the development team we traditionally think of as a group of IT folk. And that's absolutely the case in a lot of instances, but when you're adapting this, these concepts in this framework to business solutions or finance and accounting processes, then the development team could just be a group of financial analysts or a rep from your policy team. If you're needing to change a new process to accommodate a new regulation that's come out. So what I'd say the most popular applications of scrum is the role of the product owner. The role of the product owner, the product owner is accountable for overall product value delivery and prioritizing the backlog or the list of things that needs to get done to maximize that value. And so I, when I worked in an industry, I was working on robotic process automation and I served as the product owner. I was sitting within the finance organization and there was a team of, of finance as well as IT persons that were on the development team. But I served as the product owner overseeing, you know, this is exactly what we want to get out of this particular product. And in that scenario, the product was robotic process automation or RPA. So that's a really specific example, but I'd like to give a few others that may resonate with people in the audience, more who aren't as close to this. So the most popular application, again, using the product owner role, or just in project management and analytics in general. So if you've got complex initiatives with unknown solutions, and there's a high reliance for feedback on the end users and the end users could be stakeholders within your finance team, it might be some of your leaders, the controller. In finance and accounting. This can be found in project management when implementing new digital technologies or enhancing existing systems. So if you've got your ERP, if you're using SAP and you need some things to be changed to that. Then you're putting in a request with your IT team. In most instances, that request is being added to the it team is backlog. And so this is where all this kind of comes full circle. So if you need to enhance existing systems, you're adding items to the backlog. If you're modifying processes against and meet new regulatory requirements, then the outputs would be the product. So in that scenario, you would have, I'd say, you know, this new process that we need to define to make sure that we can meet the regulatory requirement or complete a new report, then that output would be the product and everything we need to do to be able to deliver that. If that means we need to, you know, do research on what the policies are, do research on what our existing compliance processes look like, do research on what needs to happen within the system itself, and then implement that. All of those things would be on the product backlog for us to modify our processes, to meet new regulatory requirements. and then of course there's the delivering kind of ad hoc financial reports or analysis. So the finance function can strengthen its analytics capability as we're already doing, and scrum in that instance would be used as kind of the perfect delivery mode to efficiently respond to unplanned requests in some instances as well. And then two other examples that I'll give, one is financial planning and budgeting or financial planning and analysis. Rather than developing a static annual plan and holding teams accountable for delivery against those plans, which is most customary. Some organizations have employed a scrum approach to fiscal planning, and that begins with the full year plan just as we normally put together, but then treats that plan as a true estimate. So management accountants, and a lot of instances when they're partnering with the operational leads would update the full year plan by maintaining a 12 month outlook on a rolling basis. And they also allow for updates quarterly. In some instances, performance then would be judged against quarterly plans. That account for external environmental factors, market conditions, changes in risk profiles. And this model would allow for regular inspection of the product and the product in this example would be the budget. So the budget is what you're trying to tackle. Then you're applying an agile approach or a scrum based approach to putting that together in an iterative manner and having it updated regularly. And the last example would be kind of finance operations. So this example, I really like it was employed by Scrum Inc., from by that organization. And this is nearly a decade ago. So well before we're talking finance and accounting transformation or modernization.Their leaders determined that the absence of finance tasks from their backlog was a company impediment. Which I think is really fascinating because they, if we don't have, a list of everything that needs to get done from a finance and accounting perspective and a way to attack it in an iterative and incremental manner, then we believe that this poses risk to the organization. So the team identified all of their accounting activities. they organize them by process type and that could have been all the account reconciliation activities on one side, all the reporting activities on another side, vendor payments, et cetera. And then they assigned all the tasks to the backlog, to the product backlog. And so their product owner would be one of the team leads that's within the finance group, their assignment of the cyclical and ad hoc tasks, even. So that's a unique one because you're using the routine processes that we're accustomed to working on, but when they applied them to the backlog, then they were able to eliminate the handoffs between departments because now everyone has visibility to what each team member is working on. They can weigh in on it and they no longer have to ask one team member, what's the status? Where are you? Because they can see it in real time on this backlog. And so that increased visibility to activities and eliminated silos between accounting and operational teams. And so those are some of the most prevalent examples that come to my mind when I think about this and what we can truly leverage agile and scrum for as we propel the transformation forward.

Mitch: (16:18)
Those are absolutely very relevant examples for our listeners. So thank you for putting all that out and kind of setting the stage for us. You know, the whole conversation has been great, very helpful, very informative. And thank you for sharing all of this. You know, I think some of our listeners may have a great interest in this moving forward and, you know, accountants and finance professionals who are hoping to get started with agile and scrum. Can you share exactly where they can go for more information or what they can do to actually start for their organization?

Loreal: (16:47)
Absolutely. So, the first thing I'd say is IMA is working up a suite of resources related to agile and scrum. So in early 2021, we'll have a couple of courses for agile and scrum that people can take, and these are pretty painless. So it'll take you an hour or less. One of those would be Agile and Scrum 101 and another would be focused on the application of agile and scrum specifically in finance and accounting teams. So the first one just demystifies it a bit and the second, takes it home and allows you, or I'd say empowers you even to, to make that happen or make it real within your team. We're also progressing lots of research in that area. So stay tuned for that. The piece beyond those resources that would be available, if you want to learn more, you can go to scrum.org. You can also go to Scrum Alliance. So if you search for Scrum Alliance, on the web as well, and there are resources on those sites that will support you to becoming certified as a scrum master. So I'm certified as a Professional Scrum Master. you can also get certifications in the areas of being a product owner, which for those of you who are not necessarily trying to dive all the way in and lead scrum teams, you don't necessarily have to go that far, but the role of the product owner is more popular, I'd say these days within the finance and accounting function. And so you can go to either of those websites to learn more about, the scrum process in general. The scrum guide is available for free@scrum.org. so hopefully that the IMA resources, as well as those that are available on these sites will prove beneficial to you.

Closing: (18:32)
This has been Count Me In IMA's podcast, providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like, what you heard, and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website www.imanet.org.