What Is Agile Finance? A Complete Guide

To survive — and thrive — in today’s fast and furious operating environment, businesses must be able to adapt quickly, pivot in real time, and swiftly seize opportunities.

Agile finance can help make all that happen, offering a transformative approach that enables a faster and more effective response to change and challenges.

As McKinsey and Company stated in a 2023 article, “Agile is a way of working that seeks to harness the inevitability of change rather than resist it.”

By harnessing the “inevitability of change,” you can create a sustainable competitive edge for your company. That edge comes through empowering your finance team to leverage their skills and expertise to do the best work possible.

Agile Finance Explained

Developed in 2001, the agile approach to business has been around for a quarter century, launched by the “Agile Manifesto” developed in 2001. This approach offers a way to do the following:

1. Optimize software development by prioritizing individuals over processes
2. Emphasize collaboration over closed-door meetings
3. Enable swift responses to change over following set plans

Since its early beginnings, the proven agile approach has been applied with success to a range of business practices and disciplines — including finance. And emerging artificial intelligence (AI) technology has helped to amplify the benefits of being agile.

Put simply, agile finance refers to the application of agile principles and practices within the finance function of an organization. The approach can expedite finance teams shift from static process-driven practices to a more intuitive, flexible framework to respond to fast-changing market conditions.

Agile finance aims to make strategic planning, forecasting, and decision-making not only more collaborative and adaptive, but also driven by real-time data. Embracing agility shifts the focus to continuous improvement, cross-functional collaboration, and rapid iteration that proved successful in the software development space.

What You Gain with Agile Finance

Creating an agile finance practice can lead to greater efficiency and effectiveness in five areas essential to business success:

1. Increased Adaptability
   Agile finance teams are better equipped to swiftly pivot in response change — both within the organization and from outside factors, events, and trends. For instance, rolling forecasts and sophisticated scenario planning play a central role in providing key insights and guidance that can’t be generated through traditional static annual budgets.
2. Greater Collaboration Companywide
   Agile finance is a silo killer, enabling finance pros to work more closely with other departments — such as operations, marketing, and information technology (IT). In turn, closer collaboration ensures better alignment with overarching business goals.
3. Data-Driven Insights
   With AI-propelled advanced analytics and real-time data, agile finance fuels quicker, more informed decision-making. Finance teams can spot potential risks, trends, and opportunities faster and more accurately, providing a strategic edge compared to competitors with more static approaches.
4. Rolling Forecasting
   Agile finance creates a more continuous planning model that leans heavily on rolling forecasts and scenario planning. Those tools reveal up-to-date data and information that can help guide shifts in strategy and operations.
5. Empowered Teams
   Agile finance fosters a culture of ownership and accountability. For instance, team members are empowered to take initiative, experiment, and innovate — improving both efficiency and outcomes.

What Benefits Agile Finance Brings

To move beyond the “agile” buzzword requires a sound understanding of agile finance’s unique value to gain buy-in from the finance team and organization-wide leaders. Here’s a quick cheat sheet with some key selling points of what agile finance can deliver:

1. Faster response to constant changes (i.e., from market changes, economic uncertainty and fluctuations), emerging trends, and unanticipated events.
2. Improved alignment that positions finance as a more strategic partner who helps achieve and maximize business goals to drive greater efficiencies and overall growth.
3. Greater efficiency by leveraging AI automation and capabilities to free up time for finance pros to focus on high-value strategic activities.
4. More strategic, data-driven guidance through rolling forecasts and advanced scenario planning to track change in real time and gain insights into the best path forward.

How to Make the Agile Move

So, how do you move beyond the buzzword to make agile finance core to how your finance team — and organization — operates?

The key is to take a multifaceted approach to build excitement and generate buy-in from both your finance team and leaders throughout the organization.

1. Advocate for investment in the technology and tools to make the shift to agile happen. Advanced AI technology offers the foundation to effectively integrate agile finance into your operations. Highlighting case studies where other organizations have successfully adopted agile finance can build enthusiasm and create urgency around the need to remain competitive.
2. Invest in training. Finance will gain expertise in making the most of the agile approach and start generating quick wins while laying the groundwork for continuous improvement. Keep the lines of communication open, ensuring everyone on your team feels like they are part of the solution.
3. Seize opportunities to demonstrate the value of agile finance to leaders and departments across your organization. Modeling greater collaboration and showing how agile finance can break down long standing silos helps generate stronger buy-in. Be proactive in sharing positive results generated through agile finance practices.

Moving forward, the pace of business is only going to quicken, bringing unprecedented change and challenges. Finance thus needs to adopt a leadership mindset to navigate in ways that anticipate and mitigate risks but allow for pouncing on new opportunities.

Adopting agile finance as standard operating practice offers a promising path to thriving in the face of this change, ensuring a productive and profitable future.

Curious about how a platform can help your company transition to agile finance? Check out our AI-Powered Scenario Planning eBook.