Tuesday, September 06, 2011

Breaking Departmental Silos: Scrum in Finance

By Christine Hegarty, Scrum Inc.

“So-and-so does that, not me.”

Upon hiring our accountant this June, I gleefully handed off the company QuickBooks file, stacks of financial statements and an overview of the bookkeeping functions and relished in the relief of no longer having responsibility for anything finance-related. The prospect of ignorance was bliss.

Defining the Problem

As it happens, ignorance increases the likelihood of ambiguity, delays, competing priorities, and missed opportunities. Even Scrum Inc., a six-person company run by Scrum with a single backlog, faces the limitations of departmental functions.

Through Scrum we know that a bad system is reflected in the code. We also know that communication saturation and a well-formed backlog with stories that meet the INVEST criteria are critical to attaining gains in performance. Viewing our problem with this lens, I realized that a pass-off system hinders an accountant’s ability to be a great accountant and that the current system would be suboptimal for an organization using Scrum and working towards hyperproductivity. I wanted to get the company’s finance activity started on Scrum and began with a story map.

A story map isn’t defined by Scrum but is useful for showing how functions relate and what tasks are needed to get there. In our company, the major functions of accounting are invoicing, paying vendors, reconciling accounts, reporting, tax preparation, collections, expenses reports, and tracking foreign revenue. From this horizontal stream, I started filling in the tasks needed under each function area. The accountant then worked with me to fill in the missing tasks.

At the Sprint Review and Retrospective, I presented the story map to the team and told them that not having financial tasks in the backlog was a company impediment. The team decided our kaizen for the following sprint would be entering the financial tasks into the backlog and put this improvement at the top of the backlog.

Integrating Department Functions to Smooth Flow

Tackling this impediment first required evaluating the value of financial tasks being a part of the team’s backlog to create a sense of why we would migrate to this system. The goal: eliminate a hand-off approach. The value:


· Breaks down the departmental silo (between operations and finance)

· More visibility for each side

· Team and Product Owner can anticipate needs/resources from accounting

· Accounting anticipates needs from team and Product Owner

· Broadens awareness of the impact of team’s tasks have on financial tasks

· Turns managing accounting activity into supporting accounting activity

· Diverse teams solve complex problems better than a group of like-minded experts, and each employee can benefit from the experience of the others when facing a challenge

· Smooth flow of activity, anticipated rather than reactionary

Standardizing Processes

Following creation of the story map and definition of the value, I theorized that to best meet the requirements of the story, we should start with a schedule of financial activity. Much of the financial activity repeats and follows a certain cycle. Bank statements arrive every month. Taxes are submitted quarterly and yearly. This aspect of finance particularly lends itself to Scrum.

For financial activity required in response to an event or infrequent occurrence, the accountant and I created a Google calendar that showed scheduled engagements. Within each event, the accountant created a short cut and paste question form to be completed by a team member that would provide actionable information. For example, when the company delivers a workshop to a client, the team creates an event in the Finance Calendar titled “Workshop [Client]” and pastes the standard question form into the event:

1. “Bill to” Information

2. AP Contact and Email

3. Project Type

4. Description and Location of Engagement

5. Total

Although simple, the calendar informs the accountant, enables billing to be immediately actionable, and removes the step of needing to email a team member for information.

All financial tasks were added to a spreadsheet and defined, including a column describing frequency by week, month, quarter, year, or “as needed”. We organized the cyclical tasks into a schedule by week. “As needed” tasks were placed in an adjoining column for quick reference.

Week 1

As Needed

tasks

tasks

Week 2

tasks

Tax

quarterly tasks

Week 3

annual tasks

tasks

Week 4

tasks

With this schedule and the calendar, our Product Owner can plan weekly sprints to include cyclical and as needed financial tasks. These tasks are sized by the accountant based on team estimates and count toward velocity.

Lessons Learned

The team will experiment with this model and continue to inspect and adapt. We have realized the gains of eliminating hand-offs and enabling communication saturation. Finance systems are now clearer and easier to improve and innovate. Standardizing processes creates an easier, faster flow of information in and out of accounting. Working from a single backlog, the team can help finance move faster with higher quality.