What Does Being "Agile" Mean to Your CFO? Part 1

by Bob Ellis

Fri Mar 31, 2017 at 02:18 PM
Share This Post « Go Back

Agile. Delivery of business value incrementally with a minimal amount of development work-in-progress (inventory) with such a short cycle time between plan and delivery that changes in market, technology, and legislation are immediately responded to with near zero “excess,” near zero “obsolescence,” and less “working capital” (cash) needed to keep the engineering machine running.

Compare today’s agile transformations with the manufacturing and supply chain transformations of the 90s. Companies have documented substantially better quality, predictability, productivity, and responsiveness from both.

With the substantial reduction in cycle time between planning and delivery, the amount of working capital needed to fund work-in-progress is reduced substantially, and savings can reach the tens of $ millions.  

Below I present several scenarios through which a company will progress as they implement an agile transformation, initially with annual releases and waterfall process through several scenarios, to Agile with two week releases. I invite you to inspect the value that may be recognized and share your thoughts. Click on the image below to enlarge the table:

 

Agile Business Value: Change in Working Capital

 

Do you have questions about this example and/or your own agile transformation? I’d welcome a discussion: agileinfo@eliassen.com