There are several reasons why a disciplined agile approach to finance is important:
- Ensure the economic viability of your organization. Your finance team will work to obtain external investment in your organization as needed to ensure that you have adequate funding to invest appropriately. They will also monitor incoming revenue to ensure you have adequate ongoing cash flow and will provide feedback and guidance to other parts of the organization based on what they’re seeing. Finance will also monitor spending to ensure that funds are being spent wisely.
- Fund initiatives. Initiatives – such as projects, service teams, ongoing product teams, operations efforts, and many more – require funding. This funding will include initial “seed” funding to start initiatives and ongoing injections of money as required to keep the initiatives going. Sometimes finance will need to reduce investment in an initiative when it appears the funds not being spent wisely.
- Fund capital investments. Finance will fund capital expenditure, such as investment in infrastructure, equipment, packaged software, buildings, vehicles, and so on.
- Fund ongoing operations. A significant portion of your budget is spent on ongoing business and information technology (IT) operations.
- Provide return for shareholders. For privately owned and publicly traded organizations, your finance team will likely be responsible to providing the owners a return on their investment in your organization. This may be in the form of dividends, share buybacks, increasing stock market valuation, or other mechanisms.
- Educate and coach staff in the fundamentals of finance. To increase the chance that everyone within your organization will make better financial decisions it makes sense to ensure that they understand fundamental concepts of finance.