In my last post, I introduced the concept of Kanban and explored how its four core principles can dramatically improve a team’s effectiveness. This time I would like to share how this process can be applied to both the software development process and to your financial management processes, including contract management, order management, and collections.
Applying Kanban to Your Business
A software development process can be thought of as a pipeline with feature requests entering one end and software emerging from the other end.
Inside the pipeline, there will be some kind of process, ranging from informal and ad hoc to highly formal and phased. Standalone smartboard software can help you visualize this and resolve choke points/bottlenecks. It can also help allocate resources, ensuring you’re managing the distribution of work efficiently.
But this process has one major drawback: If the interfaces are not robust, you will need to do double entry of “credits and debits” or “assets and liabilities”, which will likely cause your boards to be out of date until the next stand-up meeting; obviously not a good position to be in.
Taking effort invested in the development process management tool away from service desk and/or time recording/contract management is going to necessitate additional work, whatever you may hope.
The Effect of Bottlenecks
A bottleneck in a pipeline restricts flow. The throughput of the pipeline is limited to the throughput of the bottleneck. If the testers are only able to test five features per week, whereas the developers and analysts have the capacity to produce 10 features per week, the throughput of the pipeline as a whole will only be five features per week because the testers are acting as a bottleneck. If the analysts and developers aren’t aware that the testers are the bottleneck, a backlog of work will begin to pile up in front of the testers. The effect is that lead times go up and inevitably quality suffers as the testers struggle to keep up and may start to cut corners.
However, if you know where the bottlenecks are, you can redeploy resources to help relieve them. For example, the analysts could help with testing and the developers could work on test automation. On your Kanban board, the individual cards represent work items as they flow through the development process, which is represented by the columns. The numbers at the top of each column represent the number of cards in each stage of the process. Thinking about the limits of the pipeline (representing typical capacity and/or capability levels of the team) allows you to understand and measure the scale of the bottlenecks.
Applying Kanban to Your Financial Management
The role of the finance department in a business is to process orders, manage contracts, issue purchase orders, raise invoices, recognize costs and revenue, and most importantly, collect and pay out cash.
Some of these activities are ongoing throughout the month, while others are critical to completing your month-end. Ensuring a month-end is completed, with everything released and processed, is a complex challenge for even the smallest of businesses.
In accounting and ERP platforms, these process activities span a wide range of different lists, under different menu topics. Making sure you are on top of things is difficult and takes a lot of process and system knowledge, plus inevitably a series of checklists.
With large businesses, you can have finance staff who are specialists, limiting their coverage and their need to know the full system. But small to medium enterprises mostly employ generalists who must know everything. With very small organizations, this is most likely the owner working on the weekend—someone probably not even trained in accounting.
This situation can pose a problem, since it’s finance users who need the most training and knowledge to get a sound grasp of the processes and account flows. In many cases, they are not from that discipline and/or are part-time in the role. While this may works for common processes, for exceptional activities (such as raising a partial credit note to flatten a part-paid invoice) they will naturally struggle to remember where and how that is done—or even remember that it must be completed.
Here’s a list of how a Kanban approach can help with a number of these areas:
- Unsure if you have processed all your orders? Check out the order board and it will show you all the items in progress.
- Need to make sure you have finished invoicing? Check out the invoice board and it will show you every item of business on the way to invoicing, so you will never leave things half done.
A Kanban approach has similar benefits for service delivery teams:
- Want to see which teams are at maximum capacity with tickets approaching service level agreement breaches? Simple: Set your columns by team and check out your new team board.
- Do you work with tickets and/or on projects? Build yourself a personal work board that sorts your work into status columns.
- Need to view the testing backlog? Check out the testing column on the feature board.
- Need a team planning meeting? Throw the project board on a big screen and huddle around it.
- Placing all this activity on Kanban boards may not be the whole solution, but it is certainly a great start. With the increased visibility Kanban delivers, your processes will be better and your accounts more accurate. Toyota attributes Kanban thinking to at least one reason it’s the world’s largest automaker.
Ultimately, these are only a few of the use cases where Kanban can help. A full integration of Kanban across an entire enterprise helps visualize the macro process cycle(s) of a business as a whole, driving efficiency and ensuring nothing get missed or forgotten.
STEVE DUCKWORTH is CEO and co-founder of HarmonyPSA.