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When Management Say There’s No Budget Left for Digital Initiatives

leave a reply | June 27 2017

When the CFO Says There’s No Magic Money Tree for App Development Projects - How to Respond?

 

Companies are under increasing pressure to embark on digital transformation projects; optimising operational efficiency is not just important for profitability but survival, keeping up with competitors as well as mushrooming start-ups with virtual infrastructures.

 

But digital initiatives face internal competition of their own: Your company has plans to update and migrate legacy applications, create and improve digital services for customers, connecting different departments’ bespoke systems, continue to maintain software releases at a higher cost than was ever expected, etc.

 

Flat budgets give senior management understandable reason to refuse starting further software development projects within the current fiscal year. While no software release is ever really finished, open-ended projects present a serious risk of mission creep; needing even more budget to deliver an MVP. The answer, then, is to ascertain the budget and timeframe the project should require and ensure software development progresses at the rate needed to meet these targets. If these two endeavours sound easier said than done, it no surprise: Traditionally it hasn’t been possible to undertake these steps with any reliably accurate idea of how long app development projects will or should take.

 

Companies can estimate project size in terms of functions points; summing the time taken to complete each task that the project comprises, based on software developers past experience. While the team may agree on a functional size for each task, consensus doesn’t determine truth! Developers may estimate tasks will take longer than needed to reduce pressure on their work. A project may appear to be on schedule according to estimation, but during the build it remains unknown whether far more time is required than estimated. The problem of a complete lack of a reliable basis for estimation has led to the defeatist ‘#NoEstimates’ movement; fine for the hobbyist but not the CFO who needs to know what a project will cost. Both time and cost of projects must be based on an objective unit of ‘work’ that projects require. This essential need was the impetus for BlueOptima. The technology calculates a measure of intellectual effort that is consistent across projects, teams and languages. This insight empowers software development managers to understand the amount of Coding Effort being invested into current projects - and how much past projects have required.

 

The below chart from BlueOptima’s analytics platform shows three similar projects - and an improvement in they way they have been delivered:
 

 

Project 1 shows a far more work in the testing phase (red section) than build. This is the scenario mentioned earlier: When the build was completed it was estimated that 95% of the work was done, as per the benchmark ratio that this company expects to achieve. However, it appears this was not the case and the extended time required for test phase meant a delayed release as well as higher spend than estimated; even at the point in time that build was completed. (The left bar shows total Coding Effort (CE), but the left bar shows duration, which is proportional to cost).

 

This showed the project manager and team the importance of taking care during the build phase to minimise development work required during the test phase - it appears, with some success in Project 2. The manager and team worked on improving and formalising the processes behind this proven improvement, and for Project 3 exceeded the 95% Build:Test time target, with no developer effort required for the test phase.

 

So - what to tell the CFO? That the too-long age of indeterminable software spending is over: BlueOptima enlightens companies as to how long projects should take and should cost and empowers managers to guide efficient progress to hit these goals. Confident control over costs allows better estimation of the ROI that new releases will deliver - and how soon the company will be able to invest the returns in further digital initiatives.

 

For a thorough guide to optimising management of software development projects, please click here.

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