Fund Projects Incrementally

One of the big problems in organizations (IT or product-shipping) is how to fund projects. I don’t believe in ROI (Return on Investment). I learned how to lie with ROI back in 1988–I can make the numbers be anything you want. If you don’t have ROI, how do you know what projects to fund?

One set of projects is the set that if you don’t do, you can’t compete. Have a hardware-software solution? Better be thinking darn hard about a software-only solution that runs on several platforms. Or, a Big Gorilla  vendor such as Microsoft or Oracle changes what they support. You have to upgrade to a new platform.

But all the other projects, especially the risky projects, how do you fund those? Incrementally.

I don’t give my kids their allowance yearly. They get their allowance once a week. They get a clothing allowance in two parts, so that they can’t spend all their money on fall clothes and have nothing for the summer. That’s the same idea as funding software projects incrementally.

Of course, that means you have to build software projects incrementally, in some sort of a timebox. (Gotcha!) But here’s why it make sense to do that:

  • If you show value to someone, preferably your customer, you are much more likely to get more funding.
  • If you’re not showing value early and often, you get feedback early enough to change before you start a death march for something your customers don’t want.
  • You can start highly risky projects, because you’re not committing a ton of money and time to that much risk. You’re just committing 2, 3, or 4 weeks.

If you’re having trouble getting your projects funded, stop asking for the whole huge project. Make the project show value first, fund that value first, and see how much it actually cost you to provide that value. Now you have a little information and can decide whether or not to continue. You never have to throw good money after bad.

5 Replies to “Fund Projects Incrementally”

  1. I seem to have the reverse problem – no project is funded until it’s very big. In a recent example, I asked for about $500 to try something, and am spending 30-40 hours of time to prove it is worth it. IE, they just “spent” $4000 dollars of time to justify a $500 bill. Likewise, I find that management doesn’t want to think about something that is < $20k or so and so the automatic answer is no. But if it is $100k or more, I can invest months of time into proving it is a good idea, and it will consequentially be very likely to happen.

    So my question is, how do you convince management that a small project, with a small benefit is worth the small risk?

  2. While incremental funding might work for software projects on standard hardware, it kinda falls apart the moment you need custom hardware, because custom hardware ain’t cheap or timeboxable.

  3. Awesome – great post! We can get some really huge disconnects between how the development team operates (when using agile) and how that maps back to the organization. This sounds like a fantastic way to help align goals and get people thinking about things in the same type of way.

  4. Johanna,
    Jack Welsch learned how to deal with people who lied on the ROI. They now longer worked at GE the day the ROI did not come true.
    Don’t take the low road. Force those wanting to spend the firms money to provide financially sound arguments as to why. They hold them to it. And remove them if they don’t produce tangible results.
    Jack (in a direct experience) asked for the names of the people to be let go when the document management system we were installing was operable at Aircraft Engines.
    It can be done, but you have to start acting like a business person rather than an IT person.

  5. Incremental funding works well in organizations where the leadership team knows how to think that way. It works less well in organizations where that management style is less genetic. In other words, incremental funding is akin to iterative devlopment.

    If your team knows how to make it work, it works. If you don’t, it doesn’t. I’d say the other comments here back this up quite well…

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