Paid Subscribers Only: Attention CEOs! How You Fund and Manage Software Budgets May Be Damaging Your Investments

I’ve seen executives frustrated when software investments fall short. A key factor in success lies with them. Here’s how funding impacts development.

Photo by Eugene Triguba on Unsplash

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Posted by Daniel Walters . Dec 12.24

I’ve worked with many executives who have great intentions and aspirations for their companies. They’re frustrated that their energy and investment in software development are not meeting those aspirations. Some find a path to success, but many fail to produce software that meets the expectations to compete.

One common thread I’ve observed is that executives who are unwilling to adjust the mechanisms around software funding to fit the nature of software work are at a greater risk of falling short of their goals.

Specifically, I mean how funding is accessed within the organisation and ensuring the mechanisms for using the funding support decision-making. Doing this is in the organisation’s best interests in terms of the speed and quality of the software it delivers, such as the ease of using the funds and being accountable for their use.

Organisations’ traditional funding and budgeting approaches often depend on infrequent changes, centralised control, and governance, which can align with reporting lines rather than the actual workflow. The nature of software development makes it vulnerable to the consequences of misalignment.

This is because funding and budgeting are often closely tied to matters of accountability, authority, process, and policy, and any misalignment left unaddressed will have unwanted effects. Issues that fundamentally affect how people work also impact how decisions are made, and software development, being a high concentration of many compounding choices, is where these issues often manifest.

When executives ignore this issue, in the best-case scenario, it results in a lot of avoidable friction, including interpersonal conflict and fighting upstream to do the right thing. This can lead to burnout, attrition, or reduced engagement in software teams, which is costly for the business and negatively impacts company performance. In the worst cases, it results in catastrophic quality issues that destroy customer trust. There’s a better way.

To avoid these problems, technology leadership must either change the available funding mechanisms or operate within those constraints while being mindful of how funding influences the behaviour of software teams and their supporting leadership. While funding practices are important, they alone cannot protect organisations from all issues related to software development. There are various factors involved, but this remains a significant one.

In this blog, I explore why these mechanisms are so important and discuss some practical strategies that can benefit the teams responsible for developing software while also achieving the goals of managing critical company funds.

Factors influencing software funding mechanisms success

To understand why it is worthwhile to move away from established norms for funding and managing software development, we must examine what about software development lends itself to particular approaches.

Several factors shape how we must think about funding mechanisms:

• The continuous nature of software

• Software development is inherently uncertain

• It’s a team sport

• Cost centre accounting shackles value creation

These factors suggest that the mechanisms governing the work should be adaptive, funded for the length of the service and organised around the purpose and the people supporting that purpose. Let’s look at each.