You’re the IT lead responsible for delivering software services, and planning your software development budget. You’ve been talking to higher ups and you know they want 23 new services completed in 2018. You’ve been working your tail off and you’ve added a dozen new apps and integrations in the last year, but given the size of what you have to support already, you know you’ve only got enough team member capacity and discretionary budget to deliver four or five.
What’s even more challenging is that you know that your department is going to be competing for limited dollars, but regardless of the dollars you “win” in the process, your leaders still expect you to deliver more with less.
Your best case outcome is to make a software development budget request big enough to give the business everything they want. Looking at their wish list, you’ll need at least 6 new FTEs added to the team, but you know hiring has been flat recently, and given the revenue projections for next year, that idea is a pipe dream.
So, how do you make your budget planning process successful? Let’s get your request approved the first time.
What an ‘Approvable’ Software Development Budget Needs
- Make it easy for your boss (and his boss ) to say yes. Too often our budget requests are just long lists of line items with dollars attached. How can you make it easier for your boss? If you can make it simple for them to know what you want, and how they will win, it’s easier for them to approve your request. Can you keep it simple? Executives look for different things in software than developers do, like adding revenue, lowering costs or improving efficiency. Be clear about which of those gains go with each funding request.
- Demonstrate that your request is actually an investment. Ultimately, your leaders want to see business results from the money they are spending. One NASCAR leader recently said “We spend a TON of money on technology, software and IT today, but I don’t always see it in faster lap times at the track.” Can you draw a clear link between the items in your software development budget request and the business results that your boss is being held accountable to deliver? Can you put your budget request in priority order, based on what matters to the business? When you link the budget request to the business results they are looking for, you’re more likely to get your request approved.
- Be the “Early Bird” - Get budget requests in early. It’s a reality that often the early bird DOES get the worm. When your leaders have the list of initiatives in priority, along with the requested amount, you’re more likely to be able to get more of those discretionary dollars.
If Your Software Development Budget Request Is Denied
Let’s say you follow those tips and your software development budget is still not approved. Now you’re expected to do the impossible (again): deliver the results expected by company leadership without the budget you requested. This is your moment to shine.
Your biggest cost factor in software development is resources, and specifically highly paid local or domestic talent. To budget for talented team members, your HR team may tell you to expect to budget $90/hour for the “fully burdened rate” for additional FTEs.
The salary cost of those resources is dictated by supply and demand: there’s a shortage of experienced software engineers which drives up salaries and rates.
What can you do to help increase your capacity without breaking the bank? Gaining support for bigger teams can be a challenge.
If your additional headcount request is turned down, your next option is to look for staff augmentation resources. These are more expensive ($100-150/hour) than employees, but at least you don’t have to commit to having them on the team forever, and you don’t have to pay benefits, either. But perhaps you’re hearing “revenues are flat” or “other priorities are ahead of our department, so we just don’t have the money”.
What about outsourcing your software development? You may have tried outsourcing before, with mixed results. When done right, outsourcing to the right offshore or nearshore software developer can be a game changer.
The fact is that great developers are everywhere (not just in your backyard). With the right partnership, you tap highly skilled, mature software development companies who would be happy to expand your team’s capacity to deliver all those high quality software services, give you access to new technology platforms, tools and techniques, and they can do all of that for far less money than you’d pay for local FTEs. Depending on location, you can get access to highly skilled development team members for $30-$50/hour.
Think of how much more you can deliver if you reduce development costs without compromising quality? You’ll be a hero when you demonstrate how much more you can do “with less” when you go to your boss with a plan to deliver measurable business results without increasing your total spending.