STOP funding projects, START funding products

Here we go again: the project budget is gone. Someone has to go hat-in-hand to request more funding.

Embarrassing, demoralising, frustrating and stressful.

Projects that run out of funding fail because they have not delivered the highest value business objectives. Or the benefits of the highest value changed. Maybe they were more complex. Maybe they didn’t matter after all.

Traditional projects are funded based on a pre-defined solution, approach and scope basis. Many months ago, a very expensive team spent months identifying the business benefits.

These projects are funded on a case-by-case basis. There is no flexibility to adapt to meet new business problems and needs.

Funding only covers the development phase of a project. No one considers operations or support. A new team is stood up for the development phase. After that team has finished development, they disband and take all their knowledge. They go back to their business unit or onto the next client. The operations team then figures out how to support the delivered solution. They have no idea how it was built.

With these projects success means delivering an agreed-upon scope on time and within budget. Improvements to the solution require another project. If that gets funding months or years later, the cycle repeats itself.

A McKinsey & Company report shows that "On average, large IT projects run 45 percent over budget and 7 percent over time while delivering 56 percent less value than predicted."

This is not sustainable. There is a better way of doing things: adopting a product approach.

With a product approach, funding is allocated for a cross-functional team for a period of time. Timeboxed with regular reviews and assessments. These assessments look at what has been delivered by that funded team.

Based on what the team has delivered the review panel can decide if they should continue for another period.

The team may have delivered enough to solve the business problem or has provided the benefit. There may be a new higher-priority problem or benefit that the team needs to deliver.

The team works on one problem or benefit after another. One at a time. Making its way through a roadmap aligned with the business strategy. The roadmap is constantly reassessed for value and business benefit. This allows flexibility for reprioritising the roadmap items. This allows for new business benefits, new legislation or pivoting the approach.

The funding covers build, operation and continual enhancement. The permanent cross-functional team are capable of resolving issues in production and developing new features. The team retains development and operations knowledge within that team.

A product approach team is empowered, outcome-oriented and business-capability aligned. The team ideate, build and run a solution. The team take ownership of the code and outcome. The team can solve problems and improve business outcomes rather than deliver scope on schedule.

Tangible business outcomes define success. The teams are as long-lived as the product roadmap. The teams don't run out of work because they continually enhance the product.

Oh, did I mention that code is continually delivered into a live production environment? The business or customers can use the features straight away.

Let's face it: the current funding model for IT projects is outdated. It is not fit for purpose. We live in a volatile and disruptive world.

Funding and IT initiatives must be flexible, business outcome-focused and deliver value.

The product model allows organisations to invest periodically or stop early. Getting a piece of work off the ground could be much easier. There is an off-ramp in case results and business objectives no longer align.

It's high time we reassess funding models and ditch the obsolete means by which we green-light work. If we don't change, we will continue to waste money and deliver nothing.