Project to Product Funding

Project to Product Thinking Part 2

One of the main promises agility is supposed to deliver on is decreased costs. Most organizations view IT as a cost center and believe that if IT becomes more efficient through agile practices, then it will cost less. The problem with this mindset is that it often results in cutting team members for cost savings, leading to short term profit while causing a long-term decline in revenue growth.

Agility shouldn’t be limited to just efficiency and cost effectiveness, but also a guide to exponential revenue growth. The idea of “guiding” represents the ability to navigate and adapt to an ever-changing market.

When we shift to product thinking vs. project thinking, IT is viewed as an investment rather than an expense. It’s almost impossible to know how much features cost, but it’s easy to know how much people cost. When you focus on budgeting for people rather than features, you give your team the flexibility to adjust to new demands and ideas without missing a beat.

Why Should You Transition from Project-based Funding?

With project-based funding, scope, time, and budget are estimated up front. Once estimates are completed, a request for a large sum of money to support the initiative is made. Funds are delivered with the expectation that they will last the entirety of the product, until you have reached “done”. But by the time you reach “done” what happens to delivery if:

• The market shifts
• Customers’ needs shift
• We guessed wrong
• Users don’t want it anymore
• Stakeholders say it wasn’t what they asked for
• We went over budget
• We didn’t deliver on time resulting in wasted funds

Shifting to Product-Based Funding

Considering the risks that come with project-based funding, it makes the best business sense to adopt a Product-Based funding model. Product-based funding requires you to allocate an investment to an entire product line and then those funds are invested in staffing, as opposed to unpredictable features. Product teams can then progress against the product roadmap in priority order while blending product discovery with delivery to fuel continuous learning.

The Result:

• Build less, validate more
• Effectively adjust to market and customer needs
• Make measured investments
• Business has control and can steer

Investments are allocated in smaller increments as teams seek to deliver in shorter, value-generating increments to test market viability. Companies can learn and adjust their course with a fraction of the money spent when applying project-based funding, leading to enhanced ROI for the organization, better products, and increased customer satisfaction. Agile gives you the ability to steer, but when you add in the product funding model, you now know which way to steer. When blended effectively, this adds up to sustained, profitable growth.

Cprime’s Product Agility solutions help product teams get from planning to launch faster. Learn how you can gain more responsiveness to market and obtain higher rates of return from your product investments through our teaching and coaching.