budgets.md

Budgets

Capability Level	Capability Name	Description	Observed Behaviour	Project Scope
0	Budget: Silos	Budgets not designed to support evolving services.	Budgets are designed assuming each expense represents a series of individual costs that each deliver a desirable impact to the balance sheet. This creates friction to starting initiatives that deliver increasing value over time such as investment in continuous delivery pipelines. Infrastructure and software costs are hidden inside project budgets.	Change finance processes built for allocating costs to finite projects so they support the ongoing work of building and managing services. Budgets should represent a snapshot of a service’s lifecycle and should be managed with a holistic view of the future of a service not just quarter to quarter. Ensure finance can support credit card billing to allow the use of services that don’t support PO’s. Create mechanisms for allocating shared costs between services but structure the budget so that each service is responsible for it’s own costs. Review costs for each service / product monthly.
1	Budget: Empowered silos	Budget silos make it difficult to choose between engineering investment, hiring and paying for 3rd party services.	Software development, testing and operations functions receive budget allowing them to make progress. Most budget allocation is still held in project budgets. No connection between processes for allocating people to projects and investment in software, infrastructure or development of non-revenue generating software.	Define the costs of a day’s work for each engineering function in the technology department. Use these costs to ensure the actual costs of developing new capabilities are well understood and can be weighed against the opportunity. Allocate budgets to each product / service. Keep enterprise projects separate from service budgets so no one service has to bear the burden of major projects. Create a process to allow flexible management of budget line items. It should be possible to reallocate people costs to engineering work if an engineering solution provides more advantages than hiring additional staff.
2	Budget: Service	Budgets allocated to services. Service owners take responsibility for their budgets.	Services receive budgets in the same way as other business functions. Enterprise projects are the only activities budgeted for as one-time investments. Shared infrastructure and tools can be managed as services in their own right. Savings due to automation and tooling can now be estimated. The time between idea conception and realisation is still too great.	Ensure each service has well defined revenue, cost, acquisition and marketing targets. Refine the monthly budget review process to include progress against these goals. Empower product managers and service owners to use their service’s budgets to achieve the their business targets.
3	Budget: Real-time	Budgets managed in real-time.	Budgets are managed monthly alongside revenue and acquisition targets. Services now have the capability and autonomy they need to choose what they need to invest in to be successful against clearly defined targets.	Create a forum to allow service owners to find opportunities to share costs, reuse solutions and liberate value from each other’s investments. Senior engineers, product managers, service owners, marketing and other staff should debate the relative merits of projects, infrastructure costs, tools and services. Decisions should be taken about which service teams need to grow which should be investing in new capabilities and which should be consolidating. Create a process to allow services to loan or second people to other service teams to ensure efficient use of time, skills and experience.
4	Budget: Continuous Delivery	Budgets managed fully and efficiently.	Budgets now managed holistically. All services and teams are involved in the process. Budgets are traded as teams determine who is best to deliver particular capabilities and experience of tools and infrastructure is shared. People move between teams as their capability or experience is needed in those teams. Knowledge sharing is a fringe benefit of this efficient use of people.	-