The incremental funding method: data-driven software development

Mark Denne, Jane Cleland‐Huang

IEEE Software · 2004 · 105 citations · 7 references

Concepts

TL;DR

Software development projects must demonstrate clear business value to secure funding, and rising demands for shorter investment cycles, faster time‑to‑market, and greater agility have spurred the need for new, financially informed approaches such as the incremental funding method. The study aims to position software development as a value‑creation activity that integrates business analysis, requiring collaboration between software architects and financial stakeholders to apply rigorous financial analysis. IFM delivers functionality in sequenced customer‑valued feature chunks to maximize net present value. The IFM concepts were derived from years of experience securing competitive contracts for large‑systems integration and application development projects.

Abstract

Software development projects don't get funded unless they return clearly defined value to the business. Demands for shorter investment periods, faster time-to-market, and increased agility require new, radical software development approaches. These approaches must draw on the expertise of both software architects and financial stakeholders and open the traditional black box of software development to rigorous financial analysis. We can accomplish this only by positioning software development as a value-creation activity in which business analysis is integral. The incremental funding method is a financially informed approach to software development. IFM maximizes returns by delivering functionality in "chunks" of customer-valued features, carefully sequenced to optimize the project's net present value (NPV). We derived the IFM concepts from several years' experience in winning competitive contracts for large-systems integration and application development projects.

References

7