STRUCTURE

1. Traditional Funding approach

2. Problems with traditional funding
3. Case study ( Solution to one of traditional funding)
4. Alternative funding models
5. Principles to be kept in mind
1. ISO Funding model:
• In traditional project-based technology organizations, funding for the technology group is derived by executive
leadership based on a prioritization schedule of big-ticket items stacked up against historical overhead
expenditures.This Budgeting exercise is a painful process.
• ISO model suggests to change the existing traditional model into a product centric model.An indicator of
success in product-centric delivery is an increased focus on funding capacity and outcomes instead of blanket
funding requirements.
• Product-centric organizations hold leaders accountable by encouraging results that deliver value to both the
business and the customer, whereas project-based organizations use budgets and timelines to measure
success.

2. Technological Funding model :

• Technology Funding Model enables enterprise technology spending, empowers IT and other business leaders to
make funding decisions faster, and makes the drivers and benefits of technology investments transparent.
• As digital business transformation changes technology spending across the enterprise—not just within IT—
enterprise leaders need a new model for technology funding that truly reflects the nature of technology
investments in a digital business which is provided by technology funding model
 ISO Funding Model – Product centric Funding model
Incubate
 Establish pilot teams as
capacity- driven : Fund pilot
teams for a short period of time.
During that time period, team
leadership should report
outcomes to the finance
department to show value-
driven success
 Work within budget and
financial constraints
 Use a quarterly funding model
for piloting teams. This practice
requires the product teams to
present their delivered value
prior to receiving any funds
Scale Optimize
 Use Technology budget to scale  Continue to focus on alignment
up the number of capacity on business priorities and
driven teams/Product funding product funding
teams.  Expand funding model to non-
 Release funding quarterly based technology investments.Apply
on the value delivered to all aspects of the business.
 Epic-Based funding/”Shark-
Tank”- Create a committee
which assesses the teams and
allots funds based on the epic
cases they present
 ISO Funding Model
ISO Model changes the project centric traditional model into a Product centric model thereby measuring success in terms of value delivered

Incubate Scale Optimize

Funds
Use Technology Align Business
Fund Pilot budget to scale up Priorities To Product
Teams no of pilot teams Funding

Release funds
0.3 X Work within
quarterly based on
Central Funding X Budgets value delivered Expand funding
Office model to non tech
investments &
Quarterly
Shark Tank invest in all aspects
Funding of the business
Committee
Technological Funding Model
1. Development of enterprise view of technological spending:
• Should start with understanding scope of technological wide spending.
• Making Sure investments are promoting highest enterprise priorities.

2. Prioritizing and allocating the Work by product lines:

• Teams are aligned to business capabilities rather than specific projects.
• Product owners and managers work throughout the year to decide on the capabilities to develop.
• Because of quarterly assessment of funds, allocation is possible on a continuous basis by teams.

3. Moving new capabilities to business line Budgets:

• Single ownership to Business leaders providing better accountability.
• Business leaders control over all technology spending on new capabilities, while the CIO retains the budget for foundational investments and
operations.
• Provides the freedom to invest on new technologies and nontechnology and its criteria.

4. Separating Technology Foundation Budget:

• Budgets split into two categories—one for maintain and operate and another for digital foundations—CIOs can protect the digital foundations
funding from cost-cutting efforts.

5. Clarify Dependencies between Funding Categories:

• CIO’s can make business leaders understand of importance of maintain-and-operate budgets and spending on new capabilities.
Horizon Funding Model
Diving the funding into 3 different types of horizons
where each plays a crucial and individual role:

• Horizon 1: Involves only the core business of the

company for which the company is actually known
and major profits comes from, and the focus is on
improving performance so as to maximize value.

• Horizon 2: Involves funding the opportunities

within 2-3 years that can be foreseen and is likely
to generate substantial profits in future with
considerable investments.

• Horizon 3: Involves generation of ideas that can be

beneficial in the longer run and leads to profitable
growth and caters to span of 5 or more years.