Asking for money is often uncomfortable. Funding discussions requires commitment and intent to buy—and the capabilities session is just the first real interaction with the prospect we’re having! Knowing this, most people avoid the topic and focus on other venues first as a tactic to avoid scaring off the prospect.
Funding either already exists or the deal is as cold as winters in Lithuania.
Identifying the state of funding, however, is incredibly important for managing directors and sales team members because it allows them to assign a probability to the opportunity as well as estimate the close date. Below you’ll find a list of questions that are safe to ask and good ways to prime prospects to get the responses we want.
Have you considered the ROI model for the investment, and what results would you need to see to justify your planned spend?
- Is the ROI reasonable? How mature is the idea?
- Is this already budgeted?
- If no ROI, has the client considered a prototype to validate and secure funding?
What is the funding strategy for this initiative? Particularly, do you use product-specific investment themes (as recommended in Agile), or have you requested funding using some type of business requirements document?
The challenge with the business case approach is that the process predetermines the use of waterfall and hard-locked requirements ahead of time. Historically, we have found these estimates to be inaccurate, and they often lead to bloated budgets. Clarify the following as a means to avoid this pitfall:
- Which budget includes the initiative?
- Who signs the contract? Who is the actual buyer?
- What is the budgeting cycle, and how long does it take?
- Can we help them get the budget they need?
- Can you establish yourself as an authority in Agile and help force that conversation?
What is the planned spend on this initiative within the current and next budget cycle? Is the client thinking beyond a single year?
It’s best to be part of the budgeting cycle so that we can influence the outcome for the benefit and longevity of the product; if not, explain that in custom software development, budget should be treated like a runway in a start-up—the more money available, the more feature rich the product will be. Even if the client cannot disclose, we can estimate and then collectively discuss how to fit the initiative into the dollar amount available.
We work using cross-functional teams that take ownership of the product delivery; we invoice for time and materials as the team completes each sprint of work. The organization participates in the planning, demonstration, and acceptance rituals. Clarify with them the following:
- What process do they use? Do we have risks of waterfall?
- Should we expect to coach them along the way?
- Are they aware we invoice time and materials (T&M)? Do they understand how burn up and burn down works?