Project funding models are restricting utilities’ ability to fully unlock the benefits of digital tools and ways of working, preventing true collaboration and agility between the business and digital teams. However, those who've switched to Product based “enduring funding” are seeing their investments in multi-disciplinary teams and modern engineering practices pay off.
A lot of water and energy companies find themselves unable to get the promised value from their digital capabilities, often trying to convince the wider business of their role rather than being a fully integrated value driver.
This is in large part due to a digital delivery funding model which blocks the type of collaborative, fail-fast, agile ways-of-working that fully utilise digital skills and processes and the value, speed and efficiency experienced by other industries.
True integration of digital in the business presents the opportunity for business and digital teams to work together on shared problems, not pre-defined solutions; to organise around outcomes, and adjust the work done to meet them, rather than stick to a rigid plan because that’s what was promised in a business case; and to create the conditions for success that lead to demonstrable impacts that can be held up to the rest of business as exemplars, encouraging others to follow the same path. Without that, all the digital tools and skills in the world will still fail to fulfil their promise.
Project-based, time and output bound funding is the root cause of all of this, and we’ve come across it in every digital, data and technology department we’ve worked with across the sector. And to be clear, project-funding still very much has its place. We shouldn’t establish teams centred around agile sprint-based delivery when we’re building a new strategic pipeline – fail-fast doesn’t cut it, when failure might cost tens of thousands of pounds or worse, risk to life. But the iron-like grip project funding has on how internal funding is allocated is stifling digital progress.
Why?
- Project-based funding requires business cases that demand solutions – suffocating most attempts at proper problem discovery with service designers and technologists
- It encourages short-termism in resourcing and planning, undermining attempts to build high performing digital teams able to participate in Communities of Practice.
- Delivery models default to waterfall, despite efforts at agile, as teams need to deliver against fixed milestones and budgets.
The solution? Breaking out of the stop-start, waterfall leaning project model requires a shift to enduring product funding. This is where digital teams are aligned with business areas around value, outcomes, KPIs, and work together on shared objectives over a sustained period. Enduring funding doesn’t mean lack of budgetary control or accountability either. The same checks, governance and Value for Money (VfM) assurances are built into staged delivery gates, sprint planning and ceremonies – in fact you see far more transparency and assessment against clear goals (OKRs) than you may in a project-based scenario.
But getting here is not so simple. Enduring funding models can fly in the face of ingrained financial mindsets and cultural norms. It means flipping the traditional funding-by-business case into broader funding by value streams, where there is a commitment to outcomes rather than clarity on exact outputs. It also requires the business loosening their grip on how and when that money is spent, putting more trust in their delivery partners – but also spreading the risk and accountability for delivering the outcomes. This play between financial and cultural norms, and trust beyond the business unit is at the heart of the resistance to change.
There are great examples of where this shift is happening, and enduring outcome-based funding has landed with all the associated benefits.
Showing value by doing is key. Pick an enlightened business team, and work with them in discovery mode, without pre-defined solutions – to start adopting the “digital behaviors”. And crucially, measure, measure, measure. The (hopefully) positive picture painted by your data points on delivery velocity, user experience and team satisfaction will enable you to hold it up as an exemplar to the business, building awareness and, most importantly, trust. This communication needs to flow all the way to the top so the CEO and CFO can endorse new funding structures – a sometimes slow and difficult path – but the rewards are worth it.
The alternative is unfulfilled destiny for digital; a vicious circle of unmet expectations, undermined confidence and erosion of budget.
Talk to us about how we’re helping utilities get the most from their digital investments.