Recently, the SAFe framework has introduced the ideas of OpEx and CapEx Agile budgeting and capitalization. In this recent update in the SAFe framework, it is explained that some SAF enterprise strategies can be used to create categories for labor costs in the agile development with some being subject to CapEx or Capital Expense treatment. But before exploring these updates, it is best to tackle the subject of SAFe portfolio budgets.
SAFe Portfolio Budgets
Every SAFe portfolio comes with a purpose which is to realize some technical solutions that will enable a business strategy. But for the technical solutions to be realized and the business strategy enabled, the portfolio has to operate inside an approved budget for the operation. This is because the operating costs for the development of the solutions are a key to the business strategy’s economic success.
How Budgets Work
Each SAFe portfolio must operate within the approved and known budget. The budget is the basic factor on IT development and deployment as well as that of hardware, software, services, products, solutions and all other offerings inside the SAFe portfolio. This operating budget is an outcome of the process of strategic planning and within which all portfolios operate.
According to the SAFe framework, the allocation of the funding to individual streams is under the support of the Program Portfolio Management. They are those who allocated the necessary funding for every value stream within the portfolio. On that note, the budgets may include either OpEx or Operating Expense or CapEx elements.
The requirements and design continuously emerge in Agile enterprise which means there are no formal gate that serves as overture to capitalization. This is compared to waterfall projects and therefore points out that in SAFe, capitalization can be done either on agile release trains or value streams. In release trains with the use of program increments and portfolio kanban, there are several types of requirements that are capitalized.
Understanding the Problem of Traditional Budgeting
Apparently, there are many problems pertaining to traditional budgeting approach and with that, a new solution is being proposed. But before one embraces this new solution, it is important to understand first the problems caused by the traditional approach. For one, the traditional budgeting process seems to create multiple challenges being that it is slow and complicated, not all tasks are identified and many other issues.
Additionally, with the traditional budgeting there are the constraints based on projects. These constraints obstruct positive economic outcomes as well as hinder adaptability. By following the traditional budgeting, when the project is initialed there are challenges that simple continue and makes the economy suffer. At the same time, there are delays that constantly happen and which only makes things even uglier than it already is.
These are a lot of challenges that must be addressed with following the traditional SAFe portfolio budgeting approach. On that note, there is the Lean-Agile development process that makes for new, easier solution in terms of budgeting. It follows a more effective fiduciary control when it comes to total investment budget but with higher throughput and less friction as well as overhead.
