agile# How to Use the Global Delivery Model to Manage Budget Constraints in Finance SaaS (1/37)
A finance SaaS company running XP with a small team of two to five people has a budget problem. The company provides a regulatory compliance platform for mid-size banks. The platform handles transaction monitoring, suspicious activity reporting, customer due diligence, regulatory filing, and audit trail management. The company has been around for eight years. It has nine hundred employees. The product development organization has four people. The organization runs Extreme Programming (2/37)
. One development team. Four people.
The budget is tight. The company allocated $180,000 for product development this year. That must cover salaries, tools, infrastructure, and training. Salaries consume $150,000. The remaining $30,000 must cover everything else. It is not enough. (3/37)
The team needs a new testing tool at $8,000 per year. A cloud infrastructure upgrade at $12,000 per year. A training program at $6,000 per year. The total need is $26,000. That exceeds the remaining budget by $4,000. The team must choose. They cannot have everything. The choosing is painful and slow. The slowness delays development, which delays releases, which delays revenue. (4/37)
Last year the team faced the same problem. They chose the testing tool and skipped the infrastructure upgrade and the training program. The skipped upgrade caused performance issues. The performance issues caused customer complaints. The complaints caused a contract loss worth $60,000 per year. The $60,000 loss was three times the $12,000 savings. The team saved $12,000 and lost $60,000. The budget constraints must be managed better. (5/37)
Narayana Murthy built Infosys on the global delivery model. The model was simple. Murthy realized that the cost of delivering a service depends on where the service is delivered. A software developer in Bangalore costs less than a software developer in New York. The quality is the same. The cost is different. Murthy exploited the difference. (6/37)
He built a global delivery network with three layers. Layer one was on-site. The on-site team was in New York. They understood the customer, gathered requirements, and managed the relationship. Layer two was near-site. The near-site team was in London. They designed the solution and planned the work. Layer three was offshore. The offshore team was in Bangalore. They built, tested, and deployed the solution. (7/37)
The three-layer model reduced costs by forty percent. That reduction made Infosys competitive. The competitiveness won contracts. The contracts built Infosys. (8/37)
Murthy applied the same thinking to budget management. When he had a budget constraint, he did not cut everything equally. He prioritized based on impact. High-impact activities were done on-site. Medium-impact activities were done near-site. Low-impact activities were done offshore. The prioritization maximized the budget, which maximized the output, which maximized the revenue. (9/37)
For a finance SaaS multinational, the budget problem is the same. The team has a constraint and must prioritize. Murthy's model says: prioritize by impact. High-impact activities get the most budget. Low-impact activities get the least. That is how you maximize what you have.
## The Core Principle (10/37)
Murthy's global delivery model was built on a simple insight. The best way to manage budget constraints is to prioritize spending by impact instead of cutting everything equally. He did not cut the on-site team because they had the highest impact. They understood the customer, and that understanding was essential. He cut the offshore team's budget because they had the lowest impact and could work with less. (11/37)
For a finance SaaS multinational, the team cuts everything equally. That is wrong. Murthy's model says: prioritize by impact. That is how you maximize the budget and the output.
## Four Steps to Apply the Global Delivery Model
1. Categorize Every Budget Item by Impact Level Using a Three-Tier Framework (12/37)
Murthy categorized every Infosys budget item by impact level using a three-tier framework. Tier one was high impact: items that directly affected customer satisfaction. Tier two was medium impact: items that indirectly affected customer satisfaction. Tier three was low impact: items that had no effect on customer satisfaction. The framework created clarity, which created prioritization, which maximized the budget. (13/37)
You should do the same. For a finance SaaS multinational, the product manager leads a budget categorization session with all four team members. The session takes one hour. Every budget item is reviewed and placed into one of three tiers. (14/37)
The items are: salaries at $150,000, a testing tool at $8,000, a cloud infrastructure upgrade at $12,000, a training program at $6,000, development laptops at $4,000, software licenses at $3,000, conference attendance at $2,000, and a team offsite at $1,000. (15/37)
Salaries are tier one. Without salaries there is no team, and without a team there is no product. The testing tool is tier one. Without it, bugs reach production, cause customer complaints, and cause contract losses. The cloud infrastructure upgrade is tier one. Without it, the platform is slow, which causes customer complaints and contract losses. (16/37)
The training program is tier two. Better-trained developers write better code with fewer bugs. Development laptops are tier two. Faster laptops mean faster development and faster releases. Software licenses are tier two. Without them, developers use less efficient tools and development slows down.
Conference attendance is tier three. It provides networking and learning, but the value is not immediate. The team offsite is tier three. It improves morale, but the value is not immediate. (17/37)
The categorization identifies three tier-one items totaling $170,000. The remaining budget is $10,000. The tier-two items total $13,000. The tier-three items total $3,000. The gap is $6,000. That gap must be closed through prioritization.
For an XP team of two to five, this should happen in one session of no more than one hour. It should be part of the planning game as a planning input.
2. Allocate Budget to Tier-One Items First, Then Distribute the Remainder by Weighted Priority (18/37)
Murthy allocated budget to tier-one items first. They were fully funded. The remainder was distributed to tier-two items by weighted priority based on impact. Tier-three items were funded last and got whatever was left. (19/37)
You should follow the same approach. The product manager allocates budget to tier-one items first. Salaries at $150,000 are fully funded. The testing tool at $8,000 is fully funded. The cloud infrastructure upgrade at $12,000 is fully funded. The tier-one items total $170,000. The remaining budget is $10,000. (20/37)