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As a VP of engineering or CTO in a board meeting, it can be tough to watch the chief revenue officer (CRO) present. Sales have had years of experience translating their operational metrics to key business metrics — the board understands pipeline and expected annual recurring revenue (ARR) growth. It’s much harder to draw a direct line from the percent of the roadmap delivered to the business’s bottom line.
As a software engineering leader, I experienced this challenge every time I stepped into the board room or important staff meetings. This leaves the discussions around engineering resources surface level and can leave engineering leaders without the financial support they need to deliver against business priorities.
As I experienced this, I became more accustomed to the expectations non-technical leaders have for engineering and began starting all quarterly business reviews (QBRs) with resource allocation. Why? I wanted to showcase the backwards nature of engineering resource allocation.
For example, I’d show that we had 0.2 people working on a mission-critical project, while we had three people working on a less critical project. This helped us cancel non-essential projects, focus on what mattered most to the business, and bring in more people if we were under-resourced.
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At the time, I would have to prepare at least two weeks ahead of time to build this out on paper by manually hunting down and calculating relevant metrics. Now, engineering leaders have tools at their fingertips that allow them to easily access and make sense of business-first metrics by starting with operational metrics (including DORA) and building upon them for stronger alignment with business outcomes.
I learned through trial and error what metrics matter most when discussing engineering resource allocation with my board of directors. Now as a CEO, I have a whole new perspective on where engineering falls in the grand scheme of the business.
Where businesses fail engineering
More than 80% of software developers feel burnt out from their work due to understaffing, failed projects, or lack of resources. As long as non-engineering leaders struggle to understand what the right-sized investment should be for engineering (and what they can expect from that investment), teams will continue to see misallocation of resources, creating risk and waste.
Before we moved into the “every-business-is-a-tech-business” era, where engineering is seen as a value driver, non-technical leaders often perceived engineering as a cost center. Even now, archaic perceptions about development linger among some businesses.
So, when it’s time to tighten budgets, the first cuts happen in perceived “cost centers” like engineering — those that don’t have a direct and instant line to revenue like the sales team. They’re also the last to receive additional funding because it’s generally harder to trace exactly the impact of the investment on the bottom line, as it’s much more gradual.
Without metrics demonstrating direct business impact, it’s natural for non-technical leaders to turn their heads from engineering when it comes to prioritizing resources. After all, who cares about an additional 50 story points in a sprint?
What the board wants to see
When it comes to engineering, your board cares about two things:
- If you’re delivering what customers want.
- If you’re doing it efficiently.
So, how do you know you’re achieving this, and what exactly should you show the board?
The key to showing business value lies in reporting on two sets of data.
The first is health: Is your team operating efficiently?
Operational metrics that point back to engineering health include:
- Cycle time (the time from when code is committed to its deployment to production).
- Lead time (the time from when a user story is ready to implement to when it is delivered).
- Merge frequency (the number of pull requests or merge requests merged over a specific period of time).
All of the above can identify possible bottlenecks or inefficiencies in the development process. They include representation of delivery, developer experience and the completeness of value metrics. These measures can help tie back to delivery by showing whether you are delivering projects in line with the promises made by your go-to-market organization.
Here’s how to show this to your board:
The second data set is investment: Am I aligning my resources to the projects that deliver the highest business impact?
Data points that point back to engineering investment include:
- Business impact (categorized from low to high).
- Full-time equivalent (measuring units of work to full-time employees).
- Estimated cost (attaching dollars to work estimates).
Ultimately, engineering leaders must show they have the most dollars and people dedicated to the highest impact work. They must be able to climb up the stack and show the high-level outcomes of dollar investment in business outcomes, then be able to drill in on the engine of the engineering organization through operational metrics to optimize that investment.
Here’s how to show this to your board:
These business-first metrics allow non-technical leaders to finally have that “ah-ha” moment when it comes to engineering’s impact on the business, even if some of the projects are infrastructure or non-functional in nature. By providing these leaders with metrics that actually make sense, they’ll develop the same appreciation for engineering as they have for sales.
Here’s an easy way to align on engineering investments with the non-technical leaders within your business.
The economy’s impact on metrics that matter
Now is the time for engineering leaders to showcase engineering’s value. There’s not a single business that hasn’t been impacted by resource tightening over the last year. While CFOs are increasingly focusing on cost optimization within their businesses, they continue to prioritize growth, according to a survey by Gartner. Engineering leaders must show how they’re driving this growth.
Engineering leaders who couldn’t clearly show major business impact were the first to see cuts during 2022 recession concerns. While the rest were forced to “do more with less,” they were at least able to sustain critical projects and fight for their headcount. Why? Because they clearly communicated the importance of specific investments and projects to the business’s success.
No one can argue the last year has been easy for leaders across the board. But I believe good is coming from these challenges. It has forced engineering leaders to scrutinize their investments and allowed them to identify their most critical assets, enabling them to innovate even during economic uncertainty.
Engineering leaders who can continue to do so without excessively monitoring their individual developers but rather focusing on creating great developer experience, will be set up to outperform and out-resource their competitors — simply because they can show their vitality to the business in a way that non-technical leaders understand. And that’s how to get your board to prioritize engineering.
Ori Keren is cofounder and CEO of LinearB.
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