Agile Scrum – CFO’s Expectations and Scrum Development

agilescrum

When it comes to financial topics, I'm admittedly not well versed. I'm trying to lead my organization in our software development effort using a Scrum based development life-cycle. I am often discouraged when trying to coach executive leadership due to their belief that Scrum and Agile don't play well with their finanacial objectives. The other day I was challenged to show how my software developers could capitalize %60 of their work hours.

I've found a few articles on the web ( http://itprojectfinancials.com/insights/2011/06/05/capitalizing-software-development-costs-from-sdcl-to-agile/ ), but haven't come up with any great arguments.

I'm looking for advice or examples of organizations that capitalize software costs effectively in an Agile development environment.

This article sums up the issue pretty well, but offers no advise http://blogs.collab.net/agile/2007/12/20/the-scrum-gaap/

Best Answer

This shouldn't be your problem.

Capitalisation of costs is your company CFO and/or accountant's problem. The rules vary in different jurisdictions. The accounting guys are the experts and should be capitalising costs according to the relevant accounting rules.

At most, they may need to ask you for some supporting information (e.g. of the 5,000 developer hours worked this quarter, can you estimate what % was on new software development or enhancement of existing software assets?). But it's up to them to ask you the right question.

If you are doing mostly new software development in a product that your company sells or intends to sell (i.e. the product counts as an intangible asset which returns future economic benefits) then it's perfectly possible to capitalise 100% of development costs. Also some countries have special incentives for R&D investment which is possible your software development work may qualify for.

The software development methodology you use is irrelevant, the only thing that is likely to matter is having some way of categorising which costs were spent on capitalizable projects or assets. But the same problem applies to waterfall development!

But for goodness sake, let the accountants sort this all out. You don't expect the CFO to write code, do you?

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