We are spending 80% of our budget on maintenance and only 20% on innovation. We need to flip this to stay competitive. How do you categorize and track these two distinct buckets in your PPM tool? What is the "ideal" ratio for a mid-market company looking to scale through digital transformation?
3 answers
Most companies fall into the 80/20 trap. For a scaling company, you should aim for a 60/40 split. We use "Investment Buckets" in our PPM tool (Planview/Clarity) to tag every project as either "Run," "Grow," or "Transform." "Run" is your technical debt and maintenance. "Grow" is improving existing products. "Transform" is your high-risk innovation. To shift the ratio, we started a "Legacy Exit" program where we actively invest in retiring old systems to lower our maintenance costs over time. You can't just spend more on innovation; you have to stop spending so much on the past.
Do you find that your "Innovation" projects are getting cannibalized because the "Maintenance" issues always feel more urgent and get the best resources?
Use a "Horizon Model" for your portfolio. Horizon 1 is the core, Horizon 2 is emerging, and Horizon 3 is disruptive. This helps stakeholders understand the different risk profiles of each project.
The Horizon Model is a classic for a reason, Nancy. It provides a visual language for the board to see that if they only fund H1, they won't have a business in five years.
Richard, that was exactly our problem. We fixed it by "Ring-fencing" our innovation teams. We literally took our best developers and told them they are 100% dedicated to the "Transform" bucket and are forbidden from doing maintenance tickets. It felt risky at first, but it’s the only way to protect long-term growth from the "tyranny of the urgent." Now, we actually have a product roadmap that is moving forward instead of just spinning our wheels on bug fixes.