1. Introduction
What is this document. Any overall themes that will be conveyed. A recap of the company’s strategic directions. What was accomplished last year. The organization of this document. Recap of company’s costs and revenues and how you fit in (e.g., mainly a cost center, but some consulting revenues), your current percentage of the costs and an argument for increased percentage.
2. Current Output
Current set of products under maintenance (include which platforms supported) and under development plus any ongoing outputs (such as a consulting group)
3. Existing Effort Breakdown
Pie charts! Effort = headcount. Effort by deliverable. Effort by functional area. Current ratios for test and docs to development by product.
4. Process & Metrics
Where is the department vis-ŕ-vis process improvement. What has been accomplished. What are the next steps.
5. Organizational Structure
How the department is currently organized (by reporting line and dotted reporting line). Descriptions of groups. Any proposed changes for next year. Management strengths and weaknesses.
6. Key Support Areas from Other Divisions
Dependence upon other groups within the company (both backwards and forwards). Any messages to send to those groups (be careful: political!).
7. Financial Planning Assumptions
Give average loaded costs (w/ and wo/ management loaded in) by relevant category (e.g., test, developers, docs). How were these numbers arrived at. What do they include? What do they exclude?
8. Baseline Spending
Give anticipated EOY head-count in dollars. Add in capital expenditure write-downs anticipated in the next year. Project baseline spending for next year to maintain EOY pace and quality. Breakdown into the outputs. (e.g., dvlp + maintenance of product 1, dvlp + maintenance of product 2, consulting, …). Any comments on this breakdown.
9. Summary of New Projects
Propose a number of new projects (e.g., new product lines, increased pace on certain products, more consulting, metrics group, new capital expenditures (hardware/software), …). Give incremental cost of each. Give years budget. Give EONY run rate. More pie charts! Breakdown: baseline v.s. new, new new v.s. more for old, new spending by project (within type). Include capital projects.
10. Project Descriptions
What is it. What is the benefit. What is the cost. How was the cost arrived at (what new staff).
NOTE: the next step after this business plan is approved will be to share it with your staff and have them project out hiring month by month, identifying individual slots, and assigning a salary and a projected starting month. This will then be handed over to finance for making up their detailed budgets.
Draw up a year-end software development division business plan for a fictitious software vendor company (make up a name).
This is a planning document from which eventually a detailed budget will emerge. All the divisions within the company will make a similar plan. You will present yours and discuss it during your November off-site (in the Grand Hyatt, Kauai, Hawaii – last year was a good year – and no, CSC2123 will not simulate this aspect of the business).
Sales and the CFO will be presenting revenue forecasts for the next year. The goal of the meeting will be to establish strawman budgets for each division such that a profit margin of 15% is maintained. As usual, you will no doubt all have to trim your budgets. The SDD business plan must therefore be written in such a way that the other executives can understand what you’re currently spending, where it’s all going, and what the proposed budget increases will accomplish. It should be in a format such that it is convenient to argue over what new projects to drop, what new projects to scale back on, or what existing activities should be dropped or scaled back.
You are currently supporting 4 quasi-related products (make up names) across multiple platforms and a technical consulting group staffed with developers. Your current headcount is 80: 40 developers, 16 testers, 8 docs, 12 management, 3 build folks, 1 executive assistant. Your EOY burn rate (including $1M capital depreciating at 15% is $7M). This year’s expenditures in R&D were $6M.
The EOY numbers (this year) are expected to be revenues of $34.5M on costs of $30M. From preliminary discussions with CFO and sales, revenue is expected to rise by 60% (why do you think you’re meeting in Hawaii?). You will base your new budget on the (optimistic) assumption that the current % spending on R&D will be increased to 25% (you don’t really expect this, but you do expect that all the other execs will do the same, and if you don’t you’ll probably be cut). You will pessimistically expect another 25% increase in revenues for the year after, so you will also need to ensure your EONY run-rate is in-bounds.
Propose new projects to increase the pace of some of the existing products, add 1 new product line (according to the company’s strategic business plan), and improve the quality of testing and docs for certain existing products. Propose to add a performance group. Propose to increase consulting ability by a factor of 2x. Propose a project to establish a process and metrics group. Propose to acquire a new configuration management tool (about $1K a seat). Propose to acquire a big new server machine (about $500K).