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Software engineering salaries come from one of three budgets

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Re: Software engineering salaries come from one of three budgets

#111

Post by Closi »

jimbokun wrote: post #105
mooreds wrote: post #3

In addition to knowing which bucket your salary comes from, I think it is also useful to know how your organization values building software. Because this affects your career just as much. * Is your company selling software development hours (consulting)? I'm this car you'll be valued for client relations skills and the ability to bang out acceptable software. * Is your company selling a software product (product com…

To simplify, you always always always want to be working in bullet point 2, if at all possible. In the other two, you are a cost to be minimized or eliminated. Only if you are working on one of the companies core products are you an asset bringing revenue into the company.

I disagree - It depends on your career aspirations, your skillset, the company, and the type of software you like making.

If you are a great communicator and have a great ability to just 'get stuff done', you might be a superstar in 1 & 3, and you might find working in bullet point two highly frustrating.

With number 2 you are more likely to be working on a tiny part of a larger application.

My brother went from bashing out big scrappy functional software with lots of client interaction (option 1 or 3) and moved to a bigger product organisation where he is suddenly working on a team building a microservice for a larger application, but doesn't feel like he is making the same direct impact (i.e. it can be more satisfying to make 10 people's jobs 10% easier compared to than making 1 million's peoples jobs 0.1% easier). He would rather build some scrappy tools that gets the job done than build highly refined software, just because the scrappy programming to meet an end is more satisfying to him (and is generally the bit where you can build fast value!).

Re: Software engineering salaries come from one of three budgets

#112

Post by ravenstine »

jimbokun wrote: post #105
mooreds wrote: post #3

In addition to knowing which bucket your salary comes from, I think it is also useful to know how your organization values building software. Because this affects your career just as much. * Is your company selling software development hours (consulting)? I'm this car you'll be valued for client relations skills and the ability to bang out acceptable software. * Is your company selling a software product (product com…

To simplify, you always always always want to be working in bullet point 2, if at all possible. In the other two, you are a cost to be minimized or eliminated. Only if you are working on one of the companies core products are you an asset bringing revenue into the company.

Eh, I don't think it's that clear cut. I've worked in all three types, and there were positives and negatives to each, and none are necessarily better than the other. I will say that #2 tends to be the most reliable and tolerant of your faults.

Re: Software engineering salaries come from one of three budgets

#113

Post by generic92034 »

danenania wrote: post #98
generic92034 wrote: post #45

Earlier quoted context omitted.

> Because you cannot sell maintenance to the customer, you only can sell features. That does not seem to be true in many B2B areas. Software suppliers are selling maintenance and support contracts to their customers. Think ERP.

Even when a company sells maintenance/support/compliance, the incentive is still to put as few actual development hours into these columns as possible, and to pay as little as possible for those hours. What is actually being sold is a promise, and that really comes from the sales department, not the engineering department. Once the customer signs the contract, the incentive is to do the minimum possible to keep the p…

You are not considering the power dynamics in B2B. The customers get SLAs in their maintenance and support contracts, including monetary penalties. It is also a repetitive business. Bad experiences actually count.

In my experience, if anything development support/maintenance is delivering too much in many cases, i. e. not limiting themselves to fixing bugs, but enhancing functions on customer request.

Re: Software engineering salaries come from one of three budgets

#114

Post by generic92034 »

ponector wrote: post #58
generic92034 wrote: post #45

Earlier quoted context omitted.

> Because you cannot sell maintenance to the customer, you only can sell features. That does not seem to be true in many B2B areas. Software suppliers are selling maintenance and support contracts to their customers. Think ERP.

Maintenance of your software. Can you sell bug fixing of your software? You can sell new features. Of course you will add a line to the contract about bug fixing, and put few poor souls occasionally to fix issues reported by vip customers, but it is not a selling point.

See my reply to the sibling - in many B2B settings it is really different.

Re: Software engineering salaries come from one of three budgets

#115

Post by sumtechguy »

mooreds wrote: post #16
Scarblac wrote: post #15

Earlier quoted context omitted.

Or a combination. I'm in a pretty small company (about 80 people total, 15 devs) and worked on all three of those last year.

I'm a bit confused. You worked as a consultant selling hours, one a software product sold for a price and also on an internal enablement tool for the same company?

Some consulting companies also have software they sell as well as internal things that need to be done. They can have a 'boxed software' that gets 90% of their customers. Then consulting on top for the customers that do not want to do anything themselves or something the boxed software doesn't do. Plus you have internal r&d projects or other things.

Re: Software engineering salaries come from one of three budgets

#116

Post by LudwigNagasena »

Kudos wrote: post #80
LudwigNagasena wrote: post #43

Earlier quoted context omitted.

I think it’s a nonsensical model. Every department is ideally responsible for both revenues and costs. If you can’t measure it, it is a problem of your KPIs. So the KPIs may be cost-oriented (and thus badly aligned), it doesn’t make the department itself a cost center.

Which department are you talking about? If your department doesn't drive revenue, then the business leaders will see it as a cost center. It doesn't matter if you disagree with that perspective unless you can change their minds. How have you done that in the past, or hypothetically how do you think that might work?

It doesn't become any less nonsencial just because some business leaders who are still stuck in 1980s believe in it.

Both profit centers and cost centers are supposed to increase profit, otherwise you wouldn't hire those people. If a department doesn't drive profit, then just axe it and stop wasting money on it. If you can't [1], then it actually drives profit, you just have no idea how. The fact that you can't set proper KPIs to measure impact doesn't imply absence of impact, and of course it doesn't imply that you should treat it as if it has no impact.

Departments are engaged either in primary or support activities. And those activities are either efficient and optimal or not. Your competitive advantage doesn't even have to be your primary activity. If you are successful at making fidgets because you hire, plan and budget better than others in your industry; what insight can talking about profit centers and cost centers provide to you?

[1] How is someone supposed to run a company without HR or accounting?

Re: Software engineering salaries come from one of three budgets

#117

Post by Closi »

jonfw wrote: post #109
jimbokun wrote: post #105

Earlier quoted context omitted.

To simplify, you always always always want to be working in bullet point 2, if at all possible. In the other two, you are a cost to be minimized or eliminated. Only if you are working on one of the companies core products are you an asset bringing revenue into the company.

With #1- you are the product

All jobs are transactional, the transaction is just more clear-cut with #1.

Re: Software engineering salaries come from one of three budgets

#118

Post by SkyPuncher »

paxys wrote: post #102

No company I have ever worked for has had growth engineering salaries come out of the marketing budget. And there's no such thing as a "maintenance" budget either. It is all simply R&D/engineering. Sure the expectations are very different depending on your team/role, but that's not a budget thing, and depends on how the company tracks its goals.

These budgets aren't often labelled as explicitly as the article states, but I've found they're generally accurate.

You either make money now (sales), you build long term value (product), or are circling the drain (maintenance) on an existing product.

Re: Software engineering salaries come from one of three budgets

#119

Post by electrondood »

mooreds wrote: post #3

In addition to knowing which bucket your salary comes from, I think it is also useful to know how your organization values building software. Because this affects your career just as much. * Is your company selling software development hours (consulting)? I'm this car you'll be valued for client relations skills and the ability to bang out acceptable software. * Is your company selling a software product (product com…

> Is your company selling software development hours (consulting)?

From working with contractors, this bucket also motivates you to strongly optimize for number of sprint points delivered, not quality/reusability/maintainability.

Re: Software engineering salaries come from one of three budgets

#120

Post by marcosdumay »

LudwigNagasena wrote: post #43
DeathArrow wrote: post #5

I think profit center vs cost center is a better model.

I think it’s a nonsensical model. Every department is ideally responsible for both revenues and costs. If you can’t measure it, it is a problem of your KPIs. So the KPIs may be cost-oriented (and thus badly aligned), it doesn’t make the department itself a cost center.

It is a completely nonsensical model, and leads to completely stupid decisions if applied.

But management uses it for every decision anyway.

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