For decades it’s been easy. Once the application is going to be real, developing it is a capital expenditure. Waterfall made determining that pretty easy, but Agile can upend the usual considerations. As we behave in a completely iterative manner, what of the things we’re doing are capitalizable? Some of the concerns Finance often has with Agile are quite clearly described in Dean Leffingwell’s SAFe post (link below). This post is quite prescriptive. Scott Ambler and Disciplined Agile have an excellent post on this topic also, and it is less prescriptive. Scott and Mark identify a very useful yet objective milestone on which to base the decision to move from operational to capitalizable expense, and they consider an aggressive vs. conservative strategy too. I recommend reading both articles on this topic, neither is long, and making your decisions about capitalizing expenses using a short set of clear rules that you prepare, share with Finance, agree on with Finance, and then strictly adhere to unless Finance agrees on an exception. There ya go, wasn’t that easy? Read on …
- SAFe post on capex/opex: https://www.scaledagileframework.com/capex-and-opex/
- DAD post on capex/opex: http://www.disciplinedagiledelivery.com/capexopex/