Every business is a tech business.

That’s how a business leader opened his presentation at a recent investor conference I attended, and the statement resonated with me. Even though I’ve never worked at a self-described tech company, my career has revolved around building and rebuilding software. Over time, I’ve noticed a pattern of challenges that mature, tech-enabled businesses face when managing software development. These challenges can have serious consequences when investors start scrutinizing costs. Gone are the days when capitalized research and development spending was dismissed as exceptional and therefore inconsequential. Today, R&D spending directly impacts enterprise value, meaning that business executives need to understand how to effectively run software development projects more than ever.

Most software development projects in mature businesses focus on rebuilding existing software, or replatforming, rather than creating new products with potential for delivering new revenue streams. With shareholders typically focused on short-term returns, a multi-year replatforming project is unappealing—it adds substantial costs without a corresponding guaranteed increase in revenue. Yet many companies find themselves undertaking these projects anyway.

Replatforming is about replacing old, outdated software with modern versions that perform the same functions more efficiently. When a company has invested a decade or more in building legacy software, expecting to rebuild all its functionality in less than two years is unrealistic. Yet, this reality often escapes business leaders and board executives who demand these projects be completed within an investment cycle.

I sympathize with the Chief Technology Officer (CTO) who must walk into a board meeting and request capital to replatform a technology stack that is ten or twenty years old. If the CTO doesn’t promise to complete the project in under two years, the board will likely reject the request. To secure funding, the CTO might overpromise on timelines, setting the entire team up for failure. Tech teams working on replatforming don’t have the luxury of being Lean or Agile in the way that teams developing new software products do; they are working to fixed timelines and budgets.

This dynamic creates invisible tension between how product and software development teams are trained to deliver their work and the expectations of business leaders. There are four key points of conflict between what mature businesses require and how software teams prefer to self-organize:

1. Agile software development projects are often seen by business leaders as a way to justify working without fixed costs or timelines. Since investors require delivery within clear cost and timeline constraints, this needs careful management.
2. Lean principles were developed for finding new product markets, not serving existing ones. Pursuing new markets can dilute margins, conflicting with investors’ desire for predictable financial performance in mature businesses.
3. Adding more engineers to a project that is already operating at optimal capacity leads to diminishing returns. Simply increasing headcount doesn’t necessarily speed up software development.
4. Many businesses underestimate the value and complexity of existing data in legacy software at their peril. Customer data hold a great deal of customer value—mishandling data in a replatforming exercise can derail the entire project.

Is Agile What You Really Want? 

Your technology team is likely following Agile principles, as it’s the dominant methodology in software development today. However, Agile emphasizes individuals and interactions over processes and tools, and responding to change over following a plan. These principles often conflict with investors’ focus on controlled spending. Unless you’re running a startup funded by risk-tolerant venture capital, your software budget will be tightly monitored.

What investors really want is a scalable, predictable business—not one adhering to strictly Agile software development principles. Scaled businesses require alignment and consistency across diverse teams, which relies more heavily on processes and tools than purist Agile allows for. Investors want to be confident that a project’s time and cost are well-defined, which is often not the case with Agile.

Investors’ desire for oversight clashes with the Agile emphasis on self-organizing teams. Technology managers might train their teams to be Agile without realizing that they are misaligned with senior leadership’s expectations. Over time, this misalignment can lead to project failures.

Lean Is for Finding New Markets 

Combining Lean with Agile creates a powerful framework for startups aiming to innovate and capture new markets. However, most investor-backed companies are not focused on discovering entirely new markets. Instead, they prefer adjacent expansions, like new geographies or industries, rather than building truly new products, which carry more risk.

Less risk-averse investors will use acquisitions to expand into new product markets by acquiring companies with proven market fit. Managing a mature product stack is a different challenge than innovating from scratch. It should be handled differently. Yet, most product and engineering teams are only trained in Lean-Agile methodologies, which are inappropriate. Without clear alignment with leadership on this point, conflicts will inevitably arise.

Diminishing Returns on Engineering Resources 

When business leaders ask, “What if we add another scrum team to the project—how much faster can you deliver?” the honest answer is often, “Not much faster.” Onboarding new engineers takes time, and even once they’re trained, institutional knowledge bottlenecks still limit productivity. It’s usually more effective to hire a small number of experienced engineers who understand the specific challenges of the product and platform rather than bringing in a large team of mid-level engineers who require significant guidance and must climb a learning curve.

Data Challenges 

Data migrations often present the biggest surprises in software replatforming projects. Lean-Agile methodologies focus on new product development and therefore don’t address the complexities of existing data. It does seem wild, in today’s world, that data barely get a mention in Lean or Agile. But it makes sense when you realize that most new software products don’t rely on large masses of existing data. Data are generally generated once the products are built.

When a product has been in operation for a long period of time, there will be a great deal of data within it. Moving legacy data from an old platform to a new one requires specialized skills. However, it is often assumed that any software engineer can handle these extraction, transformation, and loading tasks. In reality, data specialists are far more efficient at managing this process alongside domain experts who understand the value in legacy data.

Find a New Path 

For those businesses willing to deviate from the dominance of Lean-Agile, there is another way. The Orienteering method of software development provides a blend of Agile best practices with the logical constraints of risk averse investor-ownership. In this method, waypoints of delivery are fixed. If you are rebuilding a new platform, you know what features you have to build before your existing customers will agree to be migrated from an old platform to a new one. Customers want parity between the functionality of old and new.

In the context of fixed waypoints, though, the Agile principle of short cycles resulting in working software regularly released to production is upheld. Teams innovate in how the software will be developed and released, not what it will do. Teams preserve the integrity of legacy platform data by building a project plan that focuses on the modernization and reshaping of data before the platform build begins. Adjusting these elements enables teams to remain aligned with business leadership and deliver projects on time and on budget with less friction.

In Summary

• Understanding how to manage software development is crucial for all companies, not just those in the tech sector.
• Lean-Agile methodologies are dominant but were designed for small teams exploring new markets, not for maintaining mature products in established companies.
• Colleagues at all levels must align on the goals of software development projects from top table leadership down to front line engineers.
• For CEOs seeking predictable financial performance from a mature product stack, Lean-Agile may not be the right approach.
• The misalignment between software development methodologies and business goals can derail projects.
• Lean-Agile principles often dilute margins in mature businesses, making them less suitable for risk averse investor-backed enterprises.

Written by Katie Tamblin.

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