In 2011, the New York Times was staring at a cliff. Digital revenue barely registered, making up just 1.9% of the business. Today, it’s a $1.2 billion engine.

That kind of transformation didn’t happen because teams got better at delivering projects. It happened because the company fundamentally changed how it invested in work.

They didn’t just adopt a product mindset. They rethought how capital flows through the business.

And that’s where teams in most organizations get stuck.

The constraint no one talks about

There’s no shortage of conversation around topics like agile, product operating models, and digital transformation. But underneath all of these aspects sits a quieter constraint that rarely gets addressed:

You cannot operate like a product company if you’re still funding like a project organization.

No matter how modern your delivery teams become, your portfolio will behave exactly the way your funding model tells it to.

That tension shows up in subtle but damaging ways:

  • Strategy evolves throughout the year, but funding stays locked.

  • Leadership priorities shift, but budgets don’t follow.

  • Teams are asked to pivot, but the portfolio can’t respond.

At that point, it’s no longer a delivery problem. It’s a portfolio problem.

 

The 85% failure rate isn’t about execution

There is an often-cited statistic indicating IT project failure rates can reach as high as 85%. However, this stat can be easy to misread.

This failure rate may make it sound like teams are failing to execute. In reality, most of those “failures” are rooted in how investments are structured from the start.

When funding is tied to projects, success is measured by:

  • Delivering on time

  • Staying within budget

  • Meeting predefined scope

However, none of these aspects guarantee value.

From an SPM perspective, this is the real issue. The system is designed to produce outputs, not outcomes. So even when teams succeed by traditional measures, the business can still lose.

How portfolios fill up with dead capital

You see the impact most clearly in what many organizations quietly accumulate over time: “zombie” investments.

Here’s how it typically works: A team is funded to deliver a digital initiative. The work is completed. The budget is closed. On paper, everything looks successful.

However, the product itself doesn’t disappear. It still needs to be improved and adapted to changing customer behavior and preferences. Instead, it lingers in an awkward middle ground:

  • No real ownership

  • No meaningful reinvestment

  • No clear connection to value

The organization continues to carry the cost, but the ability to influence outcomes is gone.

Across a portfolio, this creates a dangerous pattern. Capital doesn’t just get wasted. It gets stuck. Money that could be redirected toward something that’s working remains tied up in something that isn’t.

Generative AI is accelerating the problem

Generative AI (GenAI) is making teams faster. There’s no debate there.

Ideas turn into prototypes in days. Features ship in weeks. However, speed at the delivery layer doesn’t solve the problem if the portfolio can’t keep up.

In fact, GenAI amplifies the issue.

Organizations can now burn through budget faster—often before anyone could validate whether the investment was worth it in the first place. The result is simple but uncomfortable:

Building the wrong thing faster doesn’t create value. It just accelerates waste.

Without a way to continuously evaluate and adjust where capital is going, GenAI becomes less of a competitive advantage and more of a multiplier of existing inefficiencies. (See a prior post to find out why AI financial governance and granular attribution are now so critical in proving that AI expenses are generating real strategic value.)

Given all this, the key question becomes, “How can you transition successfully from project-based to product-oriented funding?"

How strategic portfolio management changes the conversation

To combat the challenges outlined above, strategic portfolio management (SPM) becomes essential. For today’s enterprises, SPM emerges as more than a reporting layer. It becomes the mechanism that connects strategy, funding, and outcomes.

What are the benefits of SPM for enterprise technology funding? SPM helps shift the conversation from activity to intent.

Instead of asking:

  • What are we building?

  • Did we deliver it?

Leaders start asking:

  • Why are we funding this?

  • Is it creating value?

  • Should we keep investing, pivot, or stop?

That shift sounds simple, but it changes how the entire organization operates. For a deeper dive into modernizing your approach, see the Strategic Portfolio Management (SPM) Buyer’s Guide.

From static budgets to dynamic investment decisions

In organizations that make this transition, teams don’t just tweak their planning process. They rethink how investment works altogether.

Instead of locking budgets into projects at the start of the year, they create the ability to move capital as reality changes.

That shows up in a few key ways:

  • Funding follows performance, not just plans.

  • Investments can be scaled up or down mid-cycle.

  • Underperforming work is stopped earlier, before it drains the portfolio.

Governance evolves alongside funding. Milestones stop being the primary signal of progress. Instead, decisions are grounded in actual indicators of value, like customer adoption, revenue impact, and efficiency gains.

Over time, this leads to a more durable model. Teams stay with the work longer. Ownership becomes clearer. The portfolio starts to behave less like a collection of disconnected efforts and more like a system of continuously managed investments.

Closing the CFO gap

What’s holding up the move to product funding? For many organizations, the hesitation comes from finance. Ongoing, product-based funding can make financial leaders feel like they’re ceding control, potentially opening the door to unchecked spending.

However, the reality is that, with the right solutions, the opposite tends to happen.

When you can clearly see how investment ties to outcomes, decision-making becomes sharper. It becomes easier to justify where money is going and, just as importantly, determine where it should stop going.

Instead of relying on static budgets and annual approvals, organizations move toward:

  • Continuous investment oversight

  • Clear guardrails tied to performance

  • Greater visibility into ROI at every level of the portfolio

That’s how the gap between technology leadership and finance starts to close. Not through more reporting, but through better alignment.

The bottom line

The organizations pulling ahead right now aren’t just delivering faster. They’re making better decisions about where to invest, and they’re doing it continuously.

They’ve aligned:

  • Strategy

  • Funding

  • Execution

  • Measurement

Because in the end, digital transformation isn’t limited by how quickly you can build. It’s limited by how effectively you allocate capital.

That’s not something you fix by improving project execution. It’s something you fix by changing how the portfolio works.

Contact us and let us show you how you can start the transformation.

Frequently asked questions

Q: Why is project-based funding so detrimental to organizations today?

A: Project-based funding traps capital in fixed timelines and predefined scopes. This rigidity prevents the portfolio from pivoting when priorities shift, often leading to "zombie” investments that continue to drain resources long after they’ve stopped creating value.

Q: What kind of impact does GenAI have on the management of a digital portfolio?

A: GenAI increases delivery speed. However, without a dynamic funding model, this speed can exacerbate issues. Fundamentally, it becomes more likely that budgets will be spent before ideas have been effectively validated.

Q: What is the primary benefit of strategic portfolio management (SPM)?

A: SPM shifts the focus from managing activity to managing intent. It enables leaders to scale investments up or down mid-cycle based on actual performance indicators rather than sticking to a fixed annual plan.

Q: How can we convince financial leaders to move away from static annual budgets?

A: SPM can be invaluable in this effort. SPM provides continuous oversight and real-time visibility into ROI. In this way, SPM offers finance more control and better justification for capital allocation than static budgets.