Salsify improves profitability with cost capitalization and focuses teams on R&D innovation

Salsify helps brand manufacturers connect with their customers and win on the digital shelf with a platform for product experience management. To remain a leader in their market, the R&D organization needs to operate efficiently and effectively, focusing as much investment on innovation as possible.

Salsify has 80 engineers and 400 employees overall, and are looking to grow engineering by more than 25% this year. Adam Ferrari, EVP of Engineering at Salsify, turned to Jellyfish to help them optimize their cost capitalization process, and maintain focus on innovation as they scale up engineering. “One of my long term objectives is to have a quantitative engineering organization that is metric-driven, and Jellyfish is helping us get there.”

R&D cost capitalization provides a clearer, more accurate view of a R&D investment and a company’s overall profitability, but it is cumbersome to get a consistent and auditable report of information across R&D. Managers would spend at least 1 hour per week to collect this information by asking everyone on their teams where and how they spent their time. Ferrari’s team estimated 700 hours/year for managers and directors to collect this information. “This was a significant expense that had a clear ROI. The process was erroneous and a waste of time that we should be spending on innovation,” Ferrari stated.

As Ferrari and the Salsify team began their search, they made sure the solution not only supported a streamlined cost capitalization process, but also leveraged the data to deliver strategic insights into the operations of the engineering teams, “We wanted a platform that helped us with cost capitalization right away, but also set us up for optimizing our engineering operations. Jellyfish uses the same data (used for cost capitalization) to roll up the work of individuals to help with big picture, strategic decisions. Individual and project level metrics alone aren’t enough for team and org-level strategic planning. Burn down charts are useful for predicting when work will be completed, but it doesn’t provide a way to see how much engineering work is actually required to complete a project.”

The cost capitalization features alone were enough to make the decision to deploy Jellyfish, “This was a huge win for me, and our CFO”, Ferrari says, “and the other features aligned with my metric-driven engineering vision so I was instantly enthusiastic about Jellyfish.”

Salsify saw quick value out of Jellyfish, improving the accuracy of their cost capitalization process and significantly reducing the person-hours required by the process. “We got value out of Jellyfish almost immediately with the cost capitalization features,” Ferrari said, “and the data has been successfully audited twice by our accounting firm, so it is working very well.”

In addition to the quick win with cost capitalization, Ferrari’s engineering directors and managers use Jellyfish to get the most out of their teams by visualizing quantitative day-to-day operational metrics including cycle time for tickets, or pull requests; and lead time (work start to production).
They also use the Jellyfish Allocation Framework as a critical component of strategic planning, providing quantitative answers to the following questions:

• How much are we investing on innovation?
• How are resources allocated, cost of those resource allocations?
• How much does a standard project cost?

Ferrari appreciates the validity of the data, “We like that these strategic metrics connect all the way back to the boots on the ground getting the work done. I can show that a team is focused 80% on innovation work (roadmap, architecture, etc.), and confidently justify headcount because another new strategic/innovation project simply won’t fit into that team.”

Ferrari views Jellyfish as the tool of choice to manage his engineering operations as it improves not only their cost capitalization process, but their overall ability to focus on maximizing investment in innovation, rather than bug fixes and support. “What I love about Jellyfish is that it automatically does this for me [shows how much we’re investing in innovation] with the Allocation Framework. This provides a great way to view these metrics at the team level that I haven’t seen in other tools.” With the right combination of process and tools, Salsify is now equipped to effectively scale high performing teams, ensuring that engineering investment continues to provide optimal value to the company.