Three times a week now an engineering leader I respect tells me their CFO wants them to justify the ROI on AI tokens. The question itself is the part I am puzzled by. A token is a raw material, the…
AI tooling is a raw material and should be managed as such. Focus on the value generated, not the input cost.
Treat the AI invoice as capital, not expense.
Organizations must measure value generated by technology inputs. When a cost of a variable input becomes visible, so too must the output of that input.
Cost of delay (CoD) quantifies the economic impact of delayed feature delivery, translating lost revenue or strategic opportunity into a daily financial figure. This applies to every element of the value stream.
Token budgets should be managed at the portfolio level, aligning resource allocation with overall business objectives and value streams, rather than individual teams or engineers.
Product managers and financial controllers must jointly own the economic outcome of AI investments, focusing on the value stream's output rather than the line item's input cost.
The first question for any AI program: what does this organization measure, and what does the measurement reward?
AI tooling is a raw material and should be managed as such. Focus on the value generated, not the input cost.
Treat the AI invoice as capital, not expense.
Organizations must measure value generated by technology inputs. When a cost of a variable input becomes visible, so too must the output of that input.
Cost of delay (CoD) quantifies the economic impact of delayed feature delivery, translating lost revenue or strategic opportunity into a daily financial figure. This applies to every element of the value stream.
Token budgets should be managed at the portfolio level, aligning resource allocation with overall business objectives and value streams, rather than individual teams or engineers.
Product managers and financial controllers must jointly own the economic outcome of AI investments, focusing on the value stream's output rather than the line item's input cost.
The first question for any AI program: what does this organization measure, and what does the measurement reward?
After 20 years in software development, Norman is both a hands-on leader and defining the new age of AI SDLC for some of the biggest brands in the world — and exploring it with the builders. He writes here about things he is hearing and seeing. All posts are his personal points of view and do not reflect any employer or any customer he has ever had contact with.
The views and opinions expressed in this article are the author’s own and do not represent the positions of any employer, client, or affiliated organization.
