CAPEX vs. OPEX: How to defend your Engineering Budget in the Boardroom

The CFO’s Dilemma

To a CFO, engineering is often the largest line item on the P&L, yet it has the least transparent ROI. Marketing can show CAC and LTV. Sales can show quota attainment.

Engineering shows... "Story Points"?

In a high-interest-rate environment, "velocity" is not a defense against budget cuts. Capitalization is.

The accounting of Code

Software development costs falls into two buckets:

1. OPEX (Operating Expense)

Maintenance, bug fixes, keeping the lights on. This hits the P&L immediately.

2. CAPEX (Capital Expenditure)

Building new assets (features) that create future value. This can be depreciated over time, improving the company’s EBITDA.

The Tracking Nightmare

To maximize CAPEX (which makes the company look more profitable), you need to prove exactly how much time was spent building new features vs. fixing old bugs.

Traditionally, this requires engineers to manually log hours against specific codes—a process they hate and usually fake.

Automating the "Cost of Innovation"

NotchUp solves the Capitalization problem by mapping GitHub Commits and Jira Tickets directly to Salary Data.

• The Mechanism

The AI classifies work types (Feature vs. Fix) based on ticket context and code diffs.

• The Financial Output

"In Q3, we deployed 2.4M in salaries (1.68M) was capitalized innovation. 32% ($770k) was maintenance."

Why This Matters

When you present this data to the board:
• You prove you are running an efficient ship.
• You defend your headcount by showing the direct correlation between "Budget Cut" and "Roadmap Delay."
• You shift the conversation from "Why is Engineering so expensive?" to "How much do we want to invest in growth?"