Vertex Systems is a publicly traded enterprise software company with $3.2B in annual revenue, selling cloud-based ERP (enterprise resource planning) solutions to mid-size and large corporations across North America and Europe. Over the past three years the company has grown revenue at 18% annually through a combination of organic growth and four bolt-on acquisitions. Despite strong top-line growth, EBITDA margins have compressed from 24% to 16% and the CFO has flagged that engineering and product development costs have grown disproportionately. McKinsey has been engaged to diagnose the root causes of engineering cost inflation and design a more efficient operating model for the product organization.

Before reviewing any data, how would you structure the diagnosis of why engineering costs have grown faster than revenue?