Bridging the Gap Between Business and Development Luke Hohmann Founder & CEO Enthiosys, Inc. Copyright © 2007 by Luke Hohmann

Is There a Gap Between Business & Development?

Let’s Talk About Business Finance Development HR Sales Marketing Service

So, Is There A Gap? NO! Development is just another business function, focused on the needs of the customer. YES! Unlike other business functions, development pursues their interests over customer interests.

My Hypothesis There is a gap There will always be a gap It is not a gap of goals . It is a communication gap.

There is a gap

There will always be a gap

It is not a gap of goals .

It is a communication gap.

The Source of The Gap? Business Development B D u e s v i e n l e o s pment Insufficient appreciation for deeply intertwined relationship between business and development. Inability to communicate on their terms.

Testing The Hypothesis Imagine that developers came in boxes and were sold at the store. What would be on the box that describes your “ideal” developer – the developer you would buy? Product Box Innovation Game ®

Imagine that developers came in boxes and were sold at the store. What would be on the box that describes your “ideal” developer – the developer you would buy?

The Results?

They Want A Lot, Don’t They?

Developer Dan (Danella) Technical Competence Customer Driven Business Acumen

Business Acumen How do you help your company make more money than they pay you?

Profit Engine Framework A unique set of models that enable you to create software-related offerings with maximum value. Pricing Model How Much Money You Make Customer ROI Model Quantifies Value Enforcement Model Protection of Rights Licensing Model Terms and Conditions of Use Business Models The Event That Makes Money Profit Engine Causes More Money Making Events Customer Value Model Identifies and Captures Value

A unique set of models that enable you to create software-related offerings with maximum value.

Business Models The event that makes money / causes money to change hands Multiple business models can co-exist in the same product e.g., txn fees and “optional modules” Why should you care?

The event that makes money / causes money to change hands

Multiple business models can co-exist in the same product e.g., txn fees and “optional modules”

Why should you care?

Six Core SW Business Models Time-based access Transaction Meter Hardware Service Percentage of revenue gained / costs saved Charity?

Time-based access

Transaction

Meter

Hardware

Service

Percentage of revenue gained / costs saved

Time-Based Access Grant “right to use” for a defined period of time (even if you don’t actually use) Perpetual (like Microsoft Windows 2000) Annual (like many ERP) Rental Subscription Pay After Use...

Grant “right to use” for a defined period of time (even if you don’t actually use)

Perpetual (like Microsoft Windows 2000)

Annual (like many ERP)

Rental

Subscription

Pay After Use...

Effects of Time-Based Access on Tarchitecture Today? Generally, minimal (honor system) Future? Disallow use Microsoft and others pioneering model Rentals / other models require both protection and backend systems to support

Today? Generally, minimal (honor system)

Future? Disallow use

Microsoft and others pioneering model

Rentals / other models require both protection and backend systems to support

Transaction Defined and measurable units of work Exchange of money is always tied to the transaction but customer value (and therefore price) is often associated with an attribute of the transaction Duration of a phone call Time of day call is made To whom the call is made

Defined and measurable units of work

Exchange of money is always tied to the transaction but customer value (and therefore price) is often associated with an attribute of the transaction

Duration of a phone call

Time of day call is made

To whom the call is made

Effects of Transactions on Tarchitecture Do legal and technical definitions match? Uniquely identify & understand entire life Capturing the necessary data (schema) Direct: System captures and manages all data necessary to support the business model Indirect: System must be integrated with other systems to capture/manage necessary data Reporting/Remittance requirements Format? Security? Auditability?

Do legal and technical definitions match?

Uniquely identify & understand entire life

Capturing the necessary data (schema)

Direct: System captures and manages all data necessary to support the business model

Indirect: System must be integrated with other systems to capture/manage necessary data

Reporting/Remittance requirements

Format? Security? Auditability?

Meter Something that is counted Constraining a well-defined, identifiable resource HW: You can only have four CPUs running or only these terminals can access the program Named user: Only Amit, Bill, and Weng Li can use the software Consuming a well-defined resource Concurrent (e.g., concurrent user) Absolute value (e.g., you have 100 hours)

Something that is counted

Constraining a well-defined, identifiable resource

HW: You can only have four CPUs running or only these terminals can access the program

Named user: Only Amit, Bill, and Weng Li can use the software

Consuming a well-defined resource

Concurrent (e.g., concurrent user)

Absolute value (e.g., you have 100 hours)

Effects of Metering on Tarchitecture Varying degrees of enforceability When dealing with users/sessions... How will you authenticate users? How many will you allow? Under what circumstances? Will you allow grace users? How do you distinguish between lack of use vs dead or broken connection?

Varying degrees of enforceability

When dealing with users/sessions...

How will you authenticate users?

How many will you allow? Under what circumstances?

Will you allow grace users?

How do you distinguish between lack of use vs dead or broken connection?

Hardware Associate the amount charged for the software with some element of hardware Software anti-piracy dongles – you pay for both the dongle and the license SDK/run-time Huge challenge: software becomes “free”, especially in embedded software Home appliances – microwave ovens Information appliances – router/VPN server Consumer electronics

Associate the amount charged for the software with some element of hardware

Software anti-piracy dongles – you pay for both the dongle and the license SDK/run-time

Huge challenge: software becomes “free”, especially in embedded software

Home appliances – microwave ovens

Information appliances – router/VPN server

Consumer electronics

Effects of Hardware on Tarchitecture How do you upgrade? Will you network? Can you diagnose & repair problems or will you do a wholesale component replacement? Is there a cracker aftermarket?

How do you upgrade?

Will you network?

Can you diagnose & repair problems or will you do a wholesale component replacement?

Is there a cracker aftermarket?

Service The exchange of money is tied to a service; software is required to provide the service or is intimately related to the service Symantec: Virus updates AOL: email Red Hat: Linux-related services such as support or upgrades Often associated with subscription pricing

The exchange of money is tied to a service; software is required to provide the service or is intimately related to the service

Symantec: Virus updates

AOL: email

Red Hat: Linux-related services such as support or upgrades

Often associated with subscription pricing

Effects of Service on Tarchitecture What are data retention policies? Who owns what data? Who can use it? What are SLAs? Is your system capable of meeting these SLAs?

What are data retention policies?

Who owns what data?

Who can use it?

What are SLAs? Is your system capable of meeting these SLAs?

Revenue Obtained / Cost Saved Charge based on revenue obtained or costs saved, often in terms of percentages Retail yield management ServiceSource, with annual revenue between $25M - $50M, says it receives compensation based on the revenue it generates for its clients and charges no consulting, training or implementation fees, or ongoing management costs. - June 29, 2005, San Jose Mercury News

Charge based on revenue obtained or costs saved, often in terms of percentages

Retail yield management

Effects of Revenue /Costs on Tarchitecture Closely related to Transactions What is the baseline? How do you track improvements? Audit and remittance?

Closely related to Transactions

What is the baseline?

How do you track improvements?

Audit and remittance?

Let’s Try It… Adobe Acrobat Intuit QuickBooks On-Line salesforce.com Google adwords

Adobe Acrobat

Intuit QuickBooks On-Line

salesforce.com

Google adwords

What Is (or Are) Your Business Model(s)

Customer (Market) Driven Are you creating what they want? How do you know?

What’s a Requirement?

Are You Sure? How Do You Know That’s What Your Customers Really Want?

The Agile Manifesto (2001) We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value: Individuals and interactions over processes and tools Working software over comprehensive documentation Customer collaboration over contract negotiation Responding to change over following a plan That is, while there is value in the items on the right, we value the items on the left more. www.agilemanifesto.org

We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value:

Individuals and interactions over processes and tools

Working software over comprehensive documentation

Customer collaboration over contract negotiation

Responding to change over following a plan

That is, while there is value in the items on the right, we value the items on the left more.

www.agilemanifesto.org

Let’s Find Out Who You Talk With Write your name in the center of the circle. Write the names of people you collaborate with at work around the circle. Draw the web of these relationships as you see it. Use different line weights and colors to represent good/bad communication. Spider Web

Write your name in the center of the circle.

Write the names of people you collaborate with at work around the circle. Draw the web of these relationships as you see it. Use different line weights and colors to represent good/bad communication.

Let’s Do It Again Write your name in the center of the circle. Using your first diagram as a guide, replace the names of the people with their organizational roles (marketing, sales, etc.). Use different line weights and colors to represent good/bad communication. Spider Web

Write your name in the center of the circle.

Using your first diagram as a guide, replace the names of the people with their organizational roles (marketing, sales, etc.). Use different line weights and colors to represent good/bad communication.

Developer One

Developer Two

Manager One

If We’re So Agile, Where Are the Customers? Do you have the tools to talk with customers?

Techniques To Foster Understanding

Getting Access To Customers Ask to be included when customers will be present (e.g., conferences, user groups, etc.) Be a good Observer Don’t make any promises on priorities Don’t make any commitments Don’t talk negatively about your product or company Don’t talk negatively about your competitor’s products Don’t say “That should be easy” Don’t say “That is too hard” Listen nonjudgementally Be forewarned: It isn’t always a fun experience

Ask to be included when customers will be present (e.g., conferences, user groups, etc.)

Be a good Observer

Don’t make any promises on priorities

Don’t make any commitments

Don’t talk negatively about your product or company

Don’t talk negatively about your competitor’s products

Don’t say “That should be easy”

Don’t say “That is too hard”

Listen nonjudgementally

Thank You !!! I’d love to hear from you! Contact me at: Innovation Through Understanding Luke Hohmann Founder & CEO Enthiosys, Inc. cell: (408) 529-0319 www.enthiosys.com [email_address]

I’d love to hear from you! Contact me at: