How do you measure value?
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How do you measure value?

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How do you measure value? How do you measure value? Presentation Transcript

  • How do youmeasure value ?
  • Our highestpriority... “ Our highest priority is to satisfy the customer through early and continuous delivery of valuable software. -- Principles behind the Agile Manifesto ” http://www.thoughtworks-studios.com/content/stop-doing-agile-start-being-agile © 2013
  • What do we measureto know we are deliveringon our priority? © 2013
  • What do we The typical measure, the “Iron Triangle”…measure? Cost Constraints Schedule Scope © 2013
  • What do we has changed… Valuemeasure? (Releasable product) Quality Constraints (Reliable, adaptable product) (cost, schedule, scope) Source: Jim Highsmith © 2013
  • What do we Valuemeasure? (Releasable product) Quality Constraints (Reliable, adaptable product) (cost, schedule, scope) The “old” Iron Triangle now becomes a set of constraints, NOT the focus of the development effort Source: Jim Highsmith © 2013
  • What do we Valuemeasure? (Releasable product) Quality is a given. But it is relative: you must decide what is the appropriate level of quality for your solution. Quality Constraints (Reliable, adaptable product) (cost, schedule, scope) Source: Jim Highsmith © 2013
  • What do we Valuemeasure? (Releasable product) We must measure value -‐ what is important to our customer, and what financial benefit does this bring to our organization. Quality Constraints (Reliable, adaptable product) (cost, schedule, scope) Source: Jim Highsmith © 2013
  • But, how do wemeasure value? © 2013
  • How do wemeasure value? 4 Step process: #1 Develop your organizations “value language”. #2 Understand the value-cost of each portfolio down to the feature level. #3 Allocate value points across all capabilities/features. #4 Track value vs. cost for each iteration. © 2013
  • How do wemeasure value? Define your Define your organizations#1 Develop your organizations currency of “Value Dials” “Business“value language” Value Points” Value-driven culture Develop your Business Value Point Matrix http://jimhighsmith.com/determining-business-value/ © 2013
  • How do we Indicators of business value that may or may not map to the financial bottom line.measure value? E.g. “Financial”, “Opportunity Capture”, “Customer Impact”, “Employee Impact”, “Social Impact”, and “Traits”.#1 Develop your organizations“value language” Define your organizations Define your “Value Dials” currency of “Business Value Points” Value-driven culture Develop your Business Value Point Matrix http://jimhighsmith.com/determining-business-value/ © 2013
  • How do we Analogous to “story points”, the estimated business value is assigned relatively. Rathermeasure value? than using $/€/¥, business value points increases the visibility of the oft-‐neglected “intangibles”.#1 Develop your organizations“value language” Define your organizations Define your “Value Dials” currency of “Business Value Points” Value-driven culture Develop your Business Value Point Matrix http://jimhighsmith.com/determining-business-value/ © 2013
  • How do we To help you prioritize your projects, map your Value Dials with measures such asmeasure value? “Start Up”, “Scale”, “Mature”, and “Decline”. The numbers indicate relative importance of the factors. For e.g., in a “Start Up” phase, financial results might be relative unimportant while opportunity capture very important. Conversely, in the#1 Develop your organizations“value language” “Mature” phase financial results might be the most important by far. Define your organizations Define your “Value Dials” currency of “Business Value Points” Value-driven culture Develop your Business Value Point Matrix http://jimhighsmith.com/determining-business-value/ © 2013
  • How do we Understand value & cost right through themeasure value? capability/feature level#1 Develop your organizations“value language”#2. Understand the value-costof each portfolio down to thefeature level Top Down – Allocation of Value Bottom Up – Calculation of Cost http://www.alnhouston.org/documents/Summits/LeaderSummit-ValuePresentation-Reed-20110610.pdf © 2013
  • How do we Allocate value points across all capabilities/features,measure value? based on their relationship to the business dials Business Value Points#1 Develop your organizations Business Value Points allocated to other Value Dials“value language” allocated to the Financial Value Dial#2. Understand the value-costof each portfolio down to thefeature level#3. Allocate “value points”across all capabilities http://www.alnhouston.org/documents/Summits/LeaderSummit-ValuePresentation-Reed-20110610.pdf © 2013
  • How do we Measure both the cost & value, to ensure that themeasure value? project does not cost us more than it is worth 120 120 Value Captured vs. Cost Expended#1 Develop your organizations 100 110“value language” 100 98 100 100 % Value 95 90 90 100 % Cost 85#2. Understand the value-cost 80 80 75of each portfolio down to the 70feature level 60 60 55 50#3. Allocate value points 40 30 40across all capabilities 30 20 20 15#4. Track value vs. cost for 10 5each iteration 0 1 2 3 4 5 6 7 8 9 10 11 12 Iteration http://www.alnhouston.org/documents/Summits/LeaderSummit-ValuePresentation-Reed-20110610.pdf © 2013
  • For example… © 2013
  • For example... Project Purpose: Increase the availability -‐ and thereby sales -‐ of#1 Develop your organizations Patent documents to the legal community (for a“value language” legal publishing company) Projected Revenue: $1million Fixed Costs: $62,400 per iteration © 2013
  • For example... Value Points (V): Estimate of value, in this case revenue.#1 Develop your organizations Effort Points (P): Relative sizing, and are an estimate of cost“value language”#2. Understand the value-cost As a Patent Attorney, I want to search existing Patents by keyword, so I can As an inventor, I want to see newof each portfolio down to thefeature level find if there are similar filings to the Patent filings so that I can develop one I am about to file. related products to these new V=1 Patents. P=8 V=2 P=3 As a Patent Attorney, I want to see the entire text and drawings in a Patent Filing, so that I can make a judgment about possible infringement. V=4 P=5 © 2013
  • For example... Value distribution across features#1 Develop your organizations 25 stories 5% value“value language” 10 stories 8% value ($2500 per story) ($8k per story)#2. Understand the value-cost 5% 8%of each portfolio down to the 12%feature level 50%#3. Allocate value points 8 stories 12% value 25%across all capabilities ($15k per story)#4. Track value vs. cost for 5 stories 50% valueeach iteration ($500k/$100k per story) 10 stories 25% value ($25k per story) © 2013
  • For example... We now start measuring delivered value against cost for every iteration#1 Develop your organizations 120 Value Captured vs. Cost Expended“value language” % Value 100#2. Understand the value-cost % Cost We start out on an agile 85of each portfolio down to the 80 project by delivering the most 75feature level valuable stories first. It takes 60 60 55#3. Allocate value points 50 a couple of iterations toacross all capabilities 40 40 stabilize, and then the value 30 30#4. Track value vs. cost for picks up. 20 20 15each iteration 10 5 0 1 2 3 4 5 6 Iteration © 2013
  • For example... But what happens when we start delivering lower value stories?#1 Develop your organizations 120 Value Captured vs. Cost Expended“value language” % Value 100 98 % Cost 95 Our fixed costs remain the#2. Understand the value-cost 90 90 85of each portfolio down to the 80 80 same, but the value of each 75feature level 70 story delivered -‐ and 60 60 55 50 therefore, the total value of#3. Allocate value pointsacross all capabilities 40 30 40 the project -‐ starts to 30 plateau.#4. Track value vs. cost for 20 20 15each iteration 10 5 0 1 2 3 4 5 6 7 8 9 Iteration © 2013
  • For example... When do we “finish”? The agile approach gives us the option to finish anytime we see “enough” value. We could finish here…#1 Develop your organizations 120 Value Captured vs. Cost Expended“value language” 100 110 100 98 100 % Value#2. Understand the value-cost 90 95 90 100 % Cost 85of each portfolio down to the 80 80 75feature level 70 But never here! 60 60 55#3. Allocate value points 50 …or “ideally” hereacross all capabilities 40 40 30 30#4. Track value vs. cost for 20 20 15each iteration 10 5 0 1 2 3 4 5 6 7 8 9 10 11 Iteration © 2013
  • How do youmeasure value ? © 2013
  • §  Highsmith, Jim (2011) Agile Triangle, Value vs. Cost graphs http://www.thoughtworks-studios.com/content/stop-doing-agile-start-being-agile http://thoughtworks.fileburst.com/articles/adaptive-leadership-accelerating- enterprise-agility-jim-highsmith-thoughtworks.pdfReferences http://jimhighsmith.com/determining-business-value/ §  Reed, Pat (2011) Value measurement framework http://www.alnhouston.org/documents/Summits/LeaderSummit- ValuePresentation-Reed-20110610.pdf §  Matthew M. Carty and Richard Lansford, Intel Corporation (2009) Value Dials Using an IT Business Value Program to Measure Benefits to the Enterprise © 2013
  • Agile Project ManagementMake decisions, not documentationThe best Agile requirements are the ones theteam builds as they work. Mingle generatesactionable project records from natural teamcollaboration. See how Mingle can help you make the most Learn More out of your user stories