Is It Worth It? Using A Business Value Model To Guide Decisions

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One trait of an effective business analyst is the ability to ask the right questions. One “right” question that applies to just about every projects can sometimes be difficult to ask, let alone answer: “Is it worth it?” This question is difficult to answer, because the answer will change as you proceed through the project and gain more knowledge about the purpose, considerations, costs, and benefits involved in a project.
In this session, we’ll explore a tool you can use to help organize the necessary information to answer the “is it worth it?” question on a regular basis. This interactive session will demonstrate how you can create a value model to make an initial decision about whether to pursue a project, and then utilize that model as your knowledge grows throughout the project to revisit the question and confirm whether the project is on the right course, or if changes need to be made.
Topics discussed during the session include:
Structuring your value model to make decisions about whether to do a project
How to deal with non-financial benefits in your Cost/Benefit discussion
Where measures such as NPV, ROI, TCO, IRR fit into the Cost/Benefit discussion.
The impact of timing of implementation on the Cost/Benefit discussion.

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  • Business Value Modeling: Guiding Key Project Decisions [New]Kent McDonaldKnowledge Bridge Partnerskentjmcdonald@gmail.com There are many questions that teams should ask about their project and its key functions and features. One question—“Is it worth it?”—is often difficult to ask, let alone answer. It’s even more difficult if you are asked to answer this critical question when you know least about the project. Unfortunately, the answer may change as you proceed and gain more knowledge about the purpose, considerations, costs, and benefits involved. Join Kent McDonald as he introduces the business value model—a tool you can use to answer the “Is it worth it?” question. In this interactive session, Kent demonstrates a business value model to help you make your initial decision about whether to pursue a project or include certain functions, and then to update that model as your knowledge increases throughout the project. Learn how and when to revisit the question and confirm whether the project is on the right course or if you need to make changes. Help your organization get away from relying solely on estimates and guesses, and instead have meaningful conversations about whether your projects are worth starting and continuing.
  • http://fc09.deviantart.net/fs51/f/2009/285/d/e/United_Federation_of_Planets_by_Scharfshutze.jpghttp://globalnerdy.com/wordpress/wp-content/uploads/2007/08/picard_ashamed.jpg
  • http://technabob.com/blog/wp-content/uploads/2007/11/blueandred_segway.jpg
  • http://www.wpclipart.com/signs_symbol/safety_signs/caution_sign_w_exclamation.png
  • Exactly what problem will this solve? (value proposition) For whom do we solve that problem? (target market) How big is the opportunity? (market size) How will we measure success? (metrics/revenue strategy) What alternatives are out there now? (competitive landscape) Why are we best suited to pursue this? (our differentiator) Why now? (market window) How will we get this product to market? (go-to-market strategy) What factors are critical to success? (solution requirements) Product Opportunity Assessment from Marty Cagan’s Inspired: How to Create Products Customers Love. The original 10th question is Given the above, what’s the recommendation? (go or no-go)
  • Ideally, you will identify some simple decision criteria or filters that you can use to define what is differentiating. You can then disperse these decision filters throughout the organization so that everyone can use them, thereby ensuring that the hundreds and thousands of decisions that your employees make are aligned with purpose and strategy.
  • This is an example of a highly effective, meaningful, and simple decision filter.
  • Ideally, you will identify some simple decision criteria or filters that you can use to define what is differentiating. You can then disperse these decision filters throughout the organization so that everyone can use them, thereby ensuring that the hundreds and thousands of decisions that your employees make are aligned with purpose and strategy.
  • Exactly what problem will this solve? (value proposition) For whom do we solve that problem? (target market) How big is the opportunity? (market size) How will we measure success? (metrics/revenue strategy) What alternatives are out there now? (competitive landscape) Why are we best suited to pursue this? (our differentiator) Why now? (market window) How will we get this product to market? (go-to-market strategy) What factors are critical to success? (solution requirements) Product Opportunity Assessment from Marty Cagan’s Inspired: How to Create Products Customers Love. The original 10th question is Given the above, what’s the recommendation? (go or no-go)
  • Exactly what problem will this solve? (value proposition) For whom do we solve that problem? (target market) How big is the opportunity? (market size) How will we measure success? (metrics/revenue strategy) What alternatives are out there now? (competitive landscape) Why are we best suited to pursue this? (our differentiator) Why now? (market window) How will we get this product to market? (go-to-market strategy) What factors are critical to success? (solution requirements) Product Opportunity Assessment from Marty Cagan’s Inspired: How to Create Products Customers Love. The original 10th question is Given the above, what’s the recommendation? (go or no-go)
  • Exactly what problem will this solve? (value proposition) For whom do we solve that problem? (target market) How big is the opportunity? (market size) How will we measure success? (metrics/revenue strategy) What alternatives are out there now? (competitive landscape) Why are we best suited to pursue this? (our differentiator) Why now? (market window) How will we get this product to market? (go-to-market strategy) What factors are critical to success? (solution requirements) Product Opportunity Assessment from Marty Cagan’s Inspired: How to Create Products Customers Love. The original 10th question is Given the above, what’s the recommendation? (go or no-go)
  • Exactly what problem will this solve? (value proposition) For whom do we solve that problem? (target market) How big is the opportunity? (market size) How will we measure success? (metrics/revenue strategy) What alternatives are out there now? (competitive landscape) Why are we best suited to pursue this? (our differentiator) Why now? (market window) How will we get this product to market? (go-to-market strategy) What factors are critical to success? (solution requirements) Product Opportunity Assessment from Marty Cagan’s Inspired: How to Create Products Customers Love. The original 10th question is Given the above, what’s the recommendation? (go or no-go)
  • Exactly what problem will this solve? (value proposition) For whom do we solve that problem? (target market) How big is the opportunity? (market size) How will we measure success? (metrics/revenue strategy) What alternatives are out there now? (competitive landscape) Why are we best suited to pursue this? (our differentiator) Why now? (market window) How will we get this product to market? (go-to-market strategy) What factors are critical to success? (solution requirements) Product Opportunity Assessment from Marty Cagan’s Inspired: How to Create Products Customers Love. The original 10th question is Given the above, what’s the recommendation? (go or no-go)
  • http://www.windfallfp.com/images/iStock_000007893322XSmall.jpg
  • Exactly what problem will this solve? (value proposition) For whom do we solve that problem? (target market) How big is the opportunity? (market size) How will we measure success? (metrics/revenue strategy) What alternatives are out there now? (competitive landscape) Why are we best suited to pursue this? (our differentiator) Why now? (market window) How will we get this product to market? (go-to-market strategy) What factors are critical to success? (solution requirements) Product Opportunity Assessment from Marty Cagan’s Inspired: How to Create Products Customers Love. The original 10th question is Given the above, what’s the recommendation? (go or no-go)
  • Goals are the way to measure whether your project was successful.This project is estimated to increase participation by 20% - 30% by December 31, 2010.”http://www.yourkidsed.com.au/info/files/shared/iStock_000006649786XSmall_smart_goal.jpg
  • Exactly what problem will this solve? (value proposition) For whom do we solve that problem? (target market) How big is the opportunity? (market size) How will we measure success? (metrics/revenue strategy) What alternatives are out there now? (competitive landscape) Why are we best suited to pursue this? (our differentiator) Why now? (market window) How will we get this product to market? (go-to-market strategy) What factors are critical to success? (solution requirements) Product Opportunity Assessment from Marty Cagan’s Inspired: How to Create Products Customers Love. The original 10th question is Given the above, what’s the recommendation? (go or no-go)
  • Exactly what problem will this solve? (identify the problem)For whom do we solve this problem (identify our stakeholders)Is the problem worth solving (does it pay us to undertake a solution?)How will we measure success (what are your SMART objectives?  - starting point for identifying the metrics that matter)What alternatives are out there now? (This helps us to identify current existing options that we can compare to, investigate, benchmark, steal ideas from etc.  This may help provide a comparison point for parity.Do we have the right people to solve this (I revised this question from the original form, which I list for external facing projects to better address the relevant question for Inward facing IT Projects.  This can be translated to do we have the ability to solve the problem)  For external facing projects the question changes to "Why are we best suited to pursue this - does it fit into one of our core competencies.  It may also give us some clues to help figure out how it fits in with our differentiators.Why Now? This is question any constraints or assumed constraints around time.How will we encourage adoption (this again is the inward facing facing version of the question intended to get the team started thinking about change management within the organization.)  For external facing projects, the question becomes "how will we take this to market?"What factors are critical to success? (This one is fairly straight forward - what must be true in order for the project to succeed.)
  • Is It Worth It? Using A Business Value Model To Guide Decisions

    1. 1. Is It Worth It:Using A Business Value Model to Guide Decisions Kent J. McDonald @beyondreqs
    2. 2. Discussion Topics Business Value? Purpose Considerations Costs & Benefits Using the Business Value Model to decide
    3. 3. The BA Prime Directive:Deliver Business Value! *The organizers wish to apologize for any gratuitous trekkie references that may appear in this presentation.
    4. 4. What is Business Value? I’ll know it when I see itJustice Potter Stewart, concurring opinion in Jacobellis v. Ohio 378 U.S. 184 (1964), regardingpossible obscenity in The Lovers.
    5. 5. Determining Business Value? CostsBenefits Business Value
    6. 6. Determining the inputs?Estimate Guess Business Value Common Practice
    7. 7. Why do we want to know Business Value? To make decisions!
    8. 8. Use business value model and guidingquestions to decide if a project is worth it.
    9. 9. Purpose = What problem are you trying to solve?
    10. 10. Solutionwithout aproblem
    11. 11. Guiding QuestionsExactly whatproblem will thissolve? Why are we best suited to pursue this?For whom do wesolve that problem?
    12. 12. Purpose Based Alignment Model
    13. 13. Purpose Based Alignment Model Do we take this Innovate, on? Create Achieve and Minimize/ maintain parity, Eliminate Mimic, Simplify
    14. 14. Decision Filters  Simple rules to guide decision making  Disperse throughout the organization Used for (among others)  Strategy alignment  Scoping  Design approach
    15. 15. “To be the low cost airline.” - Southwest Airlines
    16. 16. Purpose and Decision Filters To be the low cost airline Will this help us be the low cost airline?
    17. 17. The Billboard TestOrder newpages by2pm and getthem tomorrow!
    18. 18. Student Information SystemYes, it has been abbreviated to “SIS”
    19. 19. SIS “Requirements”In search of a "Student Information System" thatwill be used to manage student and parent data,enable interactive communication betweenteachers and parents, as well as online enrollments.Requirements: Student/Parent Directory Staff Directory Calendar Online Enrollment Parent/Classroom Portal
    20. 20. Bergman Academy 15:1 Student TeacherMusic Education w/ RatioDSM Symphony “Personalized” lessonOTM plans Enrollment Fundraising Book keeping Curriculum Facilities Parent Communication
    21. 21. Decision Filter If we do this, will it help us provide the best education for every student?
    22. 22. SIS – What’s The Purpose?
    23. 23. Considerations= What could impact value?
    24. 24. Guiding QuestionsWhat alternativesare out there now? What factors are critical to success?
    25. 25. Guiding QuestionsHow will we get this product to market?
    26. 26. Context Leadership Model
    27. 27. Guiding QuestionsWhy Now? Do we have the right people to solve this?
    28. 28. ConstraintsConstraint Fixed Flexible AcceptScope XTime XCost XQuality X
    29. 29. SIS – Considerations?
    30. 30. Costs & Benefits= What’s the impact on business objectives?
    31. 31. Guiding QuestionsHow much could we spend on this?
    32. 32. “Gut Feel” or “Ball Park”How long, and how much? About a year and $2.5 million.
    33. 33. Comparison to Past Projects$1,000 $100K $10M ?? $1M
    34. 34. ExtrapolateAssumptions: 2 week iterations Overall backlog size: 600 points Planning Velocity: 30 ? 5 Person Team Avg Cost/person/wk: $4,000 Estimate: $800,000
    35. 35. Guiding QuestionsHow big is the opportunity?
    36. 36. Benefits A consequence of the action that contributes to meeting business objectives. Can be identified in financial or non financial terms, but should be measurableSoft Benefits in a Hard Business Case: Legitimacy and Value for Difficult BenefitsSolution Matrix Ltd By Marty J Schmidt
    37. 37. Guess
    38. 38. IncreaseRevenue
    39. 39. Reduce Costs
    40. 40. Guiding QuestionHow will we measure success?
    41. 41. ObjectivesSpecificMeasureableAgreed UponRealisticTimely
    42. 42. Financial Objectives? ROI Return on Investment NPV Net Present Value TCO Total Cost of Ownership IRR Internal Rate of Return
    43. 43. Financial Objectives = Cash Flow Costs BenefitsYear 0 Year 1 Year 2 Year 3 Year 4
    44. 44. Non Financial ObjectivesBy Dec 2012 increase By Dec 2012 reduce paperinventory turns from 5/year apps from 1,000/month toto 10/year 500/month
    45. 45. SIS – Measures of Success?
    46. 46. But Wait!How can I possiblycalculate a numberfor my businessvalue with thatstuff?What ever should Ido? 50
    47. 47. The Conversation RoomThanks to Nigel Dalton
    48. 48. And if you still want numbers…
    49. 49. Is It Worth It?Move forward? Trash it?
    50. 50. BA FAQ  Do business analysts ever really get the chance to do this?  What if we never get pulled into the project until this is already done?
    51. 51. If you remember nothing else… Business Value guides decisions Purpose & Considerations impact Business Value Costs & Benefits focus on objectives It’s a conversation, not a number 57
    52. 52. Guiding Questions 1. Exactly what problem will this solve? 2. For whom do we solve that problem? 3. How big is the opportunity? 4. How will we measure success? 5. What alternatives are out there now? 6. Why are we best suited to pursue this? 7. Why now? 8. How will we get this product to market? 9. What factors are critical to success?From Inspired: How to Create Products Customers Love by Marty Cagan
    53. 53. Additional Guiding Questions1. Is the problem worth solving?2. Do we have the right people to solve this?3. How will we encourage adoption?4. How much could we spend on this?
    54. 54. Questions?Kent McDonaldkentjmcdonald@gmail.com@BeyondReqswww.beyondrequirements.comSlides available from:http://www.knowledgebridgepartners.com/presentations/isitworthit/

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