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Agile BI: 
Accounting for progress 
Tom Breur 
Data Vault Automation 
Utrecht, 6 Oktober 2011
“Our highest priority is to satisfy the 
customer through early and continuous 
delivery of valuable software” 
www.xlntconsulting.com 2 
Agile Manifesto, 2001 
Kent Beck, Mike Beedle, Arie van Bennekum, Alistair Cockburn, Ward Cunningham, 
Martin Fowler, James Grenning, Jim Highsmith, Andrew Hunt, Ron Jeffries, Jon Kern, 
Brian Marick, Robert C. Martin, Steve Mellor, Ken Schwaber, Jeff Sutherland, Dave Thomas
Counter intuitive Agile practices 
 People are more productive if nobody tells 
them what to do 
 Pair programming leads to more (effective) 
production code 
 Business partners must be full-time 
engaged (co-located) with the 
development team 
www.xlntconsulting.com 3
Counter intuitive Agile practices 
 Only the business has the right to choose 
what gets done 
 An efficient team must have “slack”, must 
have people sitting idle, with nothing 
productive to do, on a regular basis 
 Etc. 
www.xlntconsulting.com 4
Software ‘inventory’ 
“Work-in-Progress is a liability 
– not an asset” 
www.xlntconsulting.com 5 
Tom Breur, 2011
Simplified development 
Error Reports 
Idea Develop Test Working Code 
www.xlntconsulting.com 6
(More) realistic development 
Idea Analysis Design 
Working 
Code 
Error Error Error 
www.xlntconsulting.com 7 
Code 
Acceptance 
Test 
System 
Test 
Unit 
Test
Agile manufacturing 
Theory Focus 
J-i-T Inventory 
TQM/QA Quality & Conformance 
T-o-C Bottlenecks 
Lean Inventory, Quality & 
www.xlntconsulting.com 8 
Conformance 
Six Sigma Quality & Variance
Throughput Accounting metrics 
THROUGHPUT 
Rate of cash* generated through 
delivery of working code into 
production, not merely code 
complete 
*Assuming a constant level of Investment 
www.xlntconsulting.com 9 
INVENTORY 
Quantity of ideas for client-valued 
functionality queing for input to, in-process 
through, or waiting for 
output, from the system 
INVESTMENT 
The sum of money invested in the 
system of software production plus 
the sum spent to obtain the ideas for 
client-valued functionality input to the 
system (gathering requirements) 
OPERATIONAL EXPENSE 
The sum of money spent in the 
system to produce working code from 
ideas for client-valued functionality 
(marginal expense to create 
production code)
ROI in Throughput Accounting 
ROI = 
Unknown (T) – Pretty hard to guess (OE) 
Didn’t bother to measure (I) 
www.xlntconsulting.com 10
NP in Throughput Accounting 
(more) Net Profit (NP) = T – (less) OE 
www.xlntconsulting.com 11
ROI in Throughput Accounting 
(more) ROI = 
Throughput (T) – Operating Expense (OE) 
(less) Investment in Inventory 
www.xlntconsulting.com 12
ROI in Throughput Accounting 
(more) ROI = 
(more) Net Profit (NP) = (more) T - OE 
(more) Throughput (T) – Operating Expense (OE) 
www.xlntconsulting.com 13 
Investment
Focus on Throughput 
 Focus on T, I, or OE? 
 Throughput is unlimited, it can grow 
forever 
 Focusing on cost has a logical (yet 
unattainable) lower bound – namely zero 
 Throughput focuses on the customer – 
externally 
 Cost focuses on the team – internally 
www.xlntconsulting.com 14
Investment 
 Minimizing Investment (I) drives ROI up 
 Minimizing Investment also reduces OE, 
by reducing carrying cost of capital 
 And, most importantly 
 Lower I means lower inventory, 
which leads to reduced Lead Times, 
hence earlier delivery of value 
(Agile Manifesto principle #1) 
www.xlntconsulting.com 15
Cost vs Throughput Accounting 
Cost Accounting 
Throughput Accounting 
 Inventory is an asset 
 Inventory is a liability 
 Efficiency = function/ 
 Efficiency = function/ 
dollar (hours)  labor is 
direct costs (idle or not) 
a “variable” cost 
 labor is a “fixed” cost 
 People sitting idle are 
 People sitting idle are a 
discarded! 
part of the system! 
www.xlntconsulting.com 16
Cost vs Throughput Accounting 
Cost Accounting 
Operating 
Expense Inventory Production 
Throughput 
(Production) Inventory Operating 
www.xlntconsulting.com 17 
Expense 
Most Focus 
Least Focus 
Throughput Accounting
Agile & Data Vault 
 (very) few other architectures allow 
incremental build at such low marginal 
cost 
 Deliver early – in (very) small increments 
 (very) few other architectures allow 
‘mistakes’ in your model, that you can 
recover from inexpensively 
 Deliver early – (long) before you have settled 
on “the” final business model 
www.xlntconsulting.com 18
Conclusion 
 By providing appropriate metrics 
(=Throughput Accounting), complex 
adaptive systems (Agile projects) will 
display the desired emergent properties 
 Agile BI is not about delivering faster (or 
cheaper) – efficiency 
 Agile BI is about delivering in arbitrarily 
smaller increments to end-users – hence 
gathering feedback about effectiveness 
www.xlntconsulting.com 19

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Tom Breur - Agile Business Intelligence - accounting for progress - keynote data vault conference 20111006

  • 1. Agile BI: Accounting for progress Tom Breur Data Vault Automation Utrecht, 6 Oktober 2011
  • 2. “Our highest priority is to satisfy the customer through early and continuous delivery of valuable software” www.xlntconsulting.com 2 Agile Manifesto, 2001 Kent Beck, Mike Beedle, Arie van Bennekum, Alistair Cockburn, Ward Cunningham, Martin Fowler, James Grenning, Jim Highsmith, Andrew Hunt, Ron Jeffries, Jon Kern, Brian Marick, Robert C. Martin, Steve Mellor, Ken Schwaber, Jeff Sutherland, Dave Thomas
  • 3. Counter intuitive Agile practices  People are more productive if nobody tells them what to do  Pair programming leads to more (effective) production code  Business partners must be full-time engaged (co-located) with the development team www.xlntconsulting.com 3
  • 4. Counter intuitive Agile practices  Only the business has the right to choose what gets done  An efficient team must have “slack”, must have people sitting idle, with nothing productive to do, on a regular basis  Etc. www.xlntconsulting.com 4
  • 5. Software ‘inventory’ “Work-in-Progress is a liability – not an asset” www.xlntconsulting.com 5 Tom Breur, 2011
  • 6. Simplified development Error Reports Idea Develop Test Working Code www.xlntconsulting.com 6
  • 7. (More) realistic development Idea Analysis Design Working Code Error Error Error www.xlntconsulting.com 7 Code Acceptance Test System Test Unit Test
  • 8. Agile manufacturing Theory Focus J-i-T Inventory TQM/QA Quality & Conformance T-o-C Bottlenecks Lean Inventory, Quality & www.xlntconsulting.com 8 Conformance Six Sigma Quality & Variance
  • 9. Throughput Accounting metrics THROUGHPUT Rate of cash* generated through delivery of working code into production, not merely code complete *Assuming a constant level of Investment www.xlntconsulting.com 9 INVENTORY Quantity of ideas for client-valued functionality queing for input to, in-process through, or waiting for output, from the system INVESTMENT The sum of money invested in the system of software production plus the sum spent to obtain the ideas for client-valued functionality input to the system (gathering requirements) OPERATIONAL EXPENSE The sum of money spent in the system to produce working code from ideas for client-valued functionality (marginal expense to create production code)
  • 10. ROI in Throughput Accounting ROI = Unknown (T) – Pretty hard to guess (OE) Didn’t bother to measure (I) www.xlntconsulting.com 10
  • 11. NP in Throughput Accounting (more) Net Profit (NP) = T – (less) OE www.xlntconsulting.com 11
  • 12. ROI in Throughput Accounting (more) ROI = Throughput (T) – Operating Expense (OE) (less) Investment in Inventory www.xlntconsulting.com 12
  • 13. ROI in Throughput Accounting (more) ROI = (more) Net Profit (NP) = (more) T - OE (more) Throughput (T) – Operating Expense (OE) www.xlntconsulting.com 13 Investment
  • 14. Focus on Throughput  Focus on T, I, or OE?  Throughput is unlimited, it can grow forever  Focusing on cost has a logical (yet unattainable) lower bound – namely zero  Throughput focuses on the customer – externally  Cost focuses on the team – internally www.xlntconsulting.com 14
  • 15. Investment  Minimizing Investment (I) drives ROI up  Minimizing Investment also reduces OE, by reducing carrying cost of capital  And, most importantly  Lower I means lower inventory, which leads to reduced Lead Times, hence earlier delivery of value (Agile Manifesto principle #1) www.xlntconsulting.com 15
  • 16. Cost vs Throughput Accounting Cost Accounting Throughput Accounting  Inventory is an asset  Inventory is a liability  Efficiency = function/  Efficiency = function/ dollar (hours)  labor is direct costs (idle or not) a “variable” cost  labor is a “fixed” cost  People sitting idle are  People sitting idle are a discarded! part of the system! www.xlntconsulting.com 16
  • 17. Cost vs Throughput Accounting Cost Accounting Operating Expense Inventory Production Throughput (Production) Inventory Operating www.xlntconsulting.com 17 Expense Most Focus Least Focus Throughput Accounting
  • 18. Agile & Data Vault  (very) few other architectures allow incremental build at such low marginal cost  Deliver early – in (very) small increments  (very) few other architectures allow ‘mistakes’ in your model, that you can recover from inexpensively  Deliver early – (long) before you have settled on “the” final business model www.xlntconsulting.com 18
  • 19. Conclusion  By providing appropriate metrics (=Throughput Accounting), complex adaptive systems (Agile projects) will display the desired emergent properties  Agile BI is not about delivering faster (or cheaper) – efficiency  Agile BI is about delivering in arbitrarily smaller increments to end-users – hence gathering feedback about effectiveness www.xlntconsulting.com 19