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Agile Metrics for Senior Managers and Executives

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In this webinar, find out about agile appropriate metrics at the customer, portfolio and project levels. Presented by LitheSpeed, LLC.

Want to check out the full webinar? Visit http://pm.versionone.com/Webinar_MetricsExecs.html

Published in: Business, Technology

Agile Metrics for Senior Managers and Executives

  1. 1. AgileMetricsforSenior Managers&ExecutivesManagers&Executives Sanjiv Augustine and Roland Cuellar, LitheSpeed Annandale, VA April 15, 2009
  2. 2. 1. Conceptual Background • Defining Key Metrics • Metrics as Indicators • The Balanced Scorecard 2. Agile Balanced Scorecard • Sample Scorecard Agenda • Sample Scorecard • Product: Business Value Delivered • Team: Customer Satisfaction • Financial: Net Present Value • Schedule: Earned Value for Agile • Other Leading Indicators 3. Q&A 22
  3. 3. • Beware the Hawthorne Effect o We affect what we measure • Knowledge workers need to first define: o What is our business? Who is our customer? Defining Key Metrics o Who is our customer? o What does our customer consider valuable? 33 Drucker: Measures of quality must flow from the above.
  4. 4. • Business Metrics are often Lagging Indicators o They often measure what happened in the last financial period o Do not always give a forward view into what is to come and how to make corrections • Managers need Leading Indicators to help keep projects on track o Are we delivering according to schedule and budget? o Are we practicing the appropriate agile methods that will lead to success? Metrics Frameworks success? o Are we being efficient with resources? • Effectiveness Metrics o Measures the extent to which we met our business goals o Tend to be business metrics such as revenue generated, cost savings, new customer acquisition, customer retention, etc. • Efficiency Metrics o Measures the efficiency of our solution in terms of cost, time, resources, etc 44 The metrics that you choose may need to cover all 4 facets.
  5. 5. The Balanced Scorecard Customer Customer Satisfaction / NPS Financial Cost per Unit Project Savings Activity Based Costing Innovation & Learning Lessons Learned 55 Customer Satisfaction / NPS Customer Acquisition & Retention Quality Lessons Learned Training % Revenue from NPD Internal Processes Cycle Times Volumes Shipped On Time Delivery Kaplan, Norton
  6. 6. Sample Agile Balanced Scorecard Schedule EVA Product Business Value Delivered Remaining Feature Backlog Quality Team Customer & Associate Satisfaction 66 EVA Release Burndown Days per Release Customer & Associate Satisfaction Iteration Velocity Variance Audit Pass Rate Financial NPV Cost Savings or Revenue Dollars per Release
  7. 7. Fast account registration process .4 User account registration Account processing Product: Business Value • Goal represents 40% of business case • “User account registration” Feature represents 70% of Goal value • “Enter billing information” User Story realizes 60% of Feature value • % Value Delivered= .4 x .7 x .6 = 16.8% GoalFeature User account registration .7 As a User, I can enter personal information. .4 As a User, I can enter billing information. .6 Account processing .3 As an Account Processor, I can activate a User account. 1 77 FeatureUserStory
  8. 8. Landmark Honda: 6x HondaPresident’s Award winner: • “…demonstrate superior achievement in customer satisfaction, new-car- unit sales volume and business management.” Team: Customer Satisfaction • “…it is the highest award that a Honda dealership can receive because it demands the highest personal investment and stimulates the greatest results – satisfied, loyal customers.” 88 “Although some of them seem to rate our entire operation, in fact they all rate my personal performance and the scores become part of my permanent record.”
  9. 9. Financial: Net Present Value • C = net cash in period t • R = cost of capital • NPV > 0; accept the project • NPV < 0; decline the project NPV: Takes time value of money into account Takes cost of capital into account Values projects same as stock Positive NPV adds value to the firm Leads to better investment decisions than other criteria such as IRR, ROI* NPV = ∑ Ct (1+r)t 99 • NPV < 0; decline the project * From “Principles of Corporate Finance” by Brealey & Myers Leading and Lagging: For leading indicators of success, measure the assumptions that went into the model For lagging indicators, measure actual investment performance
  10. 10. Schedule: Earned Value for Agile • Does not really measure business value; measures cost delivery • Tries to measure both schedule performance and cost performance against plan EVM Definition Calculation PPC Planned % Complete Iteration # / Total Iterations APC Actual % Complete Points Delivered / Total Points 1010 APC Actual % Complete Points Delivered / Total Points PV Planned Value PPC * BAC (budget at completion) EV Earned Value APC * BAC CPI Cost Perf Index EV / Actual Cost SPI Schedule Perf Index EV / PV Sulaiman, Barton, and Blackburn
  11. 11. Other Leading Indicators - Use With Caution! • Change in velocity • Change in Team Capacity • Product Owner Time with Team • Team co-location time • Backlog growth • Defect generation and resolution rates They Want It All: “I want it fast” “I want it cheap” “I want good quality” “It must pass governance” 1111 • Process QA Checklist– o Are stand-ups happening? o Are demos happening? o Are retrospectives happening? o Is working software delivered in every sprint? o Is testing occurring in every sprint?
  12. 12. Sample Agile Balanced Scorecard Revisited Schedule EVA Product Business Value Delivered Remaining Feature Backlog Quality Team Customer & Associate Satisfaction 1212 EVA Release Burndown Days per Release Customer & Associate Satisfaction Iteration Velocity Variance Audit Pass Rate Financial NPV Cost Savings or Revenue Dollars per Release
  13. 13. Contact Us for Further Information Sanjiv Augustine President Sanjiv.Augustine@lithespeed.com Roland Cuellar Vice President 1313 Vice President Roland.Cuellar@lithespeed.com On the Web: http://www.lithespeed.com http://www.sanjivaugustine.com "I only wish I had read this book when I started my career in software product management, or even better yet, when I was given my first project to manage. In addition to providing an excellent handbook for managing with agile software development methodologies, Managing Agile Projects offers a guide to more effective project management in many business settings." John P. Barnes, former Vice President of Product Management at Emergis, Inc.

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