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Planning for Value: How much? When?

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Making more money with Agile: Time-Value profiles, cost of delay and more

Slides from Agile on the Beach conference, July 2017

Published in: Software
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Planning for Value: How much? When?

  1. 1. Evolving #NoProjects -> Con5nuous Allan Kelly - @allankellynet allan@allankelly.net Planning for Value How much? When? Agile on the Beach July 2017
  2. 2. relax
  3. 3. Is this project right for Agile? Or is Waterfall be>er here? Is this project right for Kanban? Or is Scrum be>er here?
  4. 4. Who cares about right? Which will make more money?
  5. 5. Agile makes more $ £ € because it delivers something sooner
  6. 6. Today’s Lesson #1 A li>le bit Soon is Worth more than a lot delivered Later
  7. 7. Today’s Lesson #2 Know the Time-Value Profile of the thing you are building
  8. 8. Today’s Lesson #3 Deadlines are elasSc by value
  9. 9. Agile folk get it wrong! •  Give more opportuniSes for feedback •  Tighter feedback loops •  Allow for changing requirements •  Improve quality •  Reduce risk •  They increase value •  They make more money £€$ (O, and reduce risk, improve quality, etc. etc.) Regular deliveries are good because…
  10. 10. 20.00% 20.50% 21.00% 21.50% 22.00% 22.50% 23.00% 23.50% 24.00% 24.50% 25.00% $ 0 $ 50,000 $ 100,000 $ 150,000 $ 200,000 $ 250,000 $ 300,000 Big bang delivery 12 monthly deliveries Delivered in 1 Big Bang NPV = $ 215,725 Value/Cost = 21.57% 12 monthly small bangs NPV = $ 243,359 Value/Cost = 24.34% $27,000 2.75% $1 million – 1 year
  11. 11. Value delivered Cost to build over
  12. 12. “Price is what you pay. Value is what you get.” Warren Buffet
  13. 13. Which story first? Value = $355,000 Time to delivery = 4 weeks Value = $1,060,000 Time to delivery = 6 weeks As a toy retailer I want an app that allows kids to select from my special range so that their parents can buy. As a toy retailer I want an app that allows kids to make lists of toys they want so their parents can buy.
  14. 14. Which story first? Value = $355,000 Time to delivery = 4 weeks Value = $1,060,000 Time to delivery = 6 weeks As a toy retailer I want an app that allows kids to select from my special HALLOWEEN range so that their parents can buy. As a toy retailer I want an app that allows kids to make lists of toys they want SANTA TO BRING so their parents can buy. Today is 1 September
  15. 15. Time-Value Profile How does value change over Ime? 0 200000 400000 600000 800000 1000000 1200000 Sep 1 Sep 15 Sep 29 Oct 13 Oct 27 Nov 10 Nov 24 Dec 8 Dec 22 Jan 5
  16. 16. 0 200000 400000 600000 800000 1000000 1200000 Sep 1 Sep 15 Sep 29 Oct 13 Oct 27 Nov 10 Nov 24 Dec 8 Dec 22 Jan 5 Value over 4 months Santa app total value over 4 months Delivery date Total value for a given date Total value starts to fall aner 15 September To maximize value deliver by 15 Sep 1 Sep-13 Oct 6 weeks
  17. 17. 0 200000 400000 600000 800000 1000000 1200000 Sep 1 Sep 15 Sep 29 Oct 13 Oct 27 Nov 10 Nov 24 Dec 8 Dec 22 Jan 5 Value over 4 months Santa app total value over 4 months 1 Sep-13 Oct 6 weeks Use By Date Best Before Date
  18. 18. 0 50000 100000 150000 200000 250000 300000 350000 400000 Sep 1 Sep 15 Sep 29 Oct 13 Oct 27 Nov 10 Nov 24 Dec 8 Dec 22 Jan 5 Product B value over 4 months Halloween app value over 4 months 1 Sep - 28 Sep 4 weeks
  19. 19. 0 50000 100000 150000 200000 250000 300000 350000 400000 Sep 1 Sep 15 Sep 29 Oct 13 Oct 27 Nov 10 Nov 24 Dec 8 Dec 22 Jan 5 Product B value over 4 months Halloween app value over 4 months 1 Sep - 28 Sep 4 weeks Use By Date Best Before Date
  20. 20. Together 0 200000 400000 600000 800000 1000000 1200000 1400000 1600000 Sep 1 Sep 15 Sep 29 Oct 13 Oct 27 Nov 10 Nov 24 Dec 8 Dec 22 Jan 5 Combined value from two apps Santa app Halloween app
  21. 21. What do you want to do? A.  Do Halloween & then Santa B.  Do Santa & then Halloween C.  Do Halloween & forget Santa D.  Do Santa & forget Halloween E.  Change the esSmates F.  Do both and pray G.  Add more people
  22. 22. Re-use? •  How much of Halloween can be reused? – How much of Santa can be taken from Halloween? •  How much extra does reusable code cost? – How much Sme does reusable add to the work? •  How much money is lost by delay? •  How much money is gained from early delivery?
  23. 23. Reusability increases RISK Santa depends on Halloween
  24. 24. What do you want to do? A.  Do Halloween & forget Santa B.  Do Santa & forget Halloween C.  Do Halloween & then Santa D.  Do Santa & then Halloween E.  Change the esSmates F.  Do both and pray G.  Add more people H.  Reuse
  25. 25. Santa first, Halloween second 0 200000 400000 600000 800000 1000000 1200000 1400000 1600000 1 2 3 4 5 6 7 8 9 10 Combined value from two apps Halloween app Santa app 1 Sep-13 Oct 6 weeks 13 Oct – 9 Nov
  26. 26. Santa first App makes $1,025,000 $35,000 lost because it was not ready by 13 October Halloween app makes $0 Total = $1,025,000
  27. 27. 0 200000 400000 600000 800000 1000000 1200000 1400000 1600000 1 2 3 4 5 6 7 8 9 10 Combined value from two apps Halloween app Santa app 1 Sep - 28 Sep 1 Sep-13 Oct 6 weeks 28 Sep-9 Nov 6 weeks 13 Oct – 9 Nov
  28. 28. Halloween makes $340,000 $15,000 lost because not ready before 29 September Santa makes $800,000 $225,000 lost because it is not ready unSl 10 November Halloween first
  29. 29. Halloween comes first Santa first Total = $1,025,000 Halloween first Total = $1,140,000 $115,000 more
  30. 30. Opportunity Cost of Delay •  Extra costs incurred because delivery is late – e.g. temporary staff, priority shipping, penalty fines •  Value foregone: – Lost revenue opportuniSes – Not being in the market (less Sme on sale) – Not being available before criScal date – Not being in the market before compeStors
  31. 31. Time is money? More Sme -> More costs More Sme -> Less revenue (Usually) Revenue is inversely proporSonal to Sme to delivery
  32. 32. Opportunity Cost of Delay “6 month delay can be worth 33% of life cycle profits” McKinsey (Reinertsen) 1983 Principles of Product Development Reinertsen, 2009
  33. 33. Deadlines are analogue Different dates result in different values Deadlines are not binary (all or nothing)
  34. 34. I need this and I need it YESTERDAY
  35. 35. Yesterday… 0 200 400 600 800 1000 1200 Yesterday Today Tomorrow Best Before Date Use By Date
  36. 36. I need this and I need it YESTERDAY O dear, I don’t have a TARDIS (Sme machine) but maybe I can get something for you tomorrow? Brilliant, I knew I could count on you If all the value accrued yesterday then it is lost If value sSll exists then it might be worth doing
  37. 37. How do you get to value? •  Ask your stakeholders •  Do the analysis •  EsSmate
  38. 38. Value Poker Like Planning Poker •  Value points not Effort points
  39. 39. 10,000 8,000 Do now Do soon Do later 5,000 Best before +1mth Best before +6mths Best before +3mths
  40. 40. Time-Value Profile is an input to planning 0 50000 100000 150000 200000 250000 300000 350000 400000 Sep 1 Sep 15 Sep 29 Oct 13 Oct 27 Nov 10 Nov 24 Dec 8 Dec 22 Jan 5 Product B value over 4 months
  41. 41. SoluSons must be built to: a)  Obtain as much of the value as possible b)  Within some Sme frame c)  For a cost which leaves some profit How much profit is made and How much value is extracted are negoIable.
  42. 42. Know the Time-Value profile Know your target profit Know how much you can spend Work back to date & burn rate Engineer, engineer
  43. 43. Allan Kelly… Ø ConsulSng on sonware development & strategy Ø Training for Agile Author –  LiSle Book of Requirements & User Stories (2016) h>p://www.leanpub.com/userstories –  Xanpan: Team Centric Agile Sonware Development (2014) h>ps://leanpub.com/xanpan –  Business PaSerns for SoXware Developers (2012) –  Changing Sonware Development (2008)
  44. 44. More… www.allankelly.net
  45. 45. LeanPub h>ps://leanpub.com/cdigital 1.  A li>le soon is worth more than a lot later 2.  Know the Sme-value profile 3.  Deadlines are elasSc by value allan@allankelly.net Twi>er: @allankellynet ½price code: AOTB2017 48 hours

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