Is It Worth It: Using Business Value Model to Guide ...
How do you determine that your project is worth it? 1.
2. 3.
Write your thoughts on a sticky note Discuss with those at your table Post it on the labeled sheet.
1
Is It Worth It: Using A Business Value Model to Guide Decisions Kent J. McDonald Knowledge Bridge Partners
Discussion Topics
Business Value? Purpose Considerations Costs & Benefits Using the Business Value Model to decide
What is Business Value? I’ll know it when I see it
Justice Potter Stewart, concurring opinion in Jacobellis v. Ohio 378 U.S. 184 (1964), regarding possible obscenity in The Lovers.
Determining Business Value? Costs Benefits
Business Value
Determining the inputs? Estimate Guess
Common Practice
Business Value
Why do we want to know Business Value?
To make decisions!
Purpose = What problem are you trying to solve?
Solution without a problem
Purpose Based Alignment Model
11
Purpose Based Alignment Model Do we take this on?
Innovate, Create
Minimize/ Eliminate
Achieve and maintain parity, Mimic, Simplify 12
Purpose Example Company produces document management software Undertaking a new version of their flagship document management software product
Example - Before Not much here - NIH
PROJECT TRACKING DOCUMENT MGMT DOCUMENT EDIT DOCUMENT LIBRARY SEARCH EDGAR INTEGRATION
Of course our ideas are important
Not much here
14
Example – Decision Filter IF WE DO THIS, WILL REMOTE TEAMS BE ABLE TO FINALIZE BETTER DOCUMENTS FASTER?
Example - After Portal
Document Edit Project Tracking Document Mgmt Document Library Search Edgar Integration 16
Example - Results Focused innovation on document edit capabilities Matched competitors on other capabilities Better product in half the time and 40% project cost reduction
Order new pages by 2pm and get them tomorrow!
Case Study – Purpose What are Cooking Ugly’s decision filters? What is the purpose of the Recipe Management System Project? Are the capabilities Beth identified parity, differentiating, partner, or who cares?
Considerations
= What could impact value?
Uncertainty
Market uncertainty Technology uncertainty Number of customers Project duration
Complexity
Team size Mission critical Team location Team maturity Domain knowledge gaps Dependencies
Constraints Constraint
Fixed
Flexible Accept X
Scope X
Time
Cost Quality
X X
Case Study – Considerations Identify assumptions What are some risks that could come about in this project? How do you think the Constraints of scope, time, cost, and resources should be prioritized?
Costs & Benefits
= What’s the impact on business objectives?
Costs A consequence of the action that works against meeting business objectives. Can be identified in financial or non financial terms, but should be measurable Soft Benefits in a Hard Business Case Legitimacy and Value for Difficult Benefits Solution Matrix Ltd By Marty J Schmidt
Benefits A consequence of the action that contributes to meeting business objectives. Can be identified in financial or non financial terms, but should be measurable Soft Benefits in a Hard Business Case: Legitimacy and Value for Difficult Benefits Solution Matrix Ltd By Marty J Schmidt
Financial Costs & Benefits = Cash Flow
A Cash Flow refresher Benefits
Costs
Year 0
Year 1
Year 2
Year 3
Year 4
What about these metrics? ROI Return on Investment NPV Net Present Value TCO Total Cost of Ownership IRR Internal Rate of Return
And what about non financial Benefits?
By Dec 2012 increase inventory turns from 5/year to 10/year
By Dec 2012 reduce paper apps from 1,000/month to 500/month
Case Study – Costs & Benefits Identify at least two alternatives to addressing the recipe management need. Identify the costs incurred by each alternative Identify the benefits provided by each alternative Note any additional assumptions you made during this process.
But Wait! How can I possibly calculate a number for my business value with that stuff? What ever should I do? 34
The Business Value Model organizes your conversation What problem are we trying to solve? What are things that could impact value? What’s the impact on Business Objectives? To Determine… IS IT WORTH IT?
The Conversation Room
Thanks to Nigel Dalton
Case Study – The Conversation Is the project worth it? If so, what is your rough plan for delivering it? If not, why not?
Is It Worth It? Move forward?
Trash it?
In what order should we deliver? Release 1
Release 2
Release 3
If time…
Revisiting Cash Flow Benefits
Costs
Period 0
Period 1
Period 2
Period 3
Timing can be key
Period 4
The only constant is change Change in assumptions Change in constraints Change in understanding Change in business conditions Change in objectives
How often do you reevaluate? Definitely after each release/implementation If you become aware of any big changes Ask at retrospectives: “Is it still worth it?”
Case Study – The Conversation Redux Based on the new information… Is the project still worth it? Would you change your approach? If so, how?
Is It Still Worth It? Move forward?
Change it? Trash it?
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 47
Questions? Kent McDonald [email protected] @BeyondReq www.beyondrequirements.com
Slides available from:
http://www.knowledgebridge partners.com/presentations/is itworthit/
2. 3.
Write your thoughts on a sticky note Discuss with those at your table Post it on the labeled sheet.
1
Is It Worth It: Using A Business Value Model to Guide Decisions Kent J. McDonald Knowledge Bridge Partners
Discussion Topics
Business Value? Purpose Considerations Costs & Benefits Using the Business Value Model to decide
What is Business Value? I’ll know it when I see it
Justice Potter Stewart, concurring opinion in Jacobellis v. Ohio 378 U.S. 184 (1964), regarding possible obscenity in The Lovers.
Determining Business Value? Costs Benefits
Business Value
Determining the inputs? Estimate Guess
Common Practice
Business Value
Why do we want to know Business Value?
To make decisions!
Purpose = What problem are you trying to solve?
Solution without a problem
Purpose Based Alignment Model
11
Purpose Based Alignment Model Do we take this on?
Innovate, Create
Minimize/ Eliminate
Achieve and maintain parity, Mimic, Simplify 12
Purpose Example Company produces document management software Undertaking a new version of their flagship document management software product
Example - Before Not much here - NIH
PROJECT TRACKING DOCUMENT MGMT DOCUMENT EDIT DOCUMENT LIBRARY SEARCH EDGAR INTEGRATION
Of course our ideas are important
Not much here
14
Example – Decision Filter IF WE DO THIS, WILL REMOTE TEAMS BE ABLE TO FINALIZE BETTER DOCUMENTS FASTER?
Example - After Portal
Document Edit Project Tracking Document Mgmt Document Library Search Edgar Integration 16
Example - Results Focused innovation on document edit capabilities Matched competitors on other capabilities Better product in half the time and 40% project cost reduction
Order new pages by 2pm and get them tomorrow!
Case Study – Purpose What are Cooking Ugly’s decision filters? What is the purpose of the Recipe Management System Project? Are the capabilities Beth identified parity, differentiating, partner, or who cares?
Considerations
= What could impact value?
Uncertainty
Market uncertainty Technology uncertainty Number of customers Project duration
Complexity
Team size Mission critical Team location Team maturity Domain knowledge gaps Dependencies
Constraints Constraint
Fixed
Flexible Accept X
Scope X
Time
Cost Quality
X X
Case Study – Considerations Identify assumptions What are some risks that could come about in this project? How do you think the Constraints of scope, time, cost, and resources should be prioritized?
Costs & Benefits
= What’s the impact on business objectives?
Costs A consequence of the action that works against meeting business objectives. Can be identified in financial or non financial terms, but should be measurable Soft Benefits in a Hard Business Case Legitimacy and Value for Difficult Benefits Solution Matrix Ltd By Marty J Schmidt
Benefits A consequence of the action that contributes to meeting business objectives. Can be identified in financial or non financial terms, but should be measurable Soft Benefits in a Hard Business Case: Legitimacy and Value for Difficult Benefits Solution Matrix Ltd By Marty J Schmidt
Financial Costs & Benefits = Cash Flow
A Cash Flow refresher Benefits
Costs
Year 0
Year 1
Year 2
Year 3
Year 4
What about these metrics? ROI Return on Investment NPV Net Present Value TCO Total Cost of Ownership IRR Internal Rate of Return
And what about non financial Benefits?
By Dec 2012 increase inventory turns from 5/year to 10/year
By Dec 2012 reduce paper apps from 1,000/month to 500/month
Case Study – Costs & Benefits Identify at least two alternatives to addressing the recipe management need. Identify the costs incurred by each alternative Identify the benefits provided by each alternative Note any additional assumptions you made during this process.
But Wait! How can I possibly calculate a number for my business value with that stuff? What ever should I do? 34
The Business Value Model organizes your conversation What problem are we trying to solve? What are things that could impact value? What’s the impact on Business Objectives? To Determine… IS IT WORTH IT?
The Conversation Room
Thanks to Nigel Dalton
Case Study – The Conversation Is the project worth it? If so, what is your rough plan for delivering it? If not, why not?
Is It Worth It? Move forward?
Trash it?
In what order should we deliver? Release 1
Release 2
Release 3
If time…
Revisiting Cash Flow Benefits
Costs
Period 0
Period 1
Period 2
Period 3
Timing can be key
Period 4
The only constant is change Change in assumptions Change in constraints Change in understanding Change in business conditions Change in objectives
How often do you reevaluate? Definitely after each release/implementation If you become aware of any big changes Ask at retrospectives: “Is it still worth it?”
Case Study – The Conversation Redux Based on the new information… Is the project still worth it? Would you change your approach? If so, how?
Is It Still Worth It? Move forward?
Change it? Trash it?
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 47
Questions? Kent McDonald [email protected] @BeyondReq www.beyondrequirements.com
Slides available from:
http://www.knowledgebridge partners.com/presentations/is itworthit/
