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Measuring business value

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  • Bejan Raluca
    Hi, One of the questions I am thinking lately is how to measure business value. For some projects it s kinda obvious: may be clear outcome, cost saving, risk
    Message 1 of 8 , Jul 13, 2012
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      Hi,


      One of the questions I am thinking lately is how to measure business value.

      For some projects it's kinda obvious: may be clear outcome, cost saving, risk avoidance, etc.
      But..how do you get some indication of the business value a team is delivering on bug fixes, improvements and new features? Which is the best way to measure this?

      Thanks a lot!
    • Alan Dayley
      Ask your users. How much does this bug cost you in time/money? We added this feature, what benefits did you get from it? etc. Alan
      Message 2 of 8 , Jul 24, 2012
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        Ask your users.

        How much does this bug cost you in time/money?
        We added this feature, what benefits did you get from it?
        etc.

        Alan

        On Fri, Jul 13, 2012 at 11:19 PM, Bejan Raluca <raluca.ioan@...> wrote:
         

        Hi,

        One of the questions I am thinking lately is how to measure business value.

        For some projects it's kinda obvious: may be clear outcome, cost saving, risk avoidance, etc.
        But..how do you get some indication of the business value a team is delivering on bug fixes, improvements and new features? Which is the best way to measure this?

        Thanks a lot!


      • Wouter Lagerweij
        Hi Bejan, This is one of the most difficult things to do. Most of the time we re guessing on what the actual business value is in concrete terms. And we make
        Message 3 of 8 , Jul 24, 2012
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          Hi Bejan,

          This is one of the most difficult things to do. Most of the time we're guessing on what the actual business value is in concrete terms. And we make do with educated guesses. I'm not sure this is bad:-)

          If you want to move beyond that, I'd suggest looking into what's happening with the Lean Startup movement, and its focus on working from a base of hypotheses, and using measurements of intended outcomes (actionable metrics, cohort testing) to steer choices in development.
          It's not easy in all cases (or any? :-) to work like that, but it does force one to very strictly consider the goals of what is worked on.

          Wouter

          On Sat, Jul 14, 2012 at 8:19 AM, Bejan Raluca <raluca.ioan@...> wrote:
           

          Hi,

          One of the questions I am thinking lately is how to measure business value.

          For some projects it's kinda obvious: may be clear outcome, cost saving, risk avoidance, etc.
          But..how do you get some indication of the business value a team is delivering on bug fixes, improvements and new features? Which is the best way to measure this?

          Thanks a lot!




          --
          Wouter Lagerweij         | wouter@...
        • Johanna Rothman
          Wouter and Bejan, Have you looked at any of my work around the project portfolio? Take a look at the qualitative questions in this slideshare presentation:
          Message 4 of 8 , Jul 24, 2012
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            Wouter and Bejan,

            Have you looked at any of my work around the project portfolio? 

            Take a look at the qualitative questions in this slideshare presentation: http://www.slideshare.net/johannarothman/agile-portfolio-planning-10311397

            I talked about how to use business value to rank with points here, http://www.jrothman.com/2012/02/selecting-a-ranking-method-for-your-project-portfolio/

            I have more in my project portfolio book, _Manage Your Project Portfolio: Increase Your Capacity and Finish More Projects_. I'm happy to talk to you offline about this, because this is not really on topic for this list.

            Johanna

            On Jul 24, 2012, at 3:55 PM, Wouter Lagerweij wrote:

             

            Hi Bejan,


            This is one of the most difficult things to do. Most of the time we're guessing on what the actual business value is in concrete terms. And we make do with educated guesses. I'm not sure this is bad:-)

            If you want to move beyond that, I'd suggest looking into what's happening with the Lean Startup movement, and its focus on working from a base of hypotheses, and using measurements of intended outcomes (actionable metrics, cohort testing) to steer choices in development.
            It's not easy in all cases (or any? :-) to work like that, but it does force one to very strictly consider the goals of what is worked on.

            Wouter

            On Sat, Jul 14, 2012 at 8:19 AM, Bejan Raluca <raluca.ioan@...> wrote:
             

            Hi,

            One of the questions I am thinking lately is how to measure business value.

            For some projects it's kinda obvious: may be clear outcome, cost saving, risk avoidance, etc.
            But..how do you get some indication of the business value a team is delivering on bug fixes, improvements and new features? Which is the best way to measure this?

            Thanks a lot!




            --
            Wouter Lagerweij         | wouter@...


            --

            Rothman Consulting Group, Inc.     781-641-4046

            Speaker, Author, Consultant - Managing Product Development

            AYE, Nov 4-8, 2012, http://www.ayeconference.com

            ==================================================

            See my books at http://www.jrothman.com/books

            New: Hiring Geeks That Fit, http://leanpub.com/hiringgeeks




          • Pierre Neis
            If you got a real Product Owner listening to the business, then measuring business value is not really a problem. Business Value = Business + Value is the
            Message 5 of 8 , Jul 24, 2012
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              If you got a real Product Owner listening to the business, then measuring business value is not really a problem. 

              Business Value = Business + Value is the value given by the business. Ask the business...

              Product Owner is permanently in contact with the business (and not a proxy Sales or Business Analyst) and when your Sprint Review is correctly done (Inspect and Adapt from customer and business) then you got real time measures.

              No?

              Pierre E. Neis Scrum/Lean Improver

              WE & Co , the Collab Lab |  PLöRK 
              Mobile: (+352) 661 SCRUMS
              Luxembourg - Brussels - Paris - Zürich - London - Amsterdam - Barcelona - Saigon
               
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              TwitterLatest tweet: Play 4 Agile for a better world! is out! http://t.co/Jz3mYFTm ▸ Top stories today via @sdelesie Follow @elPedroMajor Reply Retweet   19:35 Jul-24


              On 24 July 2012 22:28, Johanna Rothman <jr@...> wrote:
               

              Wouter and Bejan,


              Have you looked at any of my work around the project portfolio? 

              Take a look at the qualitative questions in this slideshare presentation: http://www.slideshare.net/johannarothman/agile-portfolio-planning-10311397

              I talked about how to use business value to rank with points here, http://www.jrothman.com/2012/02/selecting-a-ranking-method-for-your-project-portfolio/

              I have more in my project portfolio book, _Manage Your Project Portfolio: Increase Your Capacity and Finish More Projects_. I'm happy to talk to you offline about this, because this is not really on topic for this list.

              Johanna

              On Jul 24, 2012, at 3:55 PM, Wouter Lagerweij wrote:

               

              Hi Bejan,


              This is one of the most difficult things to do. Most of the time we're guessing on what the actual business value is in concrete terms. And we make do with educated guesses. I'm not sure this is bad:-)

              If you want to move beyond that, I'd suggest looking into what's happening with the Lean Startup movement, and its focus on working from a base of hypotheses, and using measurements of intended outcomes (actionable metrics, cohort testing) to steer choices in development.
              It's not easy in all cases (or any? :-) to work like that, but it does force one to very strictly consider the goals of what is worked on.

              Wouter

              On Sat, Jul 14, 2012 at 8:19 AM, Bejan Raluca <raluca.ioan@...> wrote:
               

              Hi,

              One of the questions I am thinking lately is how to measure business value.

              For some projects it's kinda obvious: may be clear outcome, cost saving, risk avoidance, etc.
              But..how do you get some indication of the business value a team is delivering on bug fixes, improvements and new features? Which is the best way to measure this?

              Thanks a lot!




              --
              Wouter Lagerweij         | wouter@...


              --

              Rothman Consulting Group, Inc.     781-641-4046

              Speaker, Author, Consultant - Managing Product Development

              AYE, Nov 4-8, 2012http://www.ayeconference.com

              ==================================================

              See my books at http://www.jrothman.com/books

              New: Hiring Geeks That Fit, http://leanpub.com/hiringgeeks





            • gregc
              Bejan, This is a great question without a simple answer. At the project level value is usually easier to assess and quantify. As you drill down into small
              Message 6 of 8 , Jul 24, 2012
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                Bejan,
                This is a great question without a simple answer. At the project level value is usually easier to assess and quantify. As you drill down into small features or bugs value becomes much more subjective and often isn't realized until a collection of features is delivered. The way I look at the problem is there's three levels we can try to assess value moving from quantitative to qualitative and data driven to subjective.

                1) Return on Investment (ROI) or other metric (e.g. retention) – we can quantify the gain we expect from completing the feature and track it to see if we achieved it.

                2) Research based –we use web metrics, surveys and/or qualitative research techniques to understand which features are more important than others to our target customer.

                3) Subjective – we work with internal stakeholders, which might include a ranking exercise, but at the end of the day we are doing what feels right based on our collected wisdom.

                Determining the business value of a bug fix is a great example. If you can reduce support cases by fixing the bug then you can develop an ROI and quantify the business value. If you want to fix the bug because you believe having a buggy product is inconsistent with your brand, this is much harder to assign the ROI.

                Your question focuses on 1 and 3. Don't overlook 2 (i.e., research) to help inform a prioritization decision. But moving down the list to type 3, subjective situations, we work with our product management clients to apply multiple prioritization lenses to the analysis. Example lenses include MoSCoW, Kano, time sensitivity analysis, etc. Each lens highlights a different aspect of value that should be considered. When used together, you get a full perspective and can even understand if the collective features or bugs you have chosen to address hold together as a release.

                -greg cohen


                --- In scrumdevelopment@yahoogroups.com, "Bejan Raluca" <raluca.ioan@...> wrote:
                >
                > Hi,
                >
                >
                > One of the questions I am thinking lately is how to measure business value.
                >
                > For some projects it's kinda obvious: may be clear outcome, cost saving, risk avoidance, etc.
                > But..how do you get some indication of the business value a team is delivering on bug fixes, improvements and new features? Which is the best way to measure this?
                >
                > Thanks a lot!
                >
              • Derek Neighbors
                First you have to determine what kind of value. Monetary? Emotional? Social? Monetary is pretty straight forward. Monetary you should be able to measure New
                Message 7 of 8 , Aug 3, 2012
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                  First you have to determine what kind of value.

                  Monetary? Emotional? Social?

                  Monetary is pretty straight forward.
                  Monetary you should be able to measure New (customers/markets), incremental (existing customers) , retained (preventing leaving customers), operational efficiencies as revenue.

                  You then need to determine the cost of creation/maintenance/etc.

                  Emotional and Social not as easy, but possible.

                  --
                  Derek Neighbors
                  Integrum Technologies


                  On Fri, Jul 13, 2012 at 11:19 PM, Bejan Raluca <raluca.ioan@...> wrote:
                   

                  Hi,

                  One of the questions I am thinking lately is how to measure business value.

                  For some projects it's kinda obvious: may be clear outcome, cost saving, risk avoidance, etc.
                  But..how do you get some indication of the business value a team is delivering on bug fixes, improvements and new features? Which is the best way to measure this?

                  Thanks a lot!


                • Paul Hudson
                  ... Is it? The one I ve never had a good answer for is when the benefit is risk reduction or mitigation An analogy may be buying fire insurance. On an
                  Message 8 of 8 , Aug 3, 2012
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                    On 3 August 2012 19:18, Derek Neighbors <derek@...> wrote:
                    Monetary is pretty straight forward.

                    Is it? The one I've never had a good answer for is when the benefit is risk reduction or mitigation

                    An analogy may be buying fire insurance. On an expected-loss basis, it's never worth it (as the insurer makes money by charging customers more than the average loss). So you need to look at something less direct... If anyone has suggested reading on this, I'd like to hear it.

                    How do you value a change that should reduce the risk of app failure by X%?

                    Also, the idea that the value of, say, availability is period of outage * value of s/w per hour is very simplistic. If email goes down for 30 minutes, probably little or no damage is done to most organisations. 1 day is a lot more than 16 times worse....

                    Paul
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