One trait of an effective business analyst is the ability to ask the right questions. One “right” question that applies to just about every projects can sometimes be difficult to ask, let alone answer: “Is it worth it?” This question is difficult to answer, because the answer will change as you proceed through the project and gain more knowledge about the purpose, considerations, costs, and benefits involved in a project. In this session, we’ll explore a tool you can use to help organize the necessary information to answer the “is it worth it?” question on a regular basis. This interactive session will demonstrate how you can create a value model to make an initial decision about whether to pursue a project, and then utilize that model as your knowledge grows throughout the project to revisit the question and confirm whether the project is on the right course, or if changes need to be made. Topics discussed during the session include: Structuring your value model to make decisions about whether to do a project How to deal with non-financial benefits in your Cost/Benefit discussion Where measures such as NPV, ROI, TCO, IRR fit into the Cost/Benefit discussion. The impact of timing of implementation on the Cost/Benefit discussion.

1. Is It Worth It:
Using A Business Value Model to
Guide Decisions
Kent J. McDonald
@beyondreqs

2. Discussion Topics
 Business Value?
 Purpose
 Considerations
 Costs & Benefits
 Using the Business
Value Model to decide

3. The BA Prime Directive:
Deliver Business Value!
*The organizers
wish to apologize
for any gratuitous
trekkie references
that may appear
in this
presentation.

4. 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.

5. Determining Business Value?
Costs
Benefits
Business Value

6. Determining the inputs?
Estimate
Guess
Business Value
Common Practice

7. Why do we want to know
Business Value?
To make decisions!

8. Use business value model and guiding
questions to decide if a project is worth it.

10. Purpose = What problem are
you trying to solve?

11. Solution
without a
problem

12. Guiding Questions
Exactly what
problem will this
solve?
Why are we best
suited to pursue
this?
For whom do we
solve that problem?

13. Purpose Based Alignment Model

14. Purpose Based Alignment Model
Do we take this Innovate,
on? Create
Achieve and
Minimize/ maintain parity,
Eliminate Mimic,
Simplify

15. Decision Filters
 Simple rules to guide
decision making
 Disperse throughout
the organization
Used for (among others)
 Strategy alignment
 Scoping
 Design approach

16. “To be the low cost airline.”
- Southwest Airlines

17. Purpose and Decision Filters
To be the
low cost
airline
Will this help us be
the low cost airline?

18. The Billboard Test
Order new
pages by
2pm and get
them tomorrow!

19. Student Information System
Yes, it has been abbreviated to “SIS”

20. SIS “Requirements”
In search of a "Student Information System" that
will be used to manage student and parent data,
enable interactive communication between
teachers and parents, as well as online enrollments.
Requirements:
 Student/Parent Directory
 Staff Directory
 Calendar
 Online Enrollment
 Parent/Classroom Portal

21. Bergman Academy
15:1 Student Teacher
Music Education w/ Ratio
DSM Symphony
“Personalized” lesson
OTM
plans
Enrollment
Fundraising
Book keeping
Curriculum
Facilities
Parent Communication

22. Decision Filter
If we do this, will it
help us provide the
best education for
every student?

23. SIS – What’s The Purpose?

24. Considerations
= What could impact value?

25. Guiding Questions
What alternatives
are out there now?
What factors are
critical to success?

28. Guiding Questions
How will we get this product to market?

29. Context Leadership Model

30. Guiding Questions
Why Now?
Do we have the right people to solve this?

31. Constraints
Constraint Fixed Flexible Accept
Scope X
Time X
Cost X
Quality X

32. SIS – Considerations?

33. Costs & Benefits
= What’s the impact on business objectives?

34. Guiding Questions
How much could we spend on this?

36. “Gut Feel” or “Ball Park”
How long, and
how much? About a year and
$2.5 million.

37. Comparison to Past Projects
$1,000 $100K $10M
??
$1M

38. Extrapolate
Assumptions:
 2 week iterations
 Overall backlog size: 600 points
 Planning Velocity: 30 ?
 5 Person Team
 Avg Cost/person/wk: $4,000
Estimate: $800,000

39. Guiding Questions
How big is the opportunity?

40. 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

41. Guess

42. Increase
Revenue

43. Reduce
Costs

44. Guiding Question
How will we measure success?

45. Objectives
Specific
Measureable
Agreed Upon
Realistic
Timely

46. Financial Objectives?
 ROI
Return on Investment
 NPV
Net Present Value
 TCO
Total Cost of Ownership
 IRR
Internal Rate of Return

47. Financial Objectives = Cash Flow
Costs Benefits
Year 0 Year 1 Year 2 Year 3 Year 4

48. Non Financial Objectives
By Dec 2012 increase By Dec 2012 reduce paper
inventory turns from 5/year apps from 1,000/month to
to 10/year 500/month

49. SIS – Measures of Success?

50. But Wait!
How can I possibly
calculate a number
for my business
value with that
stuff?
What ever should I
do?
50

52. The Conversation Room
Thanks to Nigel Dalton

53. And if you still want numbers…

54. Is It Worth It?
Move forward? Trash it?

56. BA FAQ
 Do business analysts
ever really get the
chance to do this?
 What if we never get
pulled into the
project until this is
already done?

57. 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
57

58. Guiding Questions
1. Exactly what problem will this solve?
2. For whom do we solve that problem?
3. How big is the opportunity?
4. How will we measure success?
5. What alternatives are out there now?
6. Why are we best suited to pursue this?
7. Why now?
8. How will we get this product to market?
9. What factors are critical to success?
From Inspired: How to Create Products Customers Love by Marty Cagan

59. Additional Guiding Questions
1. Is the problem worth solving?
2. Do we have the right people to solve this?
3. How will we encourage adoption?
4. How much could we spend on this?

60. Questions?
Kent McDonald
kentjmcdonald@gmail.com
@BeyondReqs
www.beyondrequirements.com
Slides available from:
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itworthit/