Planning for Value: how much? when?
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How to increase the value delivered and meet deadlines.
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Planning for Value: how much? when?
- 1. Evolving #NoProjects -> #ProjectLess Allan Kelly - @allankellynet allan@allankelly.net Planning for Value How much? When? Linz March 2017
- 2. Allan Kelly… Consulting on software development & strategy Training for Agile Author – Little Book of Requirements & User Stories (2016) http://www.leanpub.com/userstories – Xanpan: Team Centric Agile Software Development (2014) https://leanpub.com/xanpan – Business Patterns for Software Developers (2012) – Changing Software Development: Learning to be Agile (2008)
- 3. Is this project right for Agile? Or is Waterfall better here? Is this project right for Kanban? Or is Scrum better here?
- 4. Who cares about right? Which will make more money?
- 5. Agile makes more $ £ € because it delivers something sooner
- 6. Value delivered ______ over ______ Cost to build “Price is what you pay. Value is what you get.” Warren Buffet
- 7. 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% $1 million – 1 year
- 8. Agile folk get it wrong! • Give more opportunities for feedback • Tighter feedback loops • Allow for changing requirements • Improve quality • Reduce risk • They increase value • They make more money £€$ (O, and reduce risk, improve quality, etc. etc.) Regular deliveries are good because…
- 9. 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.
- 10. 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
- 11. Time-Value Profile How does value change over time? 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
- 12. 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 after 15 September To maximize value deliver by 15 Sep1 Sep-13 Oct 6 weeks
- 13. 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
- 14. 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
- 15. 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
- 16. 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
- 17. Together 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
- 18. 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 estimates F. Do both and pray G. Add more people
- 19. 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 time does reusable add to the work? • How much money is lost by delay? • How much money is gained from early delivery? Building for reuse increases RISK to both What about Intellectual Property?
- 20. 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 estimates F. Do both and pray G. Add more people H. Reuse
- 21. 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
- 22. 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
- 23. 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
- 24. Halloween app makes $340,000 $15,000 lost because not ready before 29 September Santa makes $800,000 $225,000 lost because it is not ready until 10 November Halloween first
- 25. Halloween comes first Santa first Total = $1,025,000 Halloween first Total = $1,140,000 $115,000 more
- 26. Opportunity Cost of Delay • Extra costs incurred because delivery is late – e.g. temporary staff, priority shipping, penalty fines • Value foregone: – Lost revenue opportunities – Not being in the market (less time on sale) – Not being available before critical date – Not being in the market before competitors
- 27. Time is money? More time -> More costs More time -> Less revenue (Usually) Revenue is inversely proportional to time to delivery
- 28. Opportunity Cost of Delay “6 month delay can be worth 33% of life cycle profits” McKinsey (Reinertsen) 1983 Principles of Product Development Reinertsen, 2009
- 29. Deadlines are analogue Different dates result in different values Deadlines are not binary (all or nothing)
- 30. I need this and I need it YESTERDAY
- 31. Yesterday… 0 200 400 600 800 1000 1200 Yesterday Today Tomorrow Best Before Date Use By Date
- 32. I need this and I need it YESTERDAY O dear, I don’t have a TARDIS (time 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 still exists then it might be worth doing
- 33. Today’s Lesson #1 A little bit Soon is Worth more than a lot delivered Later
- 34. Today’s Lesson #2 Know the Time-Value Profile of the thing you are building
- 35. Today’s Lesson #3 Deadlines are elastic by value
- 36. How do you get to value? • Ask your stakeholders • Do the analysis • Estimate
- 37. Value Poker Like Planning Poker • Value points not Effort points
- 39. 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
- 40. Solutions must be built to: a) Obtain as much of the value as possible b) Within some time frame c) For a cost which leaves some profit How much profit is made and How much value is extracted are negotiable.
- 41. Know the Time-Value profile Know your target profit Know how much you can spend Work back to date & burn rate Engineer, engineer
- 42. Feedback Option A Option B