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Business Value is a Conversation,
Not A Number
Kent J. McDonald
@beyondreqs
Agenda
What is business value?What is business value?What is business value?What is business value?
Conversations that consider valueConversations that consider valueConversations that consider valueConversations that consider value
Did we deliver value?Did we deliver value?Did we deliver value?Did we deliver value?
The Prime Directive:Deliver Business Value!
*The organizers
wish to apologize
for any gratuitous
trekkie references
that may appear
in this
presentation.
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.
Increase
Revenue
Protect
Revenue
Reduce
Costs
In alignment
with
organizational
strategy
Why do we want to know
Business Value?
To make decisions!
What type of decisions?
Is It Worth It?
Purpose = What problem are
you trying to solve?
Considerations
= What could impact value?
Costs & Benefits
= What’s the impact on business objectives?
An example would be
handy right about now
Conference Submission System
What other decisions?
How much should we build?
AlwaysAlwaysAlwaysAlways7%7%7%7%
OftenOftenOftenOften13%13%13%13%
SometimesSometimesSometimesSometimes16%16%16%16%
RarelyRarelyRarelyRarely19%19%19%19%
NeverNeverNeverNever45%45%45%45%
Rarely or Never used64%
Often orAlways used20%
Standish Group Study, Reported by CEO Jim Johnson, XP2002
How does value play into that?
VALUE
INPUTS
INPUTS
PROCESS
DEVELOPMENT
OUTPUTS
VALUE
INPUTS
INPUTS
PROCESS
ANALYSIS
OUTPUTS
VALUE
Huh?
Perhaps another
example…
Enterprise System Replacement
New New New New SystemSystemSystemSystem
Initial Approach to Analysis
New New New New SystemSystemSystemSystem
New Approach to Analysis
New New New New SystemSystemSystemSystem
ANALYSIS
Example
In Scope
Test
Model
aka Break
the Model
Psst, by the way…
I(a)
I(tp)
I(d) I(t)
The Missing Link!
Development
Test
Example
In Scope?
Test
Model
Taking it a step further…
Business Analysis feeding Examples into a Development Process (especially Agile)
Feature Injection
� Hunt the Value
� “Inject” only relevant features
� Communicate with examples
Devised by Chris Matts
And one final decision?
How Unique Should It Be?
Purpose Based Alignment Model
Purpose Based Alignment Model
Innovate, Innovate, Innovate, Innovate, CreateCreateCreateCreate
Achieve and Achieve and Achieve and Achieve and maintain parity, maintain parity, maintain parity, maintain parity, Mimic, Mimic, Mimic, Mimic, SimplifySimplifySimplifySimplify
Do we take this Do we take this Do we take this Do we take this on?on?on?on?
Minimize/Minimize/Minimize/Minimize/EliminateEliminateEliminateEliminate
Decision Filters
� Simple rules to guide
decision making
� Disperse throughout
the organization
Used for (among others)
� Strategy alignment
� Scoping
� Design approach
“To be the low cost airline.”
- Southwest Airlines
“Will this help us bethe low cost airline?”
- Southwest Airlines
Purpose and Decision Filters
To be the low cost airline
Will this help us be the low cost airline?
Order new
pages by
2pm and get
them tomorrow!
The Billboard Test
Ok, one more example…
Commission System
Health Insurance Capabilities
AnalyticsAnalyticsAnalyticsAnalytics
Claim processingClaim processingClaim processingClaim processingAgent paymentAgent paymentAgent paymentAgent paymentEnrollmentEnrollmentEnrollmentEnrollmentEligibilityEligibilityEligibilityEligibility
Dental Dental Dental Dental insuranceinsuranceinsuranceinsurance
Life InsuranceLife InsuranceLife InsuranceLife Insurance
How to treat the
multiple commissions rules?
How do we know we have actually
delivered value?
Do these indicate value?
� ROI
Return on Investment
� NPV
Net Present Value
� TCO
Total Cost of Ownership
� IRR
Internal Rate of Return
Objectives
Specific
Measureable
Agreed Upon
Realistic
Timely
Sample Objectives
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
Measuring Your ObjectivesObjective 1 Objective 2
Measure Inventory Turns Paper Apps
Definition The number of times
inventory is sold in a year
Number of apps received
via mail or fax
Data Source Inventory Tracking System
What to Measure Cost of Goods Sold/ Average
Inventory
Count of applications
received via mail/fax
Frequency of Measure Yearly Monthly
Sample Size N/A N/A
Who will collect data Inventory Accounting Analyst Data entry specialists
How will data be collected Report created by Inventory
Tracking Systems
Count paper applications
when entered
Baseline 5 1000
Target 10 500
If you remember nothing else…
Business value is a conversation to help us decide:
� Is it worth it?
� How much should we build?
� How unique should it be?
Use business objectives to tell if you delivered value
Questions?
Kent [email protected]
@BeyondReqs
www.beyondrequirements.com
Slides available from:
http://www.knowledgebridgepartn
ers.com/presentations/businessval
ueconversation/
