Defining the Cost of Delay

As many of you know, the “Value Visualization of IT” is a topic I am passionate about. I’ve written numerous articles, blog posts and even a book on this subject, as well as spoken about it at many conferences and events. I believe that understanding the value of a software development project is so critical to its success that I created a concept known as the Value Visualization Framework (VVF). In September, I walked through the 5-step VVF process, which provides a clear directive to discuss, define, measure, and prioritize software development initiatives based on their ability to deliver on the value expectations.

After completing the first three steps of the process: defining the units of value delivery, the value of the project in specific units and the size of the initiative, the next step is defining the “Cost of Delay” of the implementation challenge, including level of complexity, duration, etc. This step is crucial in prioritizing work packets or projects or stories. Essentially, we should always prioritize projects with the highest cost of delay. However, identifying the cost of delay for a particular story is neither intuitively obvious nor easy. The following are three potential approaches to defining the cost of delay:

1st Approach: Explicit Cost

  1. Penalty if completion date is missed (e.g. $2,500 fine if not completed by Day 15)
  2. Missed opportunity (e.g. the loss of an incentive – 30 new subscribers will sign up if delivered by Day 17 or not!)

 2nd Approach: Cost if Stories in Software Development are Too Long

 The following table shows examples of costs of delay for excessive times in software development

Cost of Delay

3rd Approach: Relative Cost of Delay of One Story Against Another

This approach can allow cost of delay to be assigned by an informed and representative team with relatively little data. The process is similar to story estimation in Agile using planning poker. Usually a limited set of numbers (Fibonacci or modified Fibonacci e.g. Cohn Scale - Popularized by Mike Cohn for use in Story Points: 0, 0.5, 1, 2, 3, 5, 8, 13, 20, 40, 100, ?) are used and participants must choose from this and set the relative cost of delay for each story against the other stories, as in the figure below.

Cost of Delay for Stories

The fifth and final step of the VVF process is quantifying the economic value once deployed. Watch for an upcoming post discussing this step.


Michael D. Harris
DCG President

 

Written by Michael D. Harris at 05:00
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Let's Talk Value

IEEE Software Technology
Last month our CEO, Mike Harris, presented in California at the IEEE Software Technology Conference. His presentation, "Let's Talk Value" discussed how providing IT with the economic data for software development initiatives can lead to improved decision making and ultimately impact an organization’s bottom line.

If you couldn't make the conference, you can still download his presentation! Learn how you can use Mike’s 5-step Value Visualization Framework (VVF) to promote collaboration between the business units and IT in order to prioritize projects based on their value.

As always, if you have any feedback for Mike, leave a comment - we'd love to hear it!

Download Now

 

 

Written by Default at 05:00
Categories :

IT As a Critical Differentiator

Mike Harris

A recent article by Dennis McCafferty, in the online version of Baseline Magazine, shares the results of a Deloitte survey of executives from mid-sized companies, which indicates that a significant share of the companies’ leadership now views technology as a critical differentiator and growth driver.

The accompanying report, "Disruption in the Mid-Market: How Technology is Fueling Growth," reveals that most C-level leaders are now involved in the adoption of next-generation tech, and many are leading the charge in this adoption.

By and large, we can assume that “technology” includes software, so when Deloitte reports that 48% of leadership views technology as a critical differentiator and a key to growth, the same is true for software. Clearly, software is delivering value to these companies, but do they know how and how much?

Well, 62% of those surveyed have involvement in next generation technology from their C-Suite and 33% are “leading the charge.” Great! But then the survey tells us about “Top IT Priorities:”

  • Improving existing business processes: 39%
  • Managing cyber-security and information risks: 35%
  • Maintaining the availability and performance of IT systems: 27%
  • Reducing IT costs and driving efficiencies: 27%
  • Assisting in business innovation: 25%

Huh? Did I just skip to a different survey? Sure, these are all valuable IT functions, but these priorities don’t really make IT a “critical differentiator.”

However, there is hope. “Assisting in business innovation” made it into the top five, and there is one other very interesting result reported – “51% said their tech team is actively building platforms so their company can better engage with customers.” How will they will measure the ROI of that investment? They have to find a way to measure value delivered!

Maybe you can see where I’m going with this. IT needs to be able to prioritize projects based on value – and then measure and report on that value in order to satisfy stakeholders. A concept such as the Value Visualization Framework provides a tool for this.

Without understanding the value of IT, it’s impossible for IT to truly function as a critical differentiator or growth driver.

 

Michael D. Harris
DCG President

 

 

Written by Michael D. Harris at 05:00
Categories :

Download Agile DC Presentations

Agile DC 2015

On October 26th, we had the pleasure of attending the Agile DC conference for the third year. Agile DC brings together an impressive community of Agile practitioners and thought leaders from around the region, for a full day of presentations and networking.

For those in attendance, we were the keynote sponsor, so you probably saw us up on stage prior to the keynote speaker, James Grenning. Following that, we were excited to have 2 speakers at the event, our CEO, Mike Harris, and our VP of Consulting, Tom Cagley.

Both of their presentations are now available for download:

  • What if you need to scale Agile but don’t fit the models? A case study.
  • Budgeting, Estimation, Planning, #NoEstimates, and the Agile Planning Onion – They ALL make sense!

As always, if you have any questions or need more information, just leave a comment below and we'll be sure to get back to you!

Download Now

Written by Default at 05:00
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Download Value Visualization White Paper

Michael D. HarrisMichael D. Harris has written a white paper titled: “How can we get more value out of software development?” It provides an introduction to visualizing the value of software development projects. In the paper, Michael lays out the challenge that most major corporations face in regards to software development: projects are prioritized based on a variety of factors, but typically not business and economic value.

The white paper discusses the importance of value visualization and then walks through the 5-step Value Visualization Framework (VVF) concept that Michael developed to help IT departments and business units collaborate to set, measure and track goals based on value.

Download this free white paper today by clicking here and learn how you can maximize the value of your next software development initiative.

Written by Default at 05:00

"It's frustrating that there are so many failed software projects when I know from personal experience that it's possible to do so much better - and we can help." 
- Mike Harris, DCG Owner

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