Helping Product Owners Define Value And Prioritize Requirements

So many decisions, more time than we thought

Helping Product Owners Define Value and Prioritize Requirements

So many decisions, more time than we thought

Kent J. McDonald Business Systems Coach, Knowledge Bridge Partners Founding Partner, Accelinnova

Overview       

Problems Value Models Today Why It Doesn’t Work Considerations Purpose New Models Example

The Problem(s)  “The Business” Expects Us to Do “The Right Things”  Methodologies Tell Us How to Do Things Right How Do We Do This? Who Decides? And When?

Features and Functions Always or Often Used: 20% Always 7% Often 13% Sometimes 16%

Never Used 45% Rarely Used 19%

Never or Rarely Used: 64% Standish Group Study, reported by CEO Jim Johnson, XP2002

Value Models How Do You Determine Costs? Costs

Benefits

Value Model

How Do You Determine Benefits?

Business Value

Costs  Costs Associated with the Team  Hardware Costs  Software Licensing Costs  Vendor Service Costs  Impact to Operations (Extra Staff)

Benefits       

Increased Revenue Cost Reductions Opportunity Costs Avoided Fee and Penalty Avoidance Support of Other Initiatives Reputation Improved Customer Satisfaction

Value Models

Costs

Benefits

Value Model Business Value

This Is Hard….

Measuring Business Value  Many Different Approaches    

Cash Flow Net Present Value Internal Rate of Return Return on Investment

 These Can All Be Gamed  Uncertainty Hard to Factor  Other Factors Impact Value

Considerations Impact Value Considerations

Costs

Benefits

Value Model

Business Value

Considerations Things That Could Impact Value:  Risks  Assumptions  Constraints

Risks  Technical Difficulties  Changes in Market Conditions  Team Makeup and Skill Set  Domain Knowledge

Assumptions  Availability of Team Members  Market Demand for Product  Team Velocity  Understanding of Domain Knowledge

Constraints Market Window External Events Compliance Dates Budget Limit Team Members Technical Architecture  “Non Functional” Requirements      

Collaboration Process  Agree to Purpose of Exercise  Brain Write  Stick Items on a Wall  Group Like Items Together  Provide Headlines for Groupings  Vote for Priority

Considerations Impact Value That Didn’t Help Much…

Costs

Benefits

Value Model

Considerations

Business Value

How Do You Justify a Project That Does Not Provide Positive Business Value?

It’s a “Strategic Project”

Value Model Considerations

Considerations

Purpose Value Model

Benefits

Costs

Business Value

Project Purpose Optimist’s View: What Job Is the Project Trying to Get Done? Pessimist’s View: What Problem Is the Project Trying to Solve?

The Key Is Common Understanding.

Purpose Tools to Help Discover Purpose:  Purpose-Based Alignment Model  The 5 Questions  Elevator Statement  Innovation Game

Strategic Development

Strategic

Mission

Vision

Values

Strategic Intent ~ Strategy ~ Purpose Long-Range Goals SCO / 5Q

Tactical

Annual Objectives Action Plans (what, who, when) Individual Business Objectives

Strategic Development

Strategic

Mission

Vision

Values

Strategic Intent ~ Strategy ~ Purpose Long-Range Goals SCO / 5Q

Tactical

Annual Objectives Action Plans (what, who, when) Individual Business Objectives

Start Here

Strategic Intent Competitive Position

Broad

Cost

Differentiation

Cost Leadership

Product Leadership

Strategic Scope Narrow

Best Customer Solution

Where is Your Organization ?

Defining Strategy Answer These Questions: 3. Whom do we serve and what do they want and need most? 4. What services do we provide to help them? 5. How do we know we’re doing a good job? 6. What is the best way to provide these services? 7. How should we organize to deliver these services?

Identifies Strategic Decision Filters

Purpose-Based Alignment High

Partner

Differentiating

Who Cares?

Parity

Market Differentiating

Low High

Low

Mission Critical

Purpose Does Not Equal Priority

Purpose Statement Stating the Purpose: Your Elevator Statement For Products and Services:

   

Who Is It For? What Do They Need? Key Benefit Is? Why Is It Different Than the Competition?

Purpose Statement Your Elevator Statement For Business Problems:

 What’s the Problem?  Who Does It Affect?  What’s the Impact?  What’s a Successful Solution?

Purpose as a Product Box Product Box An Innovation Game by Luke Hohmann

 Build Imaginary Packaging for Product  Customers Identify the Problems They Want Solved  Identifies Expected Benefits http://www.jonathanboutelle.com/mt/archives/2005/11/offline_gamelik.html

Example: Health Insurance Health Insurance Example: Create a 24x7 resource people could call to get health care questions answered and get direction to sources for care.

Example: Health Insurance Intent and Filters Strategic Intent: Best Customer Solution

Competitive Position

Broad

Cost

Differentiation

Cost Leadership

Product Leadership

Strategic Scope

Decision Filter: Does this initiative help to improve health care value for our stakeholders?

Narrow

Best Customer Solution

Example: Health Insurance Purpose Alignment High

Pharmacy Dental

Market Differentiating Disability Insurance

Healthcare analytics Member focus

Claims Processing Enrollment Customer Service

Low High

Low

Mission Critical

Example: Health Insurance Purpose Statements

What’s the Problem?

Healthcare industry is difficult to navigate

Who Does It Affect? Members

What’s the Impact? Confused about appropriate place to receive care, resulting in needless expenses

What’s a Successful Solution? Provides members a single, trusted point of contact to get health and wellness and urgent care questions answered

Example: Health Insurance Purpose  Provide members a single point of entry to heath insurer’s health and wellness resources.  Answer member’s urgent care questions

Example: Health Insurance Costs  Software Development Costs  Vendor Development Costs  Ongoing Operational Costs

Example: Health Insurance Benefits

 Consolidated Member Point of Contact  Cost Avoidance  Gather Clinical Information

Example: Health Insurance Considerations  Vendor Size  Integration with Vendor Systems  Date Available Commitments to Customers  Dependency on Other Project to Supply Data

Example: Health Insurance Is Business Value Defined?  Costs >> Benefits  Increased Information About Members  Customer Satisfaction  More Appropriate Care Delivery  Better Informed

Example  Do We Know What the Right Stuff Is?  Do We Know What to Build First?  Who Decides?

So Why Do We Care About Business Value?

It’s All About Decisions

Value Model? Considerations

Considerations

Purpose Value Model

Benefits

Costs

Business Value

Value Model! Considerations

Considerations

What do we do?

Purpose

Benefits

Costs

Value Model

When do we do it?

When do we decide?

What Do We Do?

Is Analysis a Lost Art?    

Do I Understand the Problem? Do I Understand the Guidelines For a Solution? Have I Consistently Described the Solution? Can I Verify the Solution?

Doing the Right Stuff  Tie Project Purpose to Strategy  Factor in Considerations  Utilize Cost/Benefit Information

Tie Purpose to Strategy What Is the Project Purpose? Does the Purpose Align with Decision Filters?  Yes – Continue!  No – Stop!  “What Decision Filters?” – Go Back and Define Some.

What Decision Filters? Does purpose meet decision filters? Yes Continue

No

Factor In Considerations  A Business Driven Deadline?  Impact on Other Projects?  Impacted by Other Projects?  Availability of Key People?  Impact of Regulations?

Utilize Cost/Benefit Analysis  Adjust for Considerations  Use Consistent Analysis Between Projects  Understand Uncertainty in Estimates

Selecting The “Right Requirements”  Look at the Right Level  Put the Analysis Back In Business Analysis  Do the Right Stuff  What Just Meets Purpose?

Requirements Levels Business Requirements User Requirements Software Requirements

Why Do This Project? This Is the Right Level What Do Users Want?

What Do We Build? The Software Requirements Memory Jogger by Ellen Gottesdiener

Minimum Necessary Set  Minimum Features to Create Value  Minimum Features to Replace Existing System  Base on Project Purpose and Considerations

When Do We Do It?

Prioritizing Features  Determine Relative Value  Priority = Order  Revisions to Order Based on Technical Considerations

Relative Value of Feature  Relative Benefit Relative Cost  Benefit Measured in Benefit Points  Cost Measured in Story Points  Resolve Outliers

“Value” in the Extreme  Team Discusses Feature  Each Member Indicates Numerical Estimate  Discuss Outliers  Outliers Indicate Assumptions, Considerations

Change Feature Order Based on Considerations  Move Up Features That Provide Information  Move Down Features That Depend on Others  Group Features Together That Have Synergy

When Do We Decide?

Real Options

Deciding Is Not a Once in a Lifetime Event  Knowledge Improves  Business Conditions Change  Project Conditions Change  Do You Know Why You Are Deciding Early?

Decide Who Should Decide  Who Makes The Decision?  Who Makes Sure It Is Enacted?  Understand Before Making Decisions  Decision Leader  NOT For Purposes Of Placing Blame

“Roles” = Who Decides?  Many Roles for “Business”    

Stakeholders Customers Product Owners Users

 Need Input From Multiple People  Need To Know Who Ultimately Decides

Some Things to Remember  Value Impacted By Purpose And Considerations  Business Value Is All About Decisions  Decide Wisely  Decide Who Should Decide Wisely

Questions?

References  Stand Back and Deliver, co-author, published by Addison Wesley, due out late 2008 or early 2009  The Software Requirements Memory Jogger, Ellen Gottesdiener  Innovation Games, Luke Hohmann

Contact Kent J McDonald:    

www.knowledgebridgepartners.com www.accelinnova.com 515.229.6929 [email protected]