Planning for Value: How much? When?

Evolving#NoProjects->Con5nuous

AllanKelly-@allankellynetallan@allankelly.net

PlanningforValueHowmuch?When?

Agile on the BeachJuly 2017

relax

IsthisprojectrightforAgile?OrisWaterfallbe>erhere?

IsthisprojectrightforKanban?OrisScrumbe>erhere?

Whocaresaboutright?

Whichwillmakemoremoney?

Agilemakesmore$£€becauseitdeliverssomethingsooner

Today’sLesson#1

Ali>lebitSoonis

WorthmorethanalotdeliveredLater

Today’sLesson#2

KnowtheTime-ValueProfileofthethingyouarebuilding

Today’sLesson#3

DeadlinesareelasScbyvalue

Agilefolkgetitwrong!

•  GivemoreopportuniSesforfeedback

•  Tighterfeedbackloops•  Allowforchangingrequirements

•  Improvequality•  Reducerisk

•  Theyincreasevalue•  Theymakemoremoney£€$

(O,andreducerisk,improvequality,etc.etc.)

Regulardeliveriesaregoodbecause…

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

Bigbangdelivery 12monthlydeliveries

Deliveredin1BigBangNPV=$215,725Value/Cost=21.57%

12monthlysmallbangsNPV=$243,359Value/Cost=24.34%

$27,0002.75%

$1million–1year

Valuedelivered

Costtobuildover

“Priceiswhatyoupay.Valueiswhatyouget.”

WarrenBuffet

Whichstoryfirst?

Value=$355,000Timetodelivery=

4weeks

Value=$1,060,000Timetodelivery=

6weeks

AsatoyretailerIwantanappthatallowskidstoselectfrommyspecialrangesothattheirparentscanbuy.

AsatoyretailerIwantanappthatallowskidstomakelistsoftoystheywantsotheirparentscanbuy.

Whichstoryfirst?

Value=$355,000Timetodelivery=

4weeks

Value=$1,060,000Timetodelivery=

6weeks

AsatoyretailerIwantanappthatallowskidstoselectfrommyspecialHALLOWEENrangesothattheirparentscanbuy.

AsatoyretailerIwantanappthatallowskidstomakelistsoftoystheywantSANTATOBRINGsotheirparentscanbuy.

Todayis1September

Time-ValueProfileHowdoesvaluechangeoverIme?

0

200000

400000

600000

800000

1000000

1200000

Sep1 Sep15 Sep29 Oct13 Oct27 Nov10 Nov24 Dec8 Dec22 Jan5

0

200000

400000

600000

800000

1000000

1200000

Sep1 Sep15 Sep29 Oct13 Oct27 Nov10 Nov24 Dec8 Dec22 Jan5

Valueover4months

Santaapptotalvalueover4months

DeliverydateTotalvaluefora

givendate

Totalvaluestartstofallaner15SeptemberTomaximizevaluedeliverby15Sep1Sep-13Oct

6weeks

0

200000

400000

600000

800000

1000000

1200000

Sep1 Sep15 Sep29 Oct13 Oct27 Nov10 Nov24 Dec8 Dec22 Jan5

Valueover4months

Santaapptotalvalueover4months

1Sep-13Oct6weeks UseByDate

BestBeforeDate

0

50000

100000

150000

200000

250000

300000

350000

400000

Sep1 Sep15 Sep29 Oct13 Oct27 Nov10 Nov24 Dec8 Dec22 Jan5

ProductBvalueover4months

Halloweenappvalueover4months

1Sep-28Sep

4weeks

0

50000

100000

150000

200000

250000

300000

350000

400000

Sep1 Sep15 Sep29 Oct13 Oct27 Nov10 Nov24 Dec8 Dec22 Jan5

ProductBvalueover4months

Halloweenappvalueover4months

1Sep-28Sep

4weeks

UseByDate

BestBeforeDate

Together

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

Sep1 Sep15 Sep29 Oct13 Oct27 Nov10 Nov24 Dec8 Dec22 Jan5

Combinedvaluefromtwoapps

Santaapp Halloweenapp

Whatdoyouwanttodo?

A.  DoHalloween&thenSantaB.  DoSanta&thenHalloweenC.  DoHalloween&forgetSantaD.  DoSanta&forgetHalloweenE.  ChangetheesSmatesF.  DobothandprayG.  Addmorepeople

Re-use?

•  HowmuchofHalloweencanbereused?– HowmuchofSantacanbetakenfromHalloween?

•  Howmuchextradoesreusablecodecost?– HowmuchSmedoesreusableaddtothework?

•  Howmuchmoneyislostbydelay?•  Howmuchmoneyisgainedfromearlydelivery?

ReusabilityincreasesRISK

Santade

pend

son

Halloween

Whatdoyouwanttodo?

A.  DoHalloween&forgetSantaB.  DoSanta&forgetHalloweenC.  DoHalloween&thenSantaD.  DoSanta&thenHalloweenE.  ChangetheesSmatesF.  DobothandprayG.  AddmorepeopleH.  Reuse

Santafirst,Halloweensecond

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1 2 3 4 5 6 7 8 9 10

Combinedvaluefromtwoapps

Halloweenapp Santaapp

1Sep-13Oct6weeks

13Oct–9Nov

Santafirst

Appmakes$1,025,000$35,000lostbecauseitwasnotreadyby13October

Halloweenappmakes$0Total=$1,025,000

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1 2 3 4 5 6 7 8 9 10

Combinedvaluefromtwoapps

Halloweenapp Santaapp1Sep-28Sep

1Sep-13Oct6weeks

28Sep-9Nov6weeks

13Oct–9Nov

Halloweenmakes$340,000$15,000lostbecausenotreadybefore29September

Santamakes$800,000$225,000lostbecauseitisnotreadyunSl10November

Halloweenfirst

Halloweencomesfirst

SantafirstTotal=$1,025,000

HalloweenfirstTotal=$1,140,000

$115,000more

OpportunityCostofDelay

•  Extracostsincurredbecausedeliveryislate– e.g.temporarystaff,priorityshipping,penaltyfines

•  Valueforegone:– LostrevenueopportuniSes– Notbeinginthemarket(lessSmeonsale)– NotbeingavailablebeforecriScaldate– NotbeinginthemarketbeforecompeStors

Timeismoney?

MoreSme->MorecostsMoreSme->Lessrevenue

(Usually)RevenueisinverselyproporSonalto

Smetodelivery

OpportunityCostofDelay

“6monthdelaycanbeworth33%oflifecycleprofits”

McKinsey(Reinertsen)1983

PrinciplesofProductDevelopmentReinertsen,2009

DeadlinesareanalogueDifferentdatesresultindifferent

valuesDeadlinesarenotbinary

(allornothing)

IneedthisandIneeditYESTERDAY

Yesterday…

0

200

400

600

800

1000

1200

Yesterday Today Tomorrow

BestBeforeDate

UseByDate

IneedthisandIneeditYESTERDAY

Odear,Idon’thaveaTARDIS(Smemachine)but

maybeIcangetsomethingforyoutomorrow?

Brilliant,IknewIcouldcountonyou

Ifallthevalueaccruedyesterdaythenitislost

IfvaluesSllexiststhenitmightbeworthdoing

Howdoyougettovalue?

•  Askyourstakeholders•  Dotheanalysis•  EsSmate

ValuePoker

LikePlanningPoker•  ValuepointsnotEffortpoints

10,000

8,000

Donow Dosoon Dolater

5,000Bestbefore+1mth

Bestbefore+6mths

Bestbefore+3mths

Time-ValueProfileisaninputtoplanning

0

50000

100000

150000

200000

250000

300000

350000

400000

Sep1 Sep15 Sep29 Oct13 Oct27 Nov10 Nov24 Dec8 Dec22 Jan5

ProductBvalueover4months

SoluSonsmustbebuiltto:a)  Obtainasmuchofthevalueaspossibleb)  WithinsomeSmeframec)  Foracostwhichleavessomeprofit

Howmuchprofitismadeand

HowmuchvalueisextractedarenegoIable.

KnowtheTime-ValueprofileKnowyourtargetprofitKnowhowmuchyoucanspendWorkbacktodate&burnrate

Engineer,engineer

AllanKelly…Ø ConsulSngonsonwaredevelopment&strategyØ TrainingforAgile

Author–  LiSleBookofRequirements&UserStories(2016)

h>p://www.leanpub.com/userstories–  Xanpan:TeamCentricAgileSonwareDevelopment(2014)h>ps://leanpub.com/xanpan

–  BusinessPaSernsforSoXwareDevelopers(2012)–  ChangingSonwareDevelopment(2008)

More…

www.allankelly.net

LeanPubh>ps://leanpub.com/cdigital

1.  Ali>lesoonisworthmorethanalotlater

2.  KnowtheSme-valueprofile3.  DeadlinesareelasScbyvalueallan@allankelly.netTwi>er:@allankellynet

½pricecod

e:

AOTB2017

48hours