Business Value

Teams that work in an Agile or Lean way will commonly discuss business value. Any form of benefit can be traced back to three core value statements: to make money, to save money, to protect money. Understanding business value is a critical part of prioritisation of work items in the backlog. The perceived business value should constantly be measured once delivered to a live environment and any lessons learned fed back into the prioritisation mechanism. The Product Owner, working with a Product Management capability should really understand the value of the prioritised user stories. This analysis of business value should be a real-time activity that Product Owners should obsess about. Members of the delivery team are also very interested in understanding the value of the work they are delivering so sharing and communicating the value statement is an important motivational factor when working with software development teams. Examples of how business value is expressed could include: reduction in customer dropout, increase in customer acquisition, increase in customer conversion, increase in platform supportability, improvements in platform stability, reduced time to market, regulatory compliance, and many more. Not all value needs to be directly associated with business value. You’ll hear Technical debt discussed regularly within development teams. The ability to express the resolution of technical debt as a value is important. Another way to express business value is in the Cost of Delay. The cost of delay refers to the concept of lost potential value. Basically, for every week we are late with delivering the new feature, how much value would we have gained had we delivered the feature on-time. Many advanced Product Management capabilities can calculate the Cost of Delay for any proposed feature or product. There are other methods of calculating relative value when faced with conflicting priorities. One of them is called Weighted Shortest Job First (WSJF). This is a simple weighted mathematical formula using several dimensions to work out an overall score. The parameters usually consist of (perceived value * cost of delay) / estimated effort required.

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