Capturing Business Value Delivered by Scrum Teams

8 January 2014


As part of my job working with different teams, the biggest challenge I see is how the team's work can be measured in terms of business value delivered. We need to answer a few questions to get a solution.
  • Can we identify how much value to business the technology has delivered?
  • Is it more objective than subjective?
  • How do we set delivery goals that are meaningful and measurable to the business?
  • How do we see the business value delivered incrementally during the course of projects?
  • Do we take an educated guess on what the business wants or do we really know?
Is there a way we keep it simple and yet effective?

Yes, there is! Here is how:
  • Every project gets a total of 100 points, maximum, called BP (business points). That total is divided among key objectives of the project.
  • Any business objective can be given a value of only 1, 2, 3, 5, 8, 13, 21, 34, 55 BP (these numbers come from the Fibonacci series).
  • A few parameters to consider while assigning value to objectives could be business criticality, ROI, complexity, urgency, importance (please refer to the Appendix at the end of this article).
Let's take an example: a data migration project. Company A has acquired Company B and wants its employees to access the company's website/systems, etc., for better operations. The key tasks of the project for the technology team, as part of the data migration exercise, are:
  • Log-in credentials data
  • Access/security data
  • Salary data
  • Organizational structure data
  • Generic details of employees
  • Skills data
  • Employee performance data
The key in this example project is that the product owner should know the business perspective/scenario/objectives while providing the business value:
  • Company A has acquired company B and wants its employees to access the company's website/systems, etc., for better operations.
  • Company B uses a legacy database not compatible with the current systems of company A, hence the need to migrate the data.
  • Company A wants to ensure that all the employee use the same system for leave, travel, expenses, payroll, etc., to keep operational costs low.
  • Company A wants to align the organizational structure of Company B with its own structure.
  • Company A has won a few clients for IT projects and needs to know the right fit of talent for those projects.
Now, keeping the above in mind, the sponsors of the project and the product owner should assign the business value to each key objective:
  1. Log-in credentials data -- 21 BP
  2. Access/security data -- 13 BP
  3. Salary data -- 5 BP
  4. Organizational structure data -- 8 BP
  5. Generic details of employees -- 3 BP
  6. Skills data -- 34 BP
  7. Employee performance data -- 13 BP
  8. History data -- 2 BP
  9. DW data -- 1 BP


FAQs

Can I have two objectives of the project as the same business priority?
Yes, it is OK to have the same BP assigned to different objectives.

Why choose numbers 1, 2, 3, 5, 8, 13, 21, 34, 55 (from the Fibonacci series)? Why not sequential numbers (1, 2, 3, 4, 5, 6, 7, 8, etc.)?
This makes the PO and sponsors give clear guidance around what is more valuable because of the clear value differences between the numbers.

Why limit the total BP to 100?
This allows the business to judiciously decide what is more valuable.

What if the project is big and business thinks 100 BP are not enough?
One option could be to divide the project into phases or have two separate Scrum teams work on different objectives, hence assigning the BP for different teams.

Now the product owner, while preparing the release plan, can assign business value.


Release plan

Actuals after each release to product




Benefits of the above approach:
  1. The business value delivered is objective and agreed upon by the sponsors and product owner.
  2. At any time, if the sponsors feel they have achieved what they really wanted, they can stop the project -- or change their minds and continue.
  3. The development team is now inclined to think in terms of delivering what is more important to business than in terms of planning based on technical limitations, resource availability, etc.
  4. Business has confidence in the team and also has the opportunity to change priorities by assigning a higher value to make it a part of an earlier release.
  5. Since the BPs are limited in number, the sponsors may, in the case of large projects, need to plan for different phases and multiple teams, which makes the product owner prioritize and plan.


Appendix

Below is one useful way of assigning business value to a business item using the Four Quadrant Analysis Method:
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