Monday, 31 December 2007 02:48

Defining Value to Prioritize Features

Written by Kent McDonald
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Building The Right Thing

One problem with software development methods these days is that there are a lot of different ideas on the right way to build things, but we don’t have too much guidance on how to make sure we are building the right things. There is plenty of advice on the best techniques to develop quality software, but all of this guidance is based on the assumption that the team already knows what they are supposed to be building. When it comes to how to find that out, just about every methodology has the customer/stakeholder/product owner prioritize the features/use cases/user stories.

Great, but do our stakeholders always know a sure fire way to properly define what is the most important aspects of a product or system. Do they always have an objective understanding of whether the product or service should be created or updated in the first place? All too often, stakeholders don’t have a clear idea of how to determine if they are asking for the right thing, and the project team doesn’t necessarily help them.

So what does it mean to build the “right thing”? Well, one way to look at it is to understand:

  • What projects should the organization undertake? 
  • What features should be provided for those products or services? 
  • What order should features be delivered?

So how do project teams “do the right thing”? It comes down to the project team, including the stakeholders, working together to understand the organization’s definition of value, applying that definition to determine the value delivered by their projects, determining how the features contribute to the project’s value delivery, and prioritizing the features accordingly.

We’ll discuss each of those steps in turn. One thing to note that whenever I say project team, I include stakeholders in that grouping, and I use stakeholders interchangeably with customers, product owners, users, goal donors, and gold donors.

The Organization’s Definition of Value

Value is one of those words that, while easy to define, often means different things to different people, especially when used in the context of software development projects. The most appropriate dictionary based definition is: “relative worth, utility, or importance.” (http://www.merriam-webster.com/dictionary/values). When you consider this definition, it is easy to see why the definition of value will vary between different organizations. It just so happens that an organization’s strategy, as expressed by its strategic decision filters, provides a definition of value. Strategic decision filters basically provide simple rules to determine which activities create and support sustainable competitive advantage, and which activities detract from an organization’s maintaining its competitive advantage. Anything that creates and supports the organization’s sustainable competitive advantage inherently is valuable to the organization.

The Value Delivered by the Project

Once the project team understands what is valuable to an organization, they can establish a value model for the project, which provides the project team with a tool to repeatedly assess the value delivered by a project.

The value model has four key inputs:

  • Purpose. A statement about what problem the project is trying to solve, or for those optimists out there, the job that the project is trying to get done.
  • Considerations. All those aspects of the project that could impact the value produced by the project, but are either too difficult to quantify, or haven’t happened yet, such as risks, issues, assumptions, and constraints.
  • Cost. The financial resources required to undertake the project, including such things as the people working on the project, hardware, and software.
  • Benefits. The positive impact the project has on the organization. Benefits can be financial in nature, such as increased revenue or reduced costs; or non-financial, such as support for other initiatives, or improved customer satisfaction. It is a good practice for the project team to collaborate on the purpose of the project first and run that purpose through the organization’s strategic decision filters. If the project fits within those filters, the project team can then continue to understand the remaining inputs. If however, the purpose of the project does not pass the strategic decision filters, then work on the project should stop, as it will most likely not deliver any value to the organization. Of course, if the result of the effort to evaluate the project purpose against the strategic decision filters results in the question, “what strategic decision filters?” then the organization has some more fundamental work to do.

If the project is a strategic fit, the project team then collaboratively identifies the considerations, costs, and benefits of the project and crafts a model to determine the value delivered by a project. This model should be built in such a way that it can be quickly updated and analyzed throughout the life of the project as considerations change, costs are better understood, and the benefits produced become clearer. The advantage of this approach over the typical practice of developing a business case to justify the project and then never reviewing it again, is that the project team is able to determine if the project is on track to deliver the expected value, or if conditions have changed such that the project no longer makes sense to continue.

Feature Contribution to Value

Once the project team has a grasp on how the project adds value to the organization, they can start analyzing how the various features under consideration contribute to the overall project value delivery. This can be difficult because the size of feature that delivers discernable project value is often different than the level at which the project team is comfortable fully defining features. A solution to that problem is to group finely grained features into the smallest grouping that delivers value to the stakeholder. Mark Denne and Dr. Jane Cleland-Huang introduced this concept and called them Minimal Marketable Features (MMF) in their book Software By Numbers (http://www.softwarebynumbers.org/default.htm).

 Project teams can organize their features into MMF and then, through an understanding of the relative value of those MMF’s to the overall project, prioritize the features delivered by terms of relative value contributed to the project. This approach is especially effective when the project team is following an iterative approach to development, when subsets of the overall feature set included in a project are delivered on a regular basis. Ideally, project teams will find themselves in a situation where they are able to identify a financial value delivered by a feature, but this is the exception rather than the rule. More often than not, project teams have to express the value in relative terms compared to other features included in the project. Regardless of the measure used, whether it be hard dollars, or a unit of less relative weighting, the key is for project teams to have some understanding, objective or subjective, of the value each feature contributes to the overall project and use that value as the basis for prioritization decisions.

Really Analyzing the Business

What I have just described is business analysis at its finest. It goes beyond simply “gathering” requirements to truly developing an understanding of the business, the problem that needs to be solved, and the benefits of the solution to the overall organization. This approach requires a great deal of collaboration between all involved in a project, especially business analysts, who should have the appropriate skill sets to facilitate the creation and revision of the value model, and the application of that definition of value to the features included in the project. A business analyst who has these skill sets is truly setting themselves up as an invaluable person to their organization.


Kent McDonald

is a Business Systems Coach with Knowledge Bridge Partners and Partner in Accelinnova, http://www.knowledgebridgepartners.com. He has more than a decade of experience guiding successful projects and designing business solutions in a variety of industries including financial services, health insurance, performance marketing, human services, non profit, and automotive. His background includes delivering data-intensive and web-enabled application development projects that provide outstanding business value. He has coached client staff to help teams reach project goals more productively and effectively. Kent is a speaker, writer, and coach on project leadership, business analysis, and delivering business value through projects. He can be reached at kent@knowledgebridgepartners.com
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