Better and cheaper!

Better and cheaper!

Last night I got a note asking, “We’ve been debating how to compare the value of each improvement request with the objective of prioritizing requests. What attributes or metrics do organizations use to assign value to a request?”

There are several ways to answer this question, but they all begin with determining what is important to the organization.  To define what is is valuable you need to identify the attributes that are needed to prioritize changes that will provide direct value.  I find that when executives are asked what matters in terms of process improvement, they answer:

  1. Increasing the delivery of functionality or services (speed);
  2. Reducing the cost of work delivered (productivity), and
  3. Improving the quality of functionality or services delivered (quality).

Do you recognize the mantra of “faster, better and cheaper”? CIO Magazine in their 2014 Sate of the CIO survey indicated that “improving IT project delivery performance” was a top priority of 56% of the CIOs.  Process improvement (in all forms from process change to outsourcing) is where improving delivery performance is generated and the most common measurement yardstick is money (you name the currency).  

A simple (but powerful) approach is to estimate the improvements based on the goal(s), remove the implementation (and support) costs, and then prioritize based on the remainder.

An example of the mechanics:

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Note that all of the numbers are made up just to show the mechanics.

Quantification of impact is a discipline that typically needs to be fostered. Mature organization will have data on delivery speed, productivity and defect levels which can be monetized based on the average cost of a team member or the average cost to repair a defect. Where this type of data is not available, facilitated group sessions akin to planning poker or Delphi can be used to estimate the impact.  

Once the net impact of quantification has been calculated and the list prioritized based on net-benefit, other factors can be incorporated.  Other factors impacting tactical prioritization (what do in the next month or few weeks) may include required lead times for an improvement.  For example, implementing code change management may require evaluating and purchasing a tool which might suggest tackling another priority while negotiating the purchase of another product.  

The concept of quantifying process improvements based on value is not a new concept, however sometimes it is difficult to determine the net value of a specific change.  More advanced techniques like Weighted Shortest Job First (WSJF), which explicitly weighs value, criticality, risk reduction, opportunity enablement and job size provide a framework so that opportunities can be compared.  The technique is described by Dean Leffingwell (Listen to SPaMCAST 160) extends it usefulness by building in the use of relative values (relative values are values based on perception). Organizations with measurement data can combine statistical modeling and conversation, while organizations without data will have to used relative measures or estimates of impact and cost.

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