Agile Metrics for Senior Managers and Executives

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Agile Metrics for Senior Managers & Executives Managers & Executives Sanjiv Augustine and Roland Cuellar, LitheSpeed Annandale, VA April 15, 2009

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In this webinar, find out about agile appropriate metrics at the customer, portfolio and project levels. Presented by LitheSpeed, LLC. Want to check out the full webinar? Visit http://pm.versionone.com/Webinar_MetricsExecs.html

Transcript of Agile Metrics for Senior Managers and Executives

  • 1. Agile Metrics for Senior Managers & Executives Sanjiv Augustine and Roland Cuellar, LitheSpeed Annandale, VA April 15, 2009
  • 2. Agenda 1. Conceptual Background Defining Key Metrics Metrics as Indicators The Balanced Scorecard 2. Agile Balanced Scorecard Sample Scorecard Product: Business Value Delivered Team: Customer Satisfaction Financial: Net Present Value Schedule: Earned Value for Agile Other Leading Indicators 3. Q&A 2
  • 3. Defining Key Metrics Beware the Hawthorne Effect o We affect what we measure Knowledge workers need to first define: o What is our business? o Who is our customer? o What does our customer consider valuable? Drucker: Measures of quality must flow from the above. 3
  • 4. Metrics Frameworks Business Metrics are often Lagging Indicators o They often measure what happened in the last financial period o Do not always give a forward view into what is to come and how to make corrections Managers need Leading Indicators to help keep projects on track o Are we delivering according to schedule and budget? o Are we practicing the appropriate agile methods that will lead to success? o Are we being efficient with resources? Effectiveness Metrics The metrics that you o Measures the extent to which we met our business goals choose may need to cover all 4 facets. o Tend to be business metrics such as revenue generated, cost savings, new customer acquisition, customer retention, etc. Efficiency Metrics o Measures the efficiency of our solution in terms of cost, time, resources, etc 4
  • 5. The Balanced Scorecard Financial Cost per Unit Project Savings Activity Based Costing Customer Innovation & Learning Customer Satisfaction / NPS Lessons Learned Customer Acquisition & Retention Training Quality % Revenue from NPD Internal Processes Cycle Times Volumes Shipped On Time Delivery Kaplan, Norton 5
  • 6. Sample Agile Balanced Scorecard Product Business Value Delivered Remaining Feature Backlog Quality Schedule Team EVA Customer & Associate Satisfaction Release Burndown Iteration Velocity Variance Days per Release Audit Pass Rate Financial NPV Cost Savings or Revenue Dollars per Release 6
  • 7. Product: Business Value Goal represents 40% of business case User account registration Feature represents 70% of Goal value Goal Fast account registration process Enter billing information User Story realizes .4 60% of Feature value % Value Delivered= .4 x .7 x .6 = 16.8% Feature User account registration Account processing .7 .3 User Story As a User, I can enter As a User, I can enter billing As an Account Processor, I personal information. information. can activate a User account. .4 .6 1 7
  • 8. Team: Customer Satisfaction Landmark Honda: 6x HondaPresidents Award winner: demonstrate superior achievement in customer satisfaction, new-car- unit sales volume and business management. it is the highest award that a Honda dealership can receive because it demands the highest personal investment and stimulates the greatest results satisfied, loyal customers. Although some of them seem to rate our entire operation, in fact they all rate my personal performance and the scores become part of my permanent record. 8
  • 9. Financial: Net Present Value NPV = Ct (1+r)t NPV: Takes time value of money into account Takes cost of capital into account Values projects same as stock C = net cash in period t Positive NPV adds value to the firm R = cost of capital Leads to better investment decisions NPV > 0; accept the project than other criteria such as IRR, ROI* NPV < 0; decline the project * From Principles of Corporate Finance by Brealey & Myers Leading and Lagging: For leading indicators of success, measure the assumptions that went into the model For lagging indicators, measure actual investment performance 9
  • 10. Schedule: Earned Value for Agile Does not really measure business value; measures cost delivery Tries to measure both schedule performance and cost performance against plan EVM Definition Calculation PPC Planned % Complete Iteration # / Total Iterations APC Actual % Complete Points Delivered / Total Points PV Planned Value PPC * BAC (budget at completion) EV Earned Value APC * BAC CPI Cost Perf Index EV / Actual Cost SPI Schedule Perf Index EV / PV Sulaiman, Barton, and Blackburn 10
  • 11. Other Leading Indicators - Use With Caution! Change in velocity They Want It All: Change in Team Capacity I want it fast Product Owner Time with Team I want it cheap Team co-location time I want good quality Backlog growth It must pass governance Defect generation and resolution rates Process QA Checklist o Are stand-ups happening? o Are demos happening? o Are retrospectives happening? o Is working software delivered in every sprint? o Is testing occurring in every sprint? 11
  • 12. Sample Agile Balanced Scorecard Revisited Product Business Value Delivered Remaining Feature Backlog Quality Schedule Team EVA Customer & Associate Satisfaction Release Burndown Iteration Velocity Variance Days per Release Audit Pass Rate Financial NPV Cost Savings or Revenue Dollars per Release 12
  • 13. Contact Us for Further Information Sanjiv Augustine President [email protected] Roland Cuellar Vice President [email protected] On the Web: http://www.lithespeed.com "I only wish I had read this book when I started my career in software product management, or even better yet, when I was http://www.sanjivaugustine.com given my first project to manage. In addition to providing an excellent handbook for managing with agile software development methodologies, Managing Agile Projects offers a guide to more effective project management in many business settings." John P. Barnes, former Vice President of Product Management at Emergis, Inc. 13