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how_do_we_know_where_we_are_spending_our_money [2019/06/13 14:54]
Hans Samios Cleaned up formatting
how_do_we_know_where_we_are_spending_our_money [2019/09/11 07:36] (current)
Hans Samios [How Do We Know Where We Are Spending Our Money?]
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 While many Agile-ists just want to say “Trust us; we are working on the most important thing every time”, this really is not responsible management from the perspective of the executives, nor sufficient for good corporate governance. The reason is that there are many different perspectives of the use of money that need to be looked and there is no (single) way of determining priority that would take into consideration these multiple perspectives. ​ While many Agile-ists just want to say “Trust us; we are working on the most important thing every time”, this really is not responsible management from the perspective of the executives, nor sufficient for good corporate governance. The reason is that there are many different perspectives of the use of money that need to be looked and there is no (single) way of determining priority that would take into consideration these multiple perspectives. ​
 +
 +In addition many organizations assume that the work management tool we are using to track work can be used to directly replace existing time tracking systems. In most cases this is not true. While we can generate the answers to questions such as “where are we spending our money?” using Agile data, we do not have to know “how much time did a particular person spend on this” to answer the question.
  
 ====== What Types of Categories Do We Often See? ====== ====== What Types of Categories Do We Often See? ======
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   * Operating budget   * Operating budget
  
-See [Agile Software Capitalization](http://​www.hanssamios.com/​dokuwiki/​how_do_we_do_software_capitalization_when_we_go_to_agile) ​for more on this subject.+See [[how_do_we_do_software_capitalization_when_we_go_to_agile|How Do We Do Software Capitalization ​When we Go to Agile?]] for more on this subject
 + 
 +===== Project Identifier ===== 
 + 
 +Often the work that is being taken on is the result of a customer project, for example. Project Managers and other stakeholders will be interested in understanding,​ for example, progress on elements of their project. Typically some kind of unique Project ID is used to isolate projects from other projects, as well as work that is not related to any project.
  
 ===== Funding Source ===== ===== Funding Source =====
  
-Organizations often have different sources of funding for an IT organization and it is up to the IT organization to ensure that the capacity allocated to work lines up with these funding sources. To track, ​tags we could be apply Features could be:+Organizations often have different sources of funding for an IT organization and it is up to the IT organization to ensure that the capacity allocated to work lines up with these funding sources. To track, we could tag based on:
  
   * Customer Projects   * Customer Projects
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   * Reverse ​   * Reverse ​
  
-For more information see [Kano Model](https://​en.m.wikipedia.org/​wiki/​Kano_model)+For more information see [[https://​en.m.wikipedia.org/​wiki/​Kano_model|Kano Model]]
  
-====== And Then There are More Arbitrary Definitions ​======+===== And Then There are More Arbitrary Definitions =====
  
 One product development shop I worked with really wanted us to track truly innovative work separately from maintenance work. Their categories were a combination of a number of notions: One product development shop I worked with really wanted us to track truly innovative work separately from maintenance work. Their categories were a combination of a number of notions:
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   - Initiatives:​ Sometime executives just want to understand how much is being spent on a particular initiative in relationship to others. If we assume that individual initiatives are modeled as Epics, then the simplest approach is just to link associated features and stories to the epic, and track total work.   - Initiatives:​ Sometime executives just want to understand how much is being spent on a particular initiative in relationship to others. If we assume that individual initiatives are modeled as Epics, then the simplest approach is just to link associated features and stories to the epic, and track total work.
  
-combination of approaches is also used in many cases.+Different tools will support different approaches. Often a combination of approaches is also used.
  
-No matter the approach, we’d provide tools and dashboards to people ​to easily find data that was not tagged appropriately so the data can be cleansed.+No matter the approach, we’d provide tools and dashboards to people ​so they can easily find data that was not tagged appropriately so the data can be cleansed.
  
 Some organizations feel like that they need to get very precise with these categories. So for a particular category, for example Capitalization they won’t just label a feature with “Capital budget” or “Operating budget” but rather will try to estimate a percentage of the Feature that fits into each category (eg Feature is 33.3% capital budget, and the rest operating). ​ Some organizations feel like that they need to get very precise with these categories. So for a particular category, for example Capitalization they won’t just label a feature with “Capital budget” or “Operating budget” but rather will try to estimate a percentage of the Feature that fits into each category (eg Feature is 33.3% capital budget, and the rest operating). ​
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 In most cases it doesn’t really make a lot of difference what is used. In general I’ve found that a count approach is both simpler and more consistent over the long term. Most organizations are more comfortable using size because this seems like it is an important factor. The reality is that the “law of large numbers” takes over for large implementations so the counts are “good enough” and probably about the same as using size information. In most cases it doesn’t really make a lot of difference what is used. In general I’ve found that a count approach is both simpler and more consistent over the long term. Most organizations are more comfortable using size because this seems like it is an important factor. The reality is that the “law of large numbers” takes over for large implementations so the counts are “good enough” and probably about the same as using size information.
  
-====== ​Can We Trust Agile Data to Make Decisions? ======+====== ​How Do We Started Using Agile Data Instead of Time Reporting? ======
  
-Many people worry that tracking counts of epics, features, and stories, or epic, feature, and story points are less accurate than traditional time keeping systemsExperience shows that the data from these agile systems ​is in fact more accurate because, unlike traditional time card systems, the people doing the work actually have an interest (skin in the game) when it comes to count or point dataFor more information,​ see [Can We Trust Story Points ​as a Measure of Effort](http://​www.hanssamios.com/​dokuwiki/​can_we_trust_story_points_as_a_measure_of_effort)+A word on getting started on Agile reporting approachInitially it is difficult for organizations ​to understand how you turn points and counts into dollarsSee [[how_do_i_convert_points_and_velocity_to_dollars|How Do I Convert ​Points ​and Velocity to Dollars?]] for the general approach.
  
-A word on getting started on this reporting approach. Most organizations are distrustful of things like counts of features ​to understand where they are investing. Time card systems have a huge feeling of comfort ​and let’s face it points are “unit ​less” so how can that give us what we needI’ve found that this means you will have to run time keeping and point systems in parallel for period ​of time so that people can get comfortable with the new approach.+And then many people worry that tracking ​counts of epics, ​featuresand stories, or epic, feature, and story points are less accurate than traditional time keeping systemsExperience shows that the data from these agile systems is in fact more accurate because, unlike traditional time card systems, the people doing the work actually ​have an interest (skin in the game) when it comes to count or point data. For more information,​ see [[can_we_trust_story_points_as_a_measure_of_effort|Can We Trust Story Points as Measure ​of Effort?]].
  
 +And finally, I’ve found that from a practical perspective you will have to run time keeping and point systems in parallel for a period of time so that people can get comfortable with the new approach.
 ====== Context ====== ====== Context ======
  
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 ====== Want to Know More? ====== ====== Want to Know More? ======
 +
 +  * [[how_do_i_convert_points_and_velocity_to_dollars|How Do I Convert Points and Velocity to Dollars?]]
 +  * [[how_do_we_do_software_capitalization_when_we_go_to_agile|How Do We Do Software Capitalization When we Go to Agile?]]
 +  * [[can_we_trust_story_points_as_a_measure_of_effort|Can We Trust Story Points as a Measure of Effort?]]
  
 {{tag>​FAQ investment executive reporting}} {{tag>​FAQ investment executive reporting}}
  
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