how_do_we_know_where_we_are_spending_our_money
Differences
This shows you the differences between two versions of the page.
Next revision | Previous revisionNext revisionBoth sides next revision | ||
how_do_we_know_where_we_are_spending_our_money [2019/06/05 14:10] – created hpsamios | how_do_we_know_where_we_are_spending_our_money [2019/09/11 07:28] – Added Project ID hpsamios | ||
---|---|---|---|
Line 17: | Line 17: | ||
Organizations will often be interested in how much they are investing in different time horizons of a product / solution. Are we investing the right amount in evaluating new products, in comparison to retiring existing products. Example tags (using standard SAFe discussion) on (for example) Epics might include: | Organizations will often be interested in how much they are investing in different time horizons of a product / solution. Are we investing the right amount in evaluating new products, in comparison to retiring existing products. Example tags (using standard SAFe discussion) on (for example) Epics might include: | ||
- | * Evaluating: investments aimed at potential new solutions, where we will get to a “stop, pivot or persevere” decision. | + | |
- | * Emerging: evaluation will lead to identification of some promising new solutions that we want to continue to invest. | + | * Emerging: evaluation will lead to identification of some promising new solutions that we want to continue to invest. |
- | * Investing: investments requiring significant on going investment because of volatility in the environment. | + | * Investing: investments requiring significant on going investment because of volatility in the environment. |
- | * Extracting: investments that are part of our stable offering. | + | * Extracting: investments that are part of our stable offering. |
- | * Retiring: investment required to decommission a deployed solution | + | * Retiring: investment required to decommission a deployed solution |
===== Centralized vs Decentralized Decision Making ===== | ===== Centralized vs Decentralized Decision Making ===== | ||
Line 27: | Line 27: | ||
Organizations often want to understand what kind of decisions we are making at what kind of levels. For agile transformations, | Organizations often want to understand what kind of decisions we are making at what kind of levels. For agile transformations, | ||
- | * Portfolio: work initiated and prioritized at the program level | + | |
- | * Program: work initiated and prioritized at the program level | + | * Program: work initiated and prioritized at the program level |
===== Strategic Theme ===== | ===== Strategic Theme ===== | ||
Line 34: | Line 34: | ||
Organizations often want to understand how the capacity used maps back to the strategic themes of the organization. For example, you might see tags on Epics that reflect: | Organizations often want to understand how the capacity used maps back to the strategic themes of the organization. For example, you might see tags on Epics that reflect: | ||
- | * Automation | + | |
- | * Strategic theme 2 | + | * Strategic theme 2 |
- | * And so on ... | + | * And so on ... |
===== Leading Indicators ===== | ===== Leading Indicators ===== | ||
Line 42: | Line 42: | ||
Organizations often need to understand whether they are heading in the right direction for an initiative well before the customer realizes the value. This often means identifying leading indicators, metrics that we believe means that if they head in the right direction, the outcome to the customer will be realized. Tagging Epics to reflect these indicators could help with calculation. | Organizations often need to understand whether they are heading in the right direction for an initiative well before the customer realizes the value. This often means identifying leading indicators, metrics that we believe means that if they head in the right direction, the outcome to the customer will be realized. Tagging Epics to reflect these indicators could help with calculation. | ||
- | * Percentage of deployed epics | + | |
- | * Percentage of epics associated with key initiative | + | * Percentage of epics associated with key initiative |
- | * Leading indicator 3 | + | * Leading indicator 3 |
- | * And so on ... | + | * And so on ... |
===== Capitalization ===== | ===== Capitalization ===== | ||
Line 51: | Line 51: | ||
Organizations typically operate out of two budgets; a capital budget and an operating budget. If it comes out of the capital budget, then we can defer the recognition of these costs until we actually start selling the result of the effort. If it comes out of the operating budget, the costs drop straight to the bottom line affecting your profitability immediately. Tags we could apply to Features could simply be: | Organizations typically operate out of two budgets; a capital budget and an operating budget. If it comes out of the capital budget, then we can defer the recognition of these costs until we actually start selling the result of the effort. If it comes out of the operating budget, the costs drop straight to the bottom line affecting your profitability immediately. Tags we could apply to Features could simply be: | ||
- | * Capital budget | + | |
- | * Operating budget | + | * Operating budget |
- | See [Agile Software Capitalization](http:// | + | See [[how_do_we_do_software_capitalization_when_we_go_to_agile|How Do We Do Software Capitalization |
+ | |||
+ | ===== 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, | ||
===== 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, | + | 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 | + | |
- | * Service Projects | + | * Service Projects |
- | * Base | + | * Base |
- | * And so on | + | * And so on |
===== Kano Model ===== | ===== Kano Model ===== | ||
Line 73: | Line 77: | ||
Tagging with the Kano model attributes helps us determine whether we are really going after something that excites the customer. Sample tags might include: | Tagging with the Kano model attributes helps us determine whether we are really going after something that excites the customer. Sample tags might include: | ||
- | * Must have | + | |
- | * Differentiator | + | * Differentiator |
- | * Linear | + | * Linear |
- | * Indifferent | + | * Indifferent |
- | * Reverse | + | * Reverse |
- | For more information see [Kano Model](https:// | + | For more information see [[https:// |
===== And Then There are More Arbitrary Definitions ===== | ===== And Then There are More Arbitrary Definitions ===== | ||
Line 85: | Line 89: | ||
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: | ||
- | * Discretionary: | + | |
- | * Innovation: Truly new work. Investment in a feature that is new to the work or to our offering to the industry / market. Something that we may want to consider for patent application or to mark as a trade secret. | + | * Innovation: Truly new work. Investment in a feature that is new to the work or to our offering to the industry / market. Something that we may want to consider for patent application or to mark as a trade secret. |
- | * Contractual: | + | * Contractual: |
- | * Platform: Investments supporting upgrades to new operating systems, database versions, web servers, browsers, compilers, and 3rd party components. | + | * Platform: Investments supporting upgrades to new operating systems, database versions, web servers, browsers, compilers, and 3rd party components. |
- | * Maintenance: | + | * Maintenance: |
- | * Technical Debt: Investment required to address issues in quality in the code we have in place today: | + | * Technical Debt: Investment required to address issues in quality in the code we have in place today: |
- | * Release: Activity required to generate software deliverables that is not directly related to development of the deliverable content itself. | + | * Release: Activity required to generate software deliverables that is not directly related to development of the deliverable content itself. |
- | * Overhead: Effectively the " | + | * Overhead: Effectively the " |
You can see that this list is a mix of a number of the ideas above. The problem people have with this type of categorization model is that it is often not clear which category an item belongs to, causing confusion. This approach is generally not recommended. | You can see that this list is a mix of a number of the ideas above. The problem people have with this type of categorization model is that it is often not clear which category an item belongs to, causing confusion. This approach is generally not recommended. | ||
- | ===== How Do We Track Investments? | + | ====== How Do We Track Investments? |
There are two general approaches used by agilists everywhere: | There are two general approaches used by agilists everywhere: | ||
- | 1. Tags: Tag epics, features, or stories with a tag that reflects a category. For example, perhaps we are interested in whether we are investing enough money on “Evaluating” versus “Emerging”. We’d create a (unique) tag that would reflect these values (“Evaluating”, | + | - Tags: Tag epics, features, or stories with a tag that reflects a category. For example, perhaps we are interested in whether we are investing enough money on “Evaluating” versus “Emerging”. We’d create a (unique) tag that would reflect these values (“Evaluating”, |
- | 2. Initiatives: | + | |
- | A 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 | + | No matter the approach, we’d provide tools and dashboards to people |
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). | ||
Line 111: | Line 115: | ||
In general, I recommend against this approach for a number of reasons: | In general, I recommend against this approach for a number of reasons: | ||
- | * There is a huge overhead to create and maintain this data, which reduces the chance that it will be available for all items | + | |
- | * The data may feel like it is more precise, but the reality is that it is probably less accurate overall as people typically are guessing at percentages | + | * The data may feel like it is more precise, but the reality is that it is probably less accurate overall as people typically are guessing at percentages |
- | * There is usually sufficient accuracy in broad categorization to make the decisions required. | + | * There is usually sufficient accuracy in broad categorization to make the decisions required. |
- | * If you feel there is value in more precise data, tag at the lower level. If tagging epics isn’t giving you the information you need, tag features. Same for features and stories. | + | * If you feel there is value in more precise data, tag at the lower level. If tagging epics isn’t giving you the information you need, tag features. Same for features and stories. |
- | ===== What Units Should We Use to Track Investments? | + | ====== What Units Should We Use to Track Investments? |
There are two basic units used by agilists to track proportions of investments: | There are two basic units used by agilists to track proportions of investments: | ||
- | 1. Count: of Epics, Features, or Stories | + | - Count: of Epics, Features, or Stories |
- | 2. Size: of Epic points, Feature points, or Story points | + | |
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 systems. Experience shows that the data from these agile systems | + | A word on getting started on Agile reporting approach. Initially it is difficult for organizations |
- | A word on getting started on this reporting approach. Most organizations are distrustful of things like counts of features | + | And then many people worry that tracking |
- | ===== Context ===== | + | 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 matters. This page was written out of the following context: | Context matters. This page was written out of the following context: | ||
- | 1. Discussion assumes a large scale implementation of agile where senior executives have hundreds of people on teams and they are trying to ensure good governance. | + | - Discussion assumes a large scale implementation of agile where senior executives have hundreds of people on teams and they are trying to ensure good governance. |
- | 2. Some level of “tool” is used to record the information, | + | |
- | 3. Vocabulary assumes a SAFe structure of Epics -> Features -> Stories | + | |
+ | |||
+ | ====== Want to Know More? ====== | ||
+ | {{tag> | ||
/home/hpsamios/hanssamios.com/dokuwiki/data/pages/how_do_we_know_where_we_are_spending_our_money.txt · Last modified: 2020/10/29 13:09 by hans