What Is Business Value and How Do You Measure It?
Agile approaches have changed the conversation about measuring project success, from comparing against cost, time, and scope projections to looking at how much value the project is going to deliver. The problem that remains, however, is determining what value really is and how to measure it.
Jez Humble tackled this quandary in his GOTO conference talk "What Is Value?" In the talk he reflects on his experience as a product manager and shares some thoughts, including the idea that everyone involved with a product is responsible for determining value, ways of measuring value, and how to establish feedback loops.
One thing that Jez doesn't delve into in great detail is defining what value actually is. That's probably because what is considered valuable is specific to each situation. But even though the definition of value may change depending on your circumstances, it's still helpful to know how to communicate that value and provide some way of measuring it. Jenni Jepsen provides some suggestions for helping stakeholders convey value, primarily by understanding the difference between features and benefits.
Several in the agile community have suggested ways of measuring value. Chris Matts describes a way to measure the value features in financial terms by asking a set of questions. Bas Hammendorp suggests a way to use points to measure value, but instead of the points reflecting relative value, these points measure value based on whether a set of criteria is met.
Frank Schlesinger describes a way to use planning poker to identify the relative value of stories. The interesting aspect of this approach is the discussion about value drivers and key performance indicators that occurs during the sizing exercise.
Regardless of how you measure business value, Ravi Aspler reminds us in this article that value is necessary but not sufficient for making priority decisions. You also need to consider other factors such as obligations to customers, research and development effort estimation, and dependencies.
What are some of your methods to measure value? Please let us know in the comments section below.