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‍‍‍Approaches in Business Value‍


Abram (2005)‍ explained value as a the monetary worth of something, the amount of business value depends on the individual involves. He also explain the three‍ different approaches to value a business, which are
  • Cost Approach: This is where value is being obtained from calculating the assets net of liabilities.
  • Income Approach: This is obtained by changing your expected economic benefits into a recent single amount.
  • Market Approach: This is obtained by weighing recent businesses of similar transaction.


Business Values derivation


Business values can be derived in three ways as explained by‍ Infosys(2012)
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(a) Business Transformation: This is achieved by using a range of lastest technology to get the complete solution needed.
(b)Accelerating Innovation: Speed up the time to value on specific tasks and also able to adapt to any changes when required.
(C) Efficient operations: customers are being valued by taken thier needs serious, also make sure that they are being executed as required by thier customer.


Values of agile Method‍


Rico,D., Sayani,H. & Sone,S. (2009) explained the four(4) values of agile methods.
1.customer collaboration
The first major value of agile methods is customers collaboration which means obtaining and ensuring requirements from customers and enquring from them what they really want.
And the business value was created by supplying the customers satisfaction products. In agile team, the customer is one of the development organisation. He/She will be a
full- time communicator with developers throughout the project.

2. High-performance teams
The second major value of agile methods was high-performance teams which means a plenty of rich and high-effective communication between developers to help improve thier work. In addition, members of the team(developers) work together to solve complex problems effectively. Through shedding unwanted administrative tasks and continuous
delivering valuable products to satisfy the customer.

3.Product Iteration
The third major business value of agile methods is continous delivering high-quality products which help to increase customer satisfaction. In the iteration process, all of resource are
focused on development products. The business value were created by producing at a highly speed. The products are tested and evaluated with the same process of
development. Customers can obtain business value in frequent interval.

4.Responding to change
The fourth major value of agile methods was flexible change which means capturing customer requirements and repeating the processes until the customer is satisfied. In addition,
completion of this products need to be in the right-size, just-enough and just-in-time, which will help to save some resources. Lastly, the flexible changes made by the developers helps in maintaining discipline and also to balance customer needs.

values be considered prioritizing new capabilities in agile projects

Cohn,M (2006) explained that there were four values that must be considered when prioritizing the development of new capabilities.
1.Financial Value
The finacial value means how much money will the company can make or save if it develops new capability.
2.Cost
It is important to remenber that the cost with time follwing.
3.New Knowledge
Through learning and new knowledges it reduces the uncertainties in the project, and the kowledge can be classified into two areas which includes knowledge
about the product and knowlege about project.
4. Removing Risk
The risk can be removed through development new features.


The five Business Value Commandments


1.Deliver Business Value,Not Features: In a business its of notice that nearly all project managers desire the best for a business which made them to concentrate on the documentation of the business instead of looking at the direction of the business value.Traditionally it has said that business are programme in away that shows the functionality of business given rather than the quantity of business value provided.it is advice to focus on the business value and cost.

2.It's a Model,Not a Number: The business value should focus more on the model instead of a statement,this enable the business value to adapt to changes in the future in case new information that will be observed.

3.Deliver Business Value Today:According to ‍‍Tom Gilb he observe" Traditional phased planning is based on 'Trying to do it all at once' ‍‍and this lead to more problems in trying to estimate the cost and plan for and implement such large system.In a situation like this increment approach should be apply in order to promote business value at the delivering stage of the business system.‍

4. Continuously Re evaluate and Improve:It of the best interest of the business value to adapt to changes that occurs in the business system at its deliver stage it enables the organisation to re evaluate the business value model to know the business functionality and also the business value model should be appraise with the component that have been delivered during the learning process.

5.Conduct Acceptance Testing: busines value acceptance test ‍is needed for improvement of the system future development at the business values and the aim is to reveal business value stages in order to access its accomplishment.

‍‍Calculating Earned Business Value for an Agile Project


Traditional project management approach uses Earned Value Analysis (EVA), from an existing forecasted project plan, that use 5 metrics below in combination and manipulation to measure value in terms of time and cost and response. These metrics, however are not applicable in an Agile. To enable Agile teams to receive a clearer picture of a project’s progress and in turn use it to strategically adapt to changing business conditions (Rawsthorne, 2006) Agile projects use a new metric, the Earned Business Value (EBV) following on from the below metrics
  1. 1. BCWS Budgeted Cost of Work Scheduled (Baseline cost up to the determined status date)
  2. 2. ACWP Actual Cost of Work Performed (Actual cost to complete some/all portion of tasks at status date)
  3. 3. BCWP Budgeted Cost of Work Performed (Monetary value of the work performed by the status date)
  4. 4. SV/CV SV= Schedule Variance, CV = Cost Variance
  5. 5. SPI SPI = (BCWP/BCWS)
Hill(2006) notes that only the first two listed metrics are applicable when calculating value in an Agile Environment. Based on the traditional metrics, EBV uses the work Breakdown Structure (WBS) to chart performance, quantify project progress and respond accordingly. EBV is the sum of all the business values for those stories that are complete – that have earned their business value Rawsthorne (2006). Hill (2006) highlights SPI is a poor barometer for measuring the health of a project schedule due fact “Earned Value” calculations create the false perception that actual “value” is being created during the early- to mid-phases of a project For instance when (when no software is produced). Scrum’s simple inspect and adapt mechanism tied to time-boxed delivery cycles intuitively provide more reliable project status than traditional DoD metrics. A functional Work Breakdown Structure (WBS) provides a structural framework for calculating Agile-specific business metrics ‍.

HOW BUSINESS VALUE ARE BEING CALCULATED

Once Business Value (BV) is calculated, Earned Business Value (EBV) can be generated. Raswthorne defines EBV “the percentage of the known business value that is coded up and running." (Rawsthorne.D)


BUSINESS VALUE (BV)


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‍‍EBV :Earned Business Value‍‍

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EBV calculation consists of two parts:

  1. 1. Subjective part , determines the weights allowing us to calculate the BV
  2. 2. Objective part, determines whether or not a story is “complete,” which is merely a “yes” or “no” (1 or 0). Because stories are small, it makes less sense to measure a percentage complete than to simply denote a story as “done or not.”
Once a story is defined, their validations criteria decide whether it is complete (and has earned its BV).


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Figure 1 provides the business weight of each WBS group, including stories (the ones at the bottom).
NB Business Value metric we are calculated as a percentage and not in dollars
(cite website for full details)

Note that the analysis stories have no weight; they only exist because they provide the development stories that do have business value.


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Figure2: the WBS with its assigned weights gives us the following information:
  • Assigned weights on the WSB are all relative; each group is compared to its siblings
  • The Product Leg is worth three (3) times as much as the Business Leg, Team Leg provides no business value
  • Adding features to product supplies business value, but modifying or cleaning up code that already works does not
  • Improving the User Interface, most important feature, worth one-and-a-half (1.5) times as much as ability to Update Customer Information
  • User Documentation is most important business bucket, but still not worth much in comparison to any of the features.

References


Abrams, J.(2005) : How To Value Your Business And Increase Its Potential, Publisehd by McGraw-Hill companies, Inc [online], Avaliable at:
http://books.google.co.uk/books?id=AlUI5lYU6kgC&printsec=frontcover&dq=business+value&hl=en&sa=X&ei=nkBwT5GJG6W_0QWs-b2NAg&ved=0CF8Q6AEwAw#v=onepage&q=business%20value&f=false [Accessed: 25 March,2012].

Chris,M & Andy,P.(2004)Agile Project Management Advisory Services Executive Update:The Five Business Value Commandment.5(18).
http://cdn.pols.co.uk/papers/cutterbusinessvaluearticle.pdf [Accessed 30 March 2012]

Cohn,M. (2006) Agile Estimating and Planning. pg:80-85.

Hill. J, (2006) http://www.scrumalliance.org/articles/18-its-all-in-the-delivery [Accessed 26 March 2012]

Infosys (2012) Building Tomorrow's Enterprise. Avaliable at:http://www.infosys.com/ips/industries/public-sector/pages/index.aspx [Accessed :26 March, 2012].

Rico,D. & Sayani,H. & Sone,S. (2009) The Business Value of Agile Software Methods,Publisehd by J. Ross [online] Available at:
http://books.google.co.uk/books?hl=zh-CN&lr=&id=anLeaMMgmo0C&oi=fnd&pg=PP1&dq=business+value+of+agile&ots=gc-93SsHVq&sig=650TZoJO0StyIGC3uXkEb3NcBXY&redir_esc=y#v=onepage&q=business%20value%20of%20agile&f=false [Accessed: 24 March,2012].


Rawsthorne.D, http://www.danube.com/system/files/CollabNet_WP_Earned_Business_Value_041910.pdf [Accessed 26 march 2012]