Business Value

Business Value

A lot of company’s know that there is something like “Business Value”, but only a few companies actually use it. I am working for a client at this moment that is interested in determining the Business Value. They have a large backlog with a lot of User Stories and need to find a way to determine the Business Value in a way that it can be reproduced, evaluated and explained to other Stakeholders if necessary.

How?

There are different ways to determine the Business Value. I might write a different Blog post about this in the near future. In short, you can choose to assign an exact amount, (but this is difficult, especially on User Story level), you can give it points (e.g. you have got a budget of 1.000.000 points that you need to assign to all available User Story’s and you are not allowed to use the same amount twice) or you can create a list of criteria that give Business Value.

Step 1: Take a few example User Story’s

In this case I sat down with the client and we selected 6 User Story’s from the backlog that were already selected as “Large / High Business Value”. For each User Story we discussed what the criteria were that gave it Business Value. As we did this for 6 random User Story’s we came with a selection of possible criteria. The benefit of this approach is that it are criteria that are written down by the client. You can select a list from Internet, but then there is a large chance that the list doesn’t fit the client’s specific situation.

Step 2: Write down criteria

In this case we came up with the criteria:

• Cost reduction
• New customers
• Law and Regulation
• Reinforced proposition
• Strategy
• Imago
• Comply with the market standard
• Existing customers

Step 3: Ordering Criteria

The next step is to order the criteria, so we will have the criteria that gives the highest Business Value on the first place, and the criteria that gives the lowest Business Value on the last place. We had some discussion, because everything is important. But you need to choose which criteria is most important and so on.

• 3. Cost reduction
• 4. New customers
• 1. Law and Regulation
• 8. Reinforced proposition
• 2. Strategy
• 7. Imago
• 6. Comply with the market standard
• 5. Existing customers

Step 4: Determine points

We quickly agreed that the criteria will be given points based on (Scrum) Fibernace . So the number one got 40 points and the number eight got 1 point.

Step 5: Assign Business Value to the User Story’s

The last step is assigning the Business Value to the example User Story’s and discuss the outcome. It is interesting to see if the Business Value based on the criteria marches the expected outcome. The people that are prioritizing the backlog based on “gut feeling” and “experience” are likely to have the same outcome. However, it is important to make the way you determine Business Value visible for your organization. This makes it quite easy to standardize the way of working.

Next steps

Are we done now for Business Value? No, now we are going to implement it and we need to evaluate if this is indeed the correct order. Keep in mind: Continuous Improvement is also necessary for this kind of things. We already know that we need to address some generic criteria, like the % of audience that will effectively accept the Business Value (e.g. A User Story might have a high Business Value but is only 1% of the audience will appreciate this, and we have a User Story that gives a lower Business Value and 80% of the audience will appreciate this. Which one is more important? Is Business Value only leading, or do we need to take this in account as well (just like how much cost will be reduced and how much more turnover will be generated). But the first selection is important, I will create a new blog about the next steps next month.

Conclusion

Hope you enjoyed reading this Blog post and if you have any questions or would like to discuss this topic with me, please let me know!