I recently finished reading Moneyball, the Michael Lewis bestseller and slightly above-average Hollywood movie. It struck me how great baseball minds could be so off in their focus on the right metrics to win baseball games. And by now you know the story — paying too much for high batting averages with insufficient focus where it counts —metrics that correlate with scoring runs, like on-base percentage. Not nearly as dramatic — but business is having its own “Moneyball” experience with way too much focus on traditional metrics like productivity and quality and not enough on customer experience and, most importantly, agility.
Agility is the ability to execute change without sacrificing customer experience, quality, and productivity and is “the” struggle for mature enterprises and what makes them most vulnerable to digital disruption. Enterprises routinely cite the incredible length of time to get almost any change made. I’ve worked at large companies and it’s just assumed that things move slowly, bureaucratically, and inefficiently. But why do so many just accept this? For one thing, poor agility undermines the value of other collected BPM metrics. Strong customer experience metrics are useless if you can’t respond to them in a timely manner, and so is enhanced productivity if it only results in producing out-of-date products or services faster.
Of late I’ve been considering a more mundane version of the ultimate question — what is the ideal metric to use when evaluating business technology strategies? The challenge is that we already have a diverse set of investment metrics from which to choose. There’s Return On Investment (ROI), Net Present Value (NPV), Internal Rate Of return (IRR) and Payback period to name a few of the most common. Yet I can’t help feeling they all lack a little something — the ability to connect the project with the desired business outcome, which for a strategy is the attainment of the goal.
Recently I’ve been working with clients to apply a different measure — the T2BI ratio:
My colleague and friend Mike Gualtieri wrote a really interesting blog the other day titled "Agile Software Is A Cop-Out; Here's What's Next." While I am not going to discuss the great conclusions and "next practices" of software (SW) development Mike suggests in that blog, I do want to focus on the assumption he makes about using working SW as a measurement of Agile.
I am currently researching that area and investigating how organizations actually measure the value of Agile SW development (business and IT value). And I am finding that, while organizations aim to deliver working SW, they also define value metrics to measure progress and much more:
Cycle time (e.g., from concept to production);
Business value (from number of times a feature is used by clients to impact on sales revenue, etc.);
Productivity metrics (such as burndown velocity, number of features deployed versus estimated); and last but not least
Quality metrics (such as defects per sprint/release, etc.).