We've all been there.
The company is unshackling itself from endless planning, re-planning and progress monitoring of projects that are always over-budget and rarely deliver to the original specification.
You are going 'Agile'
There's lots of new terminology, new roles, new ways of doing things, and it's exciting. What's more, it's now OK to get it wrong, as long as you quit quickly. Projects are now 'Experiments' that are 'Safe to Fail'. We can get to a prototype quickly and work out the next steps from there. It's a brave new world.
Only, nobody told the Finance department, or the Executives who are tasked according to annual budgets set months ago, or a project portfolio that is the last word in the agreed IT spend for the year. For all of these stakeholders it is difficult to explain why you spent 20% of the budget and then just quit the project with nothing much to show for it.
And what's worse is that you intend using this same approach for all of your projects; maybe they will work and maybe they won't. The problem is, if you present the outcome of an Agile project in the same way as for Waterfall, then governance and budget allocation will become an increasing challenge with every 'stopped' project, and your transition to Agile will fail because you wont allow your projects to fail.
Agile represents a different way of managing value and developing outcomes
In Waterfall, every detail of the outcome is established as a metric for success, with some being Critical Success Factors. These are promised at the start and measured at the end. Since all of the money is allocated up front, and project management is concerned with overall outcome more than specific features, then it can be impossible to manage the cash for value relationship of specific features and/or outcomes.
With Agile, individual outcomes have value and there is a minimum set (the Minimum Viable Product) which are required for an Agile project to be said to have delivered. Everything else is additional value at additional cost.
This relationship between value and investment is micro-economic and enables far greater Return on Investment if it can be managed properly. The problem is that no project will survive Finance department scrutiny of every activity, or project governance by a portfolio management function - apart from the enormous project overheads, what happens when expected ROI is missed for a key feature that is the catalyst for other outcomes?
Thankfully, the structure of delivering Agile is to enable self-organising teams and value/outcome-centric Product Managers. The relationship between these is to manage the detail, and as any transition to Agile progresses, so the experience and skills to do so effectively improves.
For governance and financial control use Value Management
Value Management
enables a more flexible relationship between a Product and it's financial investment by focusing on the rule of diminishing returns within every project, and then working with Product Owners to determine when the money is best spent elsewhere. Value management allows you to do this without diminishing Executive and Finance Department scrutiny of the overall returns on the corporate investments being made. For this reason, implementing Value Management as part of your Lean Portfolio Management is a critical part of your digital transformation journey.
Value Management has one eye on specific investments but is more concerned with assuring a balanced investment within the confines set down in the annual budgeting process. It differs from Portfolio Management in that balancing the investment can be done within and across 'living' projects and product developments. Value Management throttles and accelerates the quest for value between in-flight developments. A Value Management function will validate expenditure in successful developments, investing in the Product Backlogs where value is perceived to be within grasp, and challenging expenditure on projects that have reached the limits of efficient value extraction.
To this extent, effective Value Management is extracting maximum value from all projects at all times
and highlighting those projects that have the greatest opportunity for success, as well as those that may have reached the end of the road. This value extraction across the portfolio creates an environment of trust and provides visible outcomes from the IT investment budget as a whole, meaning that some of your projects will genuinely be 'Safe to Fail'.
For Agile to work it needs to develop trust in the value that is generated by the method across the portfolio and not to focus on specific investments. In a similar fashion to personal wealth management, this is achieved by managing all Agile projects within a portfolio, reporting on the value under management and explaining investment decisions at a higher level.
To evaluate how your business can implement Value Management in your digital transformation contact us at info@cwlconsulting.com