In this series, we have so far outlined how to estimate a budget for your agile project and how to create a contingency budget using a confidence level. Now, we go beyond determining the initial project budget and discuss how to leverage the initial benefits from your agile project to deliver more value.
We have previously discussed the term Minimum Viable Product (MVP) - a popular concept from the Lean Start-up methodology around creating a solution with just enough configured functionality to satisfy our minimum requirements.
A challenge with MVPs however, is that many solutions never make it past this 'minimum' stage, missing an opportunity to release the maximum value that the change can deliver. In this post, we help you make the case to fund systems past the MVP stage by utilising early benefits from your MVP.
The Maximum Valuable Product
At AgileXperts we use the term Maximum Valuable Product (MaxVP) for changes that were improved after the MVP stage and are now delivering the most value possible for the organisation.
Note that a solution is only a MaxVP at a point in time. This is because the maximum value that can be delivered shifts when customer expectations shift and technology advances.
The increasing speed of changes in customer expectations and the technology landscape make MaxVP’s a moving target and reiterate the need to keep investing in your T&A, Rostering, and Payroll systems for them to retain their value and market relevance.
How do I convince my organisation to keep investing in the system?
The good thing about proving the value of a MaxVP is that by the time you need the extra funding, your MVP will already have proven its value. Therefore, the question is not if the MaxVP will deliver value, but how much more value the MaxVP will deliver compared to the current state of the T&A, Rostering or Payroll systems.
Proving the value (benefits) of your MaxVP starts by defining and tracking the benefits of your MVP.
Benefits are the reason to start a project in the first place. They are the outcomes the organisation is looking to get out of its investment. Benefit management started off as a discipline in waterfall project management but applies to agile projects as well.
In fact – the value-driven approach of the agile methodology makes benefits management a very logical and valuable part of every agile project given the focus on providing value early and often.
Work through the following steps to realise benefits:
1. Defining Benefits
Before starting the project, you should define the benefits that your organisation is seeking through the execution of the project.
Are you after an increase in sales, a reduction in cost, a reduction in risk, or all of the above? When identifying benefits, consider financial benefits (‘tangible’ or ‘hard’ benefits) as well as non-financial benefits (‘intangible’ or ‘soft’).
Examples of tangible benefits are less overtime or less time spent chasing timesheets; examples of non-tangible benefits are a risk reduction or increase in employee satisfaction.
The product owner holds accountability for getting the maximum value out of the project and should play an important role in defining the benefits.
The product owner should also help identify a beneficial owner for each benefit, the person accountable for realisation of the benefit during or after the project.
The product owner may also be the beneficial owner for one or more benefits, but that is not necessarily the case. See the ‘Benefits management best practice guide’ below on how to define good benefits.
2. Realising benefits
Realising benefits happens during and after the project. It is imperative to keep the realisation of benefits front of mind while delivering the project; too many projects deliver outputs but fail to deliver their intended benefits.
The way in which the benefit is realised will depend on the nature of the benefit. For example, a cost reduction benefit can be realised by adjusting a department’s budget after the project has simplified its processes.
Realising a compliance-related benefit may have to wait until the next time a compliance audit is conducted.
3. Tracking benefits
This is simply maintaining the scorecard of your benefits to understand whether the project has delivered what it promised in terms of value.
As the realisation of benefits typically continues beyond the timelines of the project, tracking benefits may have to be done by a project management office or another group that does not dissolve at the end of the project.
It is important to note here that the responsibility to track benefits is not the same as the responsibility to realise benefits.
4. Reinvesting benefits (optional)
Now that you have realised and tracked the early benefits of your MVP, you can make the case to reinvest all or a part of it to deliver additional value. The concept of reinvesting particularly applies to financial (tangible) benefits but naturally, you also want to highlight the early intangible benefits from your MVP when applying for MaxVP funding. Would you turn down an investment case like this one?
"So far we have invested $200k in the MVP of our T&A system and realised a cost saving of $250k whilst also mitigating a high enterprise risk. If we reinvest our savings of $250k and build out our T&A and rostering solution into a MaxVP, we can deliver $600k additional cost savings and further reduce our risk profile."
Benefit management best practice guide
Measure the outcome, not the output
A benefit is an outcome for the organisation, not the output of your project. Implementing a new sales platform is an output; the additional sales that the company realises through the platform are the benefit.
Be specific
The more specific you are when describing benefits, the easier it will be to realise and to track. A good example of a specific benefit is “A 20% decrease in rostering effort by Q4 2022”.
Quantify
Quantify your benefits, but don’t limit yourself to financial (‘tangible’) benefits. Naturally, you want to consider benefits around reducing costs and increasing sales but most projects impact so much more than just financials.
For example, think about how your project influences your organisation’s risk profile, employee retention and safety posture (examples of intangible benefit categories).
Assign a benefit owner
Every benefit should be assigned a person that is accountable for realising the benefit. As projects only exist for a certain amount of time and benefits will continue to be realised after the project has been dissolved, you want the benefit owner to be someone from the BAU organisation rather than a temporary project member. In the example of a project implementing a HRIS platform, the Head of HR would make a logical benefit owner for the benefit.
If the MVP has already delivered financial benefits, why not make the case to reinvest those benefits to deliver more?
If you want help developing a budget for your payroll project, give us a call on 1300 287 213.