Build a Value Measurement Framework

Build a Value Measurement Framework

Focus product delivery on business value–driven outcomes.

ANALYST PERSPECTIVE

"A meaningful measurable definition of value is the key to effectively managing the intake, prioritization, and delivery of technology-enabled products and services."

Cole Cioran,

Senior Director, Research – Application Development and Portfolio Management

Info-Tech Research Group

Our understanding of the problem

This Research Is Designed For:

• CIOs who need to understand the value IT creates
• Application leaders who need to make good decisions on what work to prioritize and deliver
• Application and project portfolio managers who need to ensure the portfolio creates business value
• Product owners who are accountable for delivering value

This Research Will Help You:

• Define quality in your organization’s context from both business and IT perspectives.
• Define a repeatable process to understand the value of a product, application, project, initiative, or enhancement.
• Define value sources and metrics.
• Create a tool to make it easier to balance different sources of value.

This Research Will Also Assist:

• Product and application delivery teams who want to make better decisions about what they deliver
• Business analysts who need to make better decisions about how to prioritize their requirements

This Research Will Help Them:

• Create a meaningful relationship with business partners around what creates value for the organization.
• Enable better understanding of your customers and their needs.

Executive summary

Situation

• Measuring the business value provided by IT is critical for improving the relationship between business and IT.
• Rapid changes in today’s market require rapid, value-based decisions.
• Every organization has unique drivers that make it difficult to see the benefits based on time and impact approaches to prioritization.

Complication

• An organization’s lack of a shared definition of value leads to politics and decision making that does not have a firm, quantitative basis.
• Different parts of an organization have different value drivers that must be given balanced consideration.
• Focusing solely on revenue does not necessarily result in the right outcomes.

Resolution

• Standardize your definition of business value. Work with your business partners to define the different sources of business value that are created through technology-enabled products and services.
• Weigh your value drivers. Ensure business and IT understand the relative weight and priority of the different sources of business value you have identified.
• Use a balanced scorecard to understand value. Use the different value drivers to understand and prioritize different products, applications, projects, initiatives, and enhancements.

Info-Tech Insight

1. Business is the authority on business value. While IT can identify some sources of value, business stakeholders must participate in the creation of a definition that is meaningful to the whole organization.
2. It’s about more than profit. Organizations must have a definition that encompasses all of the sources of value, or they risk making short-term decisions with long-term negative impacts.
3. Technology creates business value. Treating IT as a cost center makes for short-sighted decisions in a world where every business process is enabled by technology.

Software is not currently creating the right outcomes

Software products are taking more and more out of IT budgets.

38% of spend on IT employees goes to software roles.

Source: Info-Tech’s Staffing Survey

18% of opex is spent on software licenses.

Source: SoftwareReviews.com

33% of capex is spent on new software.

However, the reception and value of software products do not justify the money invested.

Only 34% of software is rated as both important and effective by users.

Source: Info-Tech’s CIO Business Vision

IT benchmarks do not help or matter to the business. Focus on the metrics that represent business outcomes.

IT departments have a tendency to measure only their own role-based activities and deliverables, which only prove useful for selling practice improvement services. Technology doesn’t exist for technology's sake. It’s in place to generate specific outcomes. IT and the business need to be aligned toward a common goal of enabling business outcomes, and that’s the important measurement.

"In today’s connected world, IT and business must not speak different languages. "

– Cognizant, 2017

CxOs stress the importance of value as the most critical area for IT to improve reporting

N=469 CxOs from Info-Tech’s CEO/CIO Alignment Diagnostic

Key stakeholders want to know how you and your products or services help them realize their goals.

While the basics of value are clear, few take the time to reach a common definition and means to measure and apply value

Often, IT misses the opportunity to become a strategic partner because it doesn’t understand how to communicate and measure its value to the business.

"Price is what you pay. Value is what you get."

– Warren Buffett

Being able to understand the value context will allow IT to articulate where IT spend supports business value and how it enables business goal achievement.

Value is...

Derived from business context

Enabled through governance and strategy

The underlying context for decision making

A measure of achievement

Determine your business context by assessing the goals and defining the unique value drivers in your organization

Competent organizations know that value cannot always be represented by revenue or reduced expenses. However, it is not always apparent how to envision the full spectrum of sources of value. Dissecting value by the benefit type and the value source’s orientation allows you to see the many ways in which a product or service brings value to the organization.

Financial Benefits vs. Improved Capabilities

Inward vs. Outward Orientation

Inward refers to value sources that have an internal impact and improve your organization’s effectiveness and efficiency in performing its operations.Outward refers to value sources that come from your interaction with external factors, such as the market or your customers.

See your strategy through by involving both IT and the business

Buy-in for your IT strategy comes from the ability to showcase value. IT needs to ensure it has an aligned understanding of what is valuable to the organization.

Business value needs to first be established by the business. After that, IT can build a partnership with the business to determine what that value means in the context of IT products and services.

Measure your product or services with Info-Tech’s Value Measurement Framework (VMF) and value scores

The VMF provides a consistent and less subjective approach to generating a value score for an application, product, service, or individual feature, by using business-defined value drivers and product-specific value metrics.

A consistent set of established value drivers, sources, and metrics gives more accurate comparisons of relative value

A balanced and weighted scorecard allows you to measure the various ways products generate value to the business

The Info-Tech approach to measuring value applies the balanced value scorecard approach.

Value Score1 + VS2 + … + VSN = Overall Balance Value Score

Value scores help support decisions. This blueprint looks specifically at four use cases for value scores.

A value score is an input to the following activities:

1. Prioritize Your Product Backlog

Estimate the relative value of different product backlog items (i.e. epics, features, etc.) to ensure the highest value items are completed first.

This blueprint can be used as an input into Info-Tech’s Build a Better Backlog.

2. Prioritize Your Project Backlog

Estimate the relative value of proposed new applications or major changes or enhancements to existing applications to ensure the right projects are selected and completed first.

This blueprint can be used as an input into Info-Tech’s Optimize Project Intake, Approval, and Prioritization.

3. Rationalize Your Applications

Gauge the relative value from the current use of your applications to support strategic decision making such as retirement, consolidation, and further investments.

This blueprint can be used as an input into Info-Tech’s Visualize Your Application Portfolio Strategy With a Business Value-Driven Roadmap.

4. Categorize Application Tiers

Gauge the relative value of your existing applications to distinguish your most to least important systems and build tailored support structures that limit the downtime of key value sources.

This blueprint can be used as an input into Info-Tech’s Streamline Application Maintenance.

The priorities, metrics, and a common understanding of value in your VMF carry over to many other Info-Tech blueprints

Transition to Product Delivery

Build a Product Roadmap

Modernize Your SDLC

Build a Strong Foundation for Quality

Implement Agile Practices That Work

Use Info-Tech’s Value Calculator

The Value Calculator facilitates the activities surrounding defining and measuring the business value of your products and services.

Use this tool to:

• Weigh the importance of each Value Driver based on established organizational priorities.
• Create a repository for Value Sources to provide consistency throughout each measurement.
• Produce an Overall Balanced Value Score for a specific item.

Info-Tech Deliverable

Populate the Value Calculator as you complete the activities and steps on the following slides.

Limitations of the Value Measurement Framework

"All models are wrong, but some are useful."

– George E.P. Box, 1979

Value is tricky: Value can be intangible, ambiguous, and cause all sorts of confusion, with the multiple, and often conflicting, priorities any organization is sure to have. You won’t likely come to a unified understanding of value or an agreement on whether one thing is more valuable than something else. However, this doesn’t mean you shouldn’t try. The VMF provides a means to organize various priorities in a meaningful way and to assess the relative value of a product or service to guide managers and decision makers on the right track and keep alignment with the rest of the organization.

Relative value vs. ROI: This assessment produces a score to determine the value of a product or service relative to other products or services. Its primary function is to prioritize similar items (projects, epics, requirements, etc.) as opposed to producing a monetary value that can directly justify cost and make the case for a positive ROI.

Apply caution with metrics: We live in a metric-crazed era, where everything is believed to be measurable. While there is little debate over recent advances in data, analytics, and our ability to trace business activity, some goals are still quite intangible, and managers stumble trying to link these goals to a quantifiable data source.

In applying the VMF Info-Tech urges you to remember that metrics are not a magical solution. They should be treated as a tool in your toolbox and are sometimes no more than a rough gauge of performance. Carefully assign metrics to your products and services and do not disregard the informed subjective perspective when SMART metrics are unavailable.

"One of the deadly diseases of management is running a company on visible figures alone."

– William Edwards Deming, 1982

Info-Tech’s Build a Value Measurement Framework glossary of terms

This blueprint discusses value in a variety of ways. Use our glossary of terms to understand our specific focus.

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit

“Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.”

Guided Implementation

“Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.”

Workshop

“We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.”

Consulting

“Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.”

Diagnostics and consistent frameworks used throughout all four options

Build a Value Measurement Framework – project overview

Phase 1

Define Your Value Drivers

First determine your value drivers and add them to your VMF

One of the main aspects of the VMF is to apply consistent and business-aligned weights to the products or services you will evaluate.

This is why we establish your value drivers first:

• Get the right executive-level “value authorities” to establish the overarching weights.
• Build these into the backbone of the VMF to consistently apply to all your future measurements.

Step 1.1: Identify Value Authorities

Phase 1

1.1: Identify Value Authorities

1.2: Define Value Drivers

Phase 2

2.1: Identify Product or Service SMEs

2.2: Measure Value

This step will walk you through the following activities:

• Identify your authorities on business value.

This step involves the following participants:

• Owners of your value measurement framework

Outcomes of this step

• Your list of targeted individuals to include in Step 2.1

Business value is best defined and measured by the combined effort and perspective of both IT and the business

Buy-in for your IT strategy comes from the ability to showcase value. IT needs to ensure it has an aligned understanding of what is valuable to the organization. First, priorities need to be established by the business. Second, IT can build a partnership with the business to determine what that value means in the context of IT products and services.

Engage key stakeholders to reach a consensus on organizational priorities and value drivers

Engage these key players to create your value drivers:

CEO: Who better holds the vision or mandate of the organization than its leader? Ideally, they are front and center for this discussion.

CIO: IT must ensure that technical/practical considerations are taken into account when determining value.

CFO: The CFO or designated representative will ensure that estimated costs and benefits can be used to manage the budgets.

VPs: Application delivery and mgmt. is designed to generate value for the business. Senior management from business units must help define what that value is.

Evaluators (PMO, PO, APM, etc.): Those primarily responsible for applying the VMF should be present and active in identifying and carefully defining your organization’s value drivers.

Steering Committee: This established body, responsible for the strategic direction of the organization, is really the primary audience.

Identify your authorities of business value to identify, define, and weigh value drivers

1.1 Estimated Time: 15 minutes

The objective of this exercise is to identify key business stakeholders involved in strategic decision making at an organizational level.

1. Review your organization’s governance structure and any related materials.
2. Identify your key business stakeholders. These individuals are the critical business strategic partners.
1. Target those who represent the business at an organizational level and often comprise the organization’s governing bodies.
2. Prioritize a product backlog – include product owners and product managers who are in tune with the specific value drivers of the product in question.

INFO-TECH TIP

If your organization does not have a formal governance structure, your stakeholders would be the key players in devising business strategy. For example:

• CEO
• CFO
• BRMs
• VPs

Leverage your organizational chart, governing charter, and senior management knowledge to better identify key stakeholders.

INPUT

• Key decision maker roles

OUTPUT

• Targeted individuals to define and weigh value drivers

Materials

• N/A

Participants

• Owner of the value measurement framework

Step 1.2: Define Value Drivers

Phase 1

1.1: Identify Value Authorities

1.2: Define Value Drivers

Phase 2

2.1: Identify Product or Service SMEs

2.2: Measure Value

This step will walk you through the following activities:

• Define your value drivers.
• Weigh your value drivers.

This step involves the following participants:

• Owners of your value measurement framework
• Authorities of business value

Outcomes of this step

• A list of your defined and weighted value drivers

Value is based on business needs and vision

Value is subjective. It is defined through the organization’s past achievement and its future objectives.

There must be a consensus view of what is valuable within the organization, and these values need to be shared across the enterprise. Instead of maintaining siloed views and fighting for priorities, all departments must have the same value and purpose in mind. These factors – purpose and mission, past achievement and current state, vision and future state, and culture and leadership – impact what is valuable to the organization.

Value derives from the mission and vision of an organization; therefore, value is unique to each organization

Business value represents what the business needs to do to achieve its target state. Establishing the mission and vision helps identify that target state.

Understand the many types of value your products or services produce

Competent organizations know that value cannot always be represented by revenue or reduced expenses. However, it is not always apparent how to envision the full spectrum of value sources. Dissecting value by the benefit type and the value source’s orientation allows you to see the many ways in which a product or service brings value to the organization.

Financial Benefits vs. Improved Capabilities

Financial Benefits refers to the degree to which the value source can be measured through monetary metrics and is often quite tangible. Human Benefits refers to how a product or service can deliver value through a user’s experience.

Inward vs. Outward Orientation

Inward refers to value sources that have an internal impact and improve your organization’s effectiveness and efficiency in performing its operations. Outward refers to value sources that come from your interaction with external factors, such as the market or your customers.

Expand past Info-Tech’s high-level value quadrants and identify the value drivers specific to your organization

Different industries have a wide range of value drivers. Consider the difference between public and private entities with respect to generating revenue or reaching their customers or other external stakeholders. Even organizations in the same industry may have different values. For example, a mature, well-established manufacturer may view reputation and innovation as its highest-priority values, whereas a struggling manufacturer will see revenue or market share growth as its main drivers.

You do not need to dissect each quadrant into an exhaustive list of value drivers. Info-Tech recommends defining distinct value drivers only for the areas you’ve identified as critical to your organization’s core goals and objectives.

Understand value drivers that enable revenue growth

Understand value drivers that reduce costs

Understand the value drivers that enhance your services

Understand business value drivers that connect the business to your customers

Define your value drivers

1.2 Estimated Time: 1.5 hours

The objective of this exercise is to establish a common understanding of the different values of the organization.

1. Place your business value authorities at the center of this exercise.
2. Collect all the documents your organization has on the mission and vision, strategy, governance, and target state, which may be defined by enterprise architecture.
3. Identify the company mission and vision. Simply transfer the information from the mission and vision document into the appropriate spaces in the business value statement.
4. Determine the organization’s business value drivers. Use the mission and vision, as well as the information from the collected documents, to formulate your own idea of business values.
5. Use value driver template on the next slide to define the value driver, including:

• Value Driver Name
• Description
• Related Business Capabilities – If available, review business architecture materials, such as business capability maps.
• Established KPI and Targets – If available, include any organization-wide established KPIs related to your value driver. These KPIs will likely be used or influence the metrics eventually assigned to your applications.

INPUT

• Mission, vision, value statements

OUTPUT

• List and description of value drivers

Materials

• Whiteboard
• Markers

Participants

• Business value authorities
• Owner of value measurement framework

Example Value Driver

Weigh your value drivers

1.3 Estimated Time: 30 minutes

The objective of this exercise is to prioritize your value drivers based on their relative importance to the business.

1. Again, place the business value authorities at the center of this exercise.
2. In order to determine priority, divide 100% among your value drivers, allocating a percentage to each based on its relative importance to the organization.
3. Normalize those percentages on to a scale of 1 to 10, which will act as the weights for your value drivers.

INPUT

• Mission, vision, value statements

OUTPUT

• Weights for value drivers

Materials

• Whiteboard
• Markers

Participants

• Business value authorities
• Owner of value measurement framework

Weigh your value drivers

1.3 Estimated Time: 30 minutes

Carry results over to the Value Calculator

1.3

Document results of this activity in the “Value Drivers” tab of the Value Calculator.

List your value drivers.

Define or describe your value drivers.

Use this tool to create a repository for value sources to reuse and maintain consistency across your measurements.

Enter the weight of each value driver in terms of importance to the organization.

Phase 2

Measure Value

Step 2.1: Identify Product or Service SMEs

Phase 1

1.1: Identify Value Authorities

1.2: Define Value Drivers

Phase 2

2.1: Identify Product or Service SMEs

2.2: Measure Value

This step will walk you through the following activities:

• Identify your product or service SMEs.
• List your product or services items and components.

This step involves the following participants:

• Owners of your value measurement framework
• Product or service SMEs

Outcomes of this step

• Your list of targeted individuals to include in Step 2.2

Identify the products and services you are evaluating and break down their various components for the VMF

In order to get a full evaluation of a product or service you need to understand its multiple facets, functions, features capabilities, requirements, or any language you use to describe its various components.

Decompose a product or service:

• Get the right subject matter experts in place who know the business and technical aspects of the product or service.
• Decompose the product or service to capture all necessary components.

Before beginning, consider how your use case will impact your value measurement approach

This table looks at how the different use cases of the VMF call for variations of this analysis, is directed at different roles, and relies on participation from different subject matter experts to provide business context.

Identify your product or service SMEs

2.1 Estimated Time: 15 minutes

The objective of this exercise is to identify specific business stakeholders who can speak to the business outcomes of your applications at a functional level.

1. Review your related materials that reference the stakeholders for the scoped products and services (i.e. capability maps, org charts, stakeholder maps).
2. Identify your specific business stakeholders and application SMEs. These individuals represent the business at a functional level and are in tune with the business outcomes of their operations and the applications that support their operations.
1. Use Case 1 – Product Owner, Product Manager
2. Use Case 2 – Project Portfolio Manager, Project Manager, Product Owners, Business Process Owners, Appropriate Business Unit Representatives
3. Use Case 3 – Application Portfolio Manager, Product Owners, Business Analysts, Application SMEs, Business Process Owners, Appropriate Business Unit Representatives
4. Use Case 4 – Application Maintenance Manager, Operations Managers, Application Portfolio Manager, Product Owners, Application SMEs, Business Process Owners, Appropriate Business Unit Representatives

INPUT

• Specific product or service knowledge

OUTPUT

• Targeted individuals to measure specific products or services

Materials

• Whiteboard
• Markers

Participants

• Owner of value measurement framework

Use Case 1: Collect and review all of the product backlog items

Prioritizing your product backlog (epics, features, etc.) requires a consistent method of measuring the value of your product backlog items (PBIs) to continuously compare their value relative to one another. This should be treated as an ongoing initiative as new items are added and existing items change, but an initial introduction of the VMF will require you to collect and analyze all of the items in your backlog.

Regardless of producing a value score for an epic, feature, or user story, your focus should be on identifying their various value sources. Review your product’s artifact documentation, toolsets, or other information sources to extract the business outcomes, impact, benefits, KPIs, or any other description of a value source.

What’s in your backlog?

You may need to create standards for defining and measuring your different PBIs. Traceability can be critical here, as defined business outcomes for features or user stories may be documented at an epic level.

Additional Research

Build a Better Backlog helps you define and organize your product backlog items.

Use Case 2: Review the scope and requirements of the project to determine all of the business outcomes

Depending on where your project is in your intake process, there should be some degree of stated business outcomes or benefits. This may be a less refined description in the form of a project request or business case document, or it could be more defined in a project charter, business requirements document/toolset, or work breakdown structure (WBS). Regardless of the information source, to make proper use of the VMF you need a clear understanding of the various business outcomes to establish the new or improved value sources for the proposed project.

Set Metrics Early

Good project intake documentation begins the discussion of KPIs early on. This alerts teams to the intended value and gives your PMO the ability to integrate it into the workload of other proposed or approved projects.

Additional Research

Optimize Project Intake, Approval, and Prioritization provides templates to define proposed project benefits and outcomes.

Use Cases 3 & 4: Ensure you’ve listed all of each application’s uses (functions, features, capabilities, etc.) and user groups

An application can enable multiple capabilities, perform a variety of functions, and have a range of different user groups. Therefore, a single application can produce multiple value sources, which range in type, impact, and significance to the business’ overarching priorities. In order to effectively measure the overall value of an application you need to determine all of the ways in which that application is used and apply a business-downward view of your applications.

Business Capability

• Sub-capability
• Process
• Task

Application

• Module
• Feature
• Function

Aim for Business Use

Simply listing the business capabilities of an app can be too high level. Regardless of your organization’s terminology, you need to establish all of the different uses and users of an application to properly measure all of the facets of its value.

Additional Research

Discover Your Applications helps you identify and define the business use and features of your applications.

List your product or services items and components

2.2 Estimated Time: 15 minutes

The objective of this exercise is to produce a list of the different items that you are scoring and ensure you have considered all relevant components.

1. List each item you intend to produce a value score for:
1. Use Case 1 – This may be the epics in your product backlog.
2. Use Case 2 – This may be the projects in your project backlog.
3. Use Cases 3 & 4 – This may be the applications in your portfolio. For this approach Info-Tech strongly recommends iteratively assessing the portfolio to produce a list of a subset of applications.
2. For each item list its various components:
1. Use Case 1 – This may be the features or user stories of an epic.
2. Use Case 2 – This may be the business requirements of a project.
3. Use Cases 3 & 4 – This may be the modules, features, functions, capabilities, or subsystems of an application.

INPUT

• Product or service knowledge

OUTPUT

• Detailed list of items and components

Materials

• Whiteboard
• Markers

Participants

• Owner of value measurement framework
• Product or service SMEs

Use Cases 3 & 4: Create a functional view of your applications (optional)

2.3 Estimated Time: 1 hour

The objective of this exercise is to establish the different use cases of an application.

1. Recall the functional requirements and business capabilities for your applications.
2. List the various actors who will be interacting with your applications and list the consumers who will be receiving the information from the applications.
3. Based on your functional requirements, list the use cases that the actors will perform to deliver the necessary information to consumers. Each use case serves as a core function of the application. See the diagram below for an example.
4. Sometimes several use cases are completed before information is sent to consumers. Use arrows to demonstrate the flow of information from one use case to another.

Example: Ordering Products Online

INPUT

• Product or service knowledge

OUTPUT

• Product or service function

Materials

• Whiteboard
• Markers

Participants

• Application architect
• Enterprise architect
• Business and IT stakeholders
• Business analyst
• Development teams

Use Cases 3 & 4: Create a functional view of your applications (optional) (cont’d.)

2.3 Estimated Time: 1 hour

5. Align your application’s use cases to the appropriate business capabilities and stakeholder objectives.

Example:

Step 2.2: Measure Value

Phase 1

1.1: Identify Value Authorities

1.2: Define Value Drivers

Phase 2

2.1: Identify Product or Service SMEs

2.2: Measure Value

This step will walk you through the following activities:

• Identify your value sources.
• Align to a value driver.
• Assign metrics and gauge value fulfillment.

This step involves the following participants:

• Owners of your value measurement framework
• Product or service SMEs

Outcomes of this step

• An initial list of reusable value sources and metrics
• Value scores for your products or services

Use your VMF and a repeatable process to produce value scores for all of your items

With your products or services broken down, you can then determine a list of value sources, as well as their alignment to a value driver and a gauge of their value fulfillment, which in turn indicate the importance and impact of a value source respectively.

Lastly, we produce a value score for all items:

• Determine business outcomes and value sources.
• Align to the appropriate value driver.
• Use metrics as the gauge of value fulfillment.
• Collect your score.
• Repeat.

The business outcome is the impact the product or service has on the intended business activity

Business outcomes are the business-oriented results produced by organization’s capabilities and the applications that support those capabilities. The value source is, in essence, “How does the application impact the outcome?” and this can be either qualitative or quantitative.

Adapted from Agile Coach Journal.

Measure value – Identify your value sources

2.4 Estimated Time: 30 minutes

The objective of this exercise is to establish the different value sources of a product or service.

1. List the items you are producing an overall balance value score for. These can be products, services, projects, applications, product backlog items, epics, etc.
2. For each item, list its various business outcomes in the form of a description that includes:
1. The item being measured
2. Business capability or activity
3. How the item impacts said capability or activity

Consider applying the user story format for future value sources or a variation for current value sources.

As a (user), I want to (activity) so that I get (impact)

INPUT

• Product or service knowledge
• Business process knowledge

OUTPUT

• List of value sources

Materials

• Whiteboard
• Markers

Participants

• Owner of value measurement framework
• Product or service SMEs

Measure value – Align to a value driver

2.5 Estimated Time: 30 minutes

The objective of this exercise is to determine the value driver for each value source.

1. Align each value source to a value driver. Choose between options A and B.
1. Using a whiteboard, draw out a 2 x 2 business value matrix or an adapted version based on your own organizational value drivers. Place each value source in the appropriate quadrant.
1. Increase Revenue
2. Reduce Costs
3. Enhance Services
4. Reach Customers
2. Using a whiteboard or large sticky pads, create a section for each value driver. Place each value source with the appropriate value driver.

INPUT

• Product or service knowledge
• Business process knowledge

OUTPUT

• Value driver weight

Materials

• Whiteboard
• Markers

Participants

• Owner of value measurement framework
• Product or service SMEs

Brainstorm the different sources of business value (cont’d.)

2.5

Example:

Carry results over to the Value Calculator

2.5

Document results of this activity in the Value Calculator in the Item {#} tab.

List your Value Sources

Your Value Driver weights will auto-populate

Aim, but do not reach, for SMART metrics

Creating meaningful metrics

S pecific

M easureable

A chievable

R ealisitic

T ime-based

Follow the SMART framework when adding metrics to the VMF.

The intention of SMART goals and metrics is to make sure you have chosen a gauge that will:

• Reflect the actual business outcome or value source you are measuring.
• Ensure all relevant stakeholders understand the goals or value you are driving towards.
• Ensure you actually have the means to capture the performance.

Info-Tech Insight

Metrics are NOT a magical solution. They should be treated as a tool in your toolbox and are sometimes no more than a rough gauge of performance. Carefully assign metrics to your products and services and do not disregard the informed subjective perspective when SMART metrics are unavailable.

Info-Tech Best Practice

One last critical consideration here is the degree of effort required to collect the metric compared to the value of the analysis you are performing. Assessing whether or not to invest in a project should apply the rigor of carefully selecting and measuring value. However, performing a rationalization of the full app portfolio will likely lead to analysis paralysis. Taking an informed subjective perspective may be the better route.

Measure value – Assign metrics and gauge value fulfillment

2.6 30-60 minutes

The objective of this exercise is to determine an appropriate metric for each value source.

1. For each value source assign a metric that will be the unit of measurement to gauge the value fulfilment of the application.
2. Review the product or services performance with the metric
1. Use case 1&2 (Proposed Applications and/or Features) - You will need to estimate the degree of impact the product or services will have on your selected metric.
2. Use case 3&4 (Existing Applications and/or Features) – You can review historically how the product or service has performed with your selected metric
3. Determine a value fulfillment on a scale of 1 – 10.

10 = The product or service far exceeds expectations and targets on the metric.

5 = the product or service meets expectations on this metric.

1 = the product or service underperforms on this metric.

INPUT

• Product or service knowledge
• Business process knowledge

OUTPUT

• Value driver weight

Materials

• Whiteboard
• Markers

Participants

• Owner of value measurement framework
• Product or service SMEs

Carry results over to the Value Calculator

2.6

Document results of this activity in the Value Calculator in the Item {#} tab.

Assign Metrics.

Consider using current or estimated performance and targets.

Assess the impact on the value source with the value fulfillment.

Collect your Overall Balanced Value Score

Appendix

Bibliography

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Harris, Michael. “Measuring the Business Value of IT.” David Consulting Group. 20 Nov. 2017.

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