When Agile teams begin to deliver products incrementally, new opportunities open up at the portfolio level, delivering strategic business value. However, the traditional approach to portfolio management — which depends upon long-range forecasting and fixed financial controls — breaks down as business environments grow more complex, leaving portfolio managers ill-equipped to reap the potential benefits of their Agile programs.
29. 29
Extra Credit: Which investment would you pick?
IRR 27%
Confidence +or- 5%
IRR 33%
Confidence +or- 20%
30. 30
Model Variables
Assumptions Low High Average
Price per Unit 5.00$ 9.00$ 7.00$
Total Units per annum 10,000 2,000,000 1,005,000
Cost per Unit 1.50$ 2.75$ 2.13$
Capital Expense 300,000$ 600,000$ 450,000$
Annual Growth Rate 1.00% 7.00% 4.0%
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Model Variables
Assumptions Low High Average
Price per Unit 5.00$ 9.00$ 7.00$
Total Units per annum 10,000 2,000,000 1,005,000
Cost per Unit 1.50$ 2.75$ 2.13$
Capital Expense 300,000$ 600,000$ 450,000$
Annual Growth Rate 1.00% 7.00% 4.0%
Unacceptable level of variance (Risk)
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1. Conduct analysis
2. Make go/no go
decision
3. All or nothing
commitment
4. What if you could
revisit the
business case
decision?
Go/
No Go
Stop!
Project Charter
Big Bang
Release
Traditional business case decision binary and
final
46. 46
Prioritizing reduces value of later releases
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
R1 R2 R3 R4 R5 R6 R7 R8 R9 R10
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Earlier releases can have high returns
-50.0%
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
15% Hurdle Rate
48. 48
Eventually the value drops below the hurdle rate
-50.0%
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
15% Hurdle Rate
49. 49
Project Duration to Feature value
IRR Duration MVP A 2 3 4 5 6 7 8
Standard Clubs 76% 7 4 73% 73% 73% 73% 145% 71% 24%
Standard Spades 34% 4 2 43% 43% 35% 16%
Standard Diamonds 49% 7 4 65% 65% 65% 65% 98% 22% -36%
9 10 Jack Queen King
Deluxe Hearts 50% 5 3 45% 45% 45% 58% 55%
Deluxe Diamonds 31% 3 2 38% 38% 17%
Deluxe Spades 46% 5 3 27% 27% 27% 88% 62%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Expected Return
AC 2C 3C 4C 5C 6C 7C 9H 10H JH QH KH
73% 73% 73% 73% 145% 71% 24% 45% 45% 45% 58% 55% 65%
Building a 12 month plan
50. 50
With your team create an annual plan
•
•
•
Project Duration to Feature value
IRR Duration MVP A 2 3 4 5 6 7 8
Standard Clubs 76% 7 4 73% 73% 73% 73% 145% 71% 24%
Standard Spades 34% 4 2 43% 43% 35% 16%
Standard Diamonds 49% 7 4 65% 65% 65% 65% 98% 22% -36%
9 10 Jack Queen King
Deluxe Hearts 50% 5 3 45% 45% 45% 58% 55%
Deluxe Diamonds 31% 3 2 38% 38% 17%
Deluxe Spades 46% 5 3 27% 27% 27% 88% 62%
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End of First Quarter
Project Duration to Feature value
IRR Duration MVP A 2 3 4 5 6 7 8
Standard Clubs (1) 32% 7 4 24% 24% 24% 24% 127% 0% 0%
Standard Spades 34% 4 2 43% 43% 35% 16%
Standard Diamonds 49% 7 4 65% 65% 65% 65% 98% 22% -36%
Standard Hearts (2) 57% 4 2 89% 89% 32% 16%
9 10 Jack Queen King
Deluxe Hearts 50% 5 3 45% 45% 45% 58% 55%
Deluxe Diamonds 31% 3 2 38% 38% 17%
Deluxe Spades 46% 5 3 27% 27% 27% 88% 62%
52. 52
End of Second Quarter
Project Duration to Feature value
IRR Duration MVP A 2 3 4 5 6 7 8
Standard Clubs 34% 7 4 24% 24% 24% 24% 127% 16% 0%
Standard Spades 34% 4 2 43% 43% 35% 16%
Standard Diamonds 49% 7 4 65% 65% 65% 65% 98% 22% -36%
Standard Hearts (1) 33% 7 5 36% 36% 36% 36% 36% 32% 16%
9 10 Jack Queen King
Deluxe Hearts (2) 20% 5 3 22% 22% 22% 33% 2%
Deluxe Diamonds 31% 3 2 38% 38% 17%
Deluxe Spades 46% 5 3 27% 27% 27% 88% 62%
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Sunk Costs
“When you have dug
yourself into a hole, the
best thing you can do is
stop digging.”
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End of Third Quarter
Project Duration to Feature value
IRR Duration MVP A 2 3 4 5 6 7 8
Standard Clubs 34% 7 4 24% 24% 24% 24% 127% 16% 0%
Standard Spades (1) 62% 4 2 98% 98% 35% 16%
Standard Diamonds 49% 7 4 65% 65% 65% 65% 98% 22% -36%
Standard Hearts 33% 7 5 36% 36% 36% 36% 36% 32% 16%
9 10 Jack Queen King
Deluxe Hearts 20% 5 3 22% 22% 22% 33% 2%
Deluxe Diamonds (2) 31% 3 2 38% 38% 17%
Deluxe Spades 46% 5 3 27% 27% 27% 88% 62%
Deluxe Clubs (3) 189% 3 3 189% 189% 189%
55. 55
How did our waterfall project fair?
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2C 2C 4C 5C 6C 7C 8C 10H JH QH KH AH
34% 34% 34% 34% 34% 34% 34% 20% 20% 20% 20% 20% 28%
Roadmap Support Governance is provide by the Portfolio Management Team Resource Planning is conducted by the Resource planning TeamRelease Support Release coordination is conducted by the Deployment Management Team Service Agreements are negotiated with the appropriate teamIteration Support Service Agreements are negotiated with the appropriate teamDaily Support Development Environments are provided by the Infrastructure team Production code Movement is provided by Deployment Management