Showing Value for the Money

In most cases, somebody other than the software development team is paying the bills, and they want to know that their money is well-spent. They want to know that they’re getting what they want or need, and at a fair price. There is, of course, considerable ambiguity in those wants and needs as well as in what constitutes a fair price. That does not change the desire for affirmation and assurance.

In very small organizations, it’s possible for the senior leadership to perform the examinations discussed in ​Getting Things Done​ themselves. As the organization grows, high-level leaders get further removed from the work, and must depend more on indirect communications to verify things. At some point along that spectrum, the word “governance” is introduced.

Governance

Governance is a hard thing to define both concisely and in a way that communicates to people who don’t know what it means. It’s an expansive concept, and when we use the word, we’re typically only considering a small portion of the whole.

At its simplest, governance is the ongoing setting of direction and priorities, and determining whether results are in alignment. This generally involves making sure the needs of the organization are being met in a timely and cost-effective manner. I think that covers it—but it leaves so much unsaid.

Imagine you’re the CEO of a reasonably sized corporation. You confer with the board of directors regularly about the direction and priorities of the company, adjusting these as conditions warrant. You talk with your direct reports about these issues, plus the ongoing efforts to move the company in the desired direction and any potential new initiatives. They give you information about how the current efforts are doing, and the expected costs, risks, and returns of new ideas. These direct reports have similar conversations with their direct reports. How many levels does the flow of information pass through, passing downward and progressing upward? How much is it filtered and changed along the way? How do you know what’s really going on in your company, so that you can make informed decisions? How can you tell if the results are going in the direction you want?

“Go to the gemba,” you think. This Americanized admonition of Taiichi Ohno, creator of the Toyota Production System, means to observe the work actually done in the place where it’s usually done. It’s a good way to get insights about how things are going.

You visit a factory, and you can see the work flowing through it. Does it appear to be flowing smoothly? What is the rate at which completed units come off the line? How large are the stocks of parts and partially completed work? Look at the history of inventories; how have these stocks changed over time? You walk away with a more visceral understanding of what’s going on there.

Next you visit the IT department. Where is the work and how can you visualize it? How can you judge how fast things are going, or where bottlenecks might be? You walk away thinking there’s little point in visiting here again.

What sort of things might you want to know, and how can you make them visible? For ongoing projects, you’d like to know if you should continue them. Are you still getting enough value to justify the cost? Perhaps you should scale them back now, or mothball new development. Can you justify the expenses to whatever governance body applies in the situation (e.g., Board of Directors, Congress, the GAO)? Is the money being spent wisely? Are you getting the expected value for the expenditure?

For every program that is in progress, you’d like a capsule view that gives you basic information. And you’d like a way to drill down from that to get more detailed data.

Earned Value

Earned Value Management (EVM) is a traditional tool, made popular by the U.S. Department of Defense, for assessing progress against plan. Progress is measured against a Work Breakdown Structure (WBS) created as an initial plan for the project. Within a work item, cost expended is often used as a proxy for progress.

If you consider the initial project plan as approved and funded by the powers that be, then demonstrably proceeding to accomplish that plan can pass for governance. The organization may get what they asked for, but they’re unlikely to get what they want. And if there are any flaws in that plan—perhaps the WBS omitted some necessary things—then they are likely to not get what they asked for in the time and cost they expected. This is the source of so many “project overruns.”

Again, we can turn to BurnUp Charts as a better Earned Value tool. Sure, it depends on a Work Breakdown Structure, but it can accommodate changes in that structure. Of course, if the goal line changes significantly, you’ll want to communicate that with senior management. That’s exactly what competent senior management would want, anyway. And that’s the way the project manager will keep the executives’ expectations realistic, which is necessary for any hope of appearing successful in their eyes.

Introducing a simple BurnUp Chart in an organization used to complex EVM calculations may be difficult. You’ll likely want to produce numbers similar to their customary EVM numbers. The extra effort to calculate these numbers will be worth it, at least for a while. Many people tend to be suspicious of a solution radically simpler than their existing concept.