Agility Index – KVA and KPIs

• KVA
  • Organizations without strength in all three KVAs may have short-term value, but will not be able to sustain it
  • The total organizational value is captured through metrics (primary, direct evidence) in 3 areas
    • Current Value
      • organization’s actual value in the marketplace
      • organization’s current context, no relevance on an ability to sustain value in the future
    • Time to market
      • evidence of its ability to meet market demand with timely delivery
      • ability to actually deliver new features, functions, services, and products
      • Without actively managing T2M, the ability to sustainably deliver value in the future is unknown
    • Ability to innovate
      • evidence of being able to sustain itself over time
      • is necessary but often a luxury
      • Most software is overloaded by non-valuable features. As low-value features accumulate, more of the organization’s budget and time is consumed maintaining the product, reducing its available capacity to innovate
• KPIs
  • Human decision makers can only process a limited amount of information at any point in time
  • There is no need for hundreds of metrics or ‘Key Performance Indicators’
  • A limited, but cohesive set of numbers suffices
  • RADAR GRAPH representation through time and graphs
    • The metrics should not only be seen as individual data points but also be represented as holistic sets
    • Trends and patterns should be observed, not only for the individual data but also for the cohesive sets
  • There are 11, Each stands on its own and is unambiguous
  • Other proposed measures were discarded because they were intermediate measures or because their interpretation was contextual
  • practitioners may choose to monitor additional measures of value and outcomes. However, EBMgt prescribes these measures for empirical analysis of an organization’s value or Agility Index

Model

• NOTE: OKR is a strategic framework, whereas KPIs are measurements that exist within a framework
• Current Value (CV)
  • indication of the company’s success in the market place
  • Characteristics
    • easy to collect
    • most are likely readily available
  • Revenue per Employee
    • Gross Revenue / #employees
    • Gather the revenue generated by the product you are evaluating and employees contributing to its success
    • The ratio (gross revenue / # of employees) is a key competitive indicator within an industry. This varies significantly by industry
    • GR/E
    • VALUE FOR INVESTORS
  • Product Cost Ratio
    • All expenses in the organization that develops, sustains, provides services, markets, sells, and administers the product or system
    • Gather the IT expenses associated with the product
    • Total expenses and costs for the product(s)/system(s) being measured, including operational costs compared to revenue
    • E&C/R
    • VALUE FOR INVESTORS
  • Employee Satisfaction
    • Engaged employees that know how to maintain, sustain and enhance the software systems and products are one of the most significant assets of an organization
    • what percentage of employees are engaged?
    • Some form of sentiment analysis to help gauge employee engagement, energy, and enthusiasm
    • Example: NPS
  • Customer Satisfaction
    • what percentage of your customers is marketing your products or services on your behalf?
    • Some form of sentiment analysis to help gauge customers engagement, energy, and enthusiasm
    • Example: NPS
• Time-to-Market (T2M) (responsiveness) minimize the time to deliver value
  • Release Frequency
    • The time needed to satisfy the customer with new, competitive products
    • How often do we put new features in the hands of our customers?
    • number of releases per time period, as continuously, daily, weekly, monthly, quarterly, etc
    • This helps reflect the time needed to satisfy the customer with new and competitive products
    • R/t
  • Release Stabilization
    • The impact of poor development practices and underlying design and code base. Stabilization is a drag on competition that grows with time
    • How much time are we spending on getting something “done” to “really done”?
    • Release stabilization period
      • The time spent correcting product problems between the point the developers say it is ready to release and the point where it is actually released to customers
      • This helps represent the impact of poor development practices and underlying design and code base
  • Cycle Time
    • The time (including stabilization) to satisfy a key set of customers or to respond to a market opportunity competitively
    • How long does it take for us to move new features from an idea into customer’s hands?
    • Customer Cycle Time
      • The amount of time from when work starts on a release until the point where it is actually released
      • This measure helps reflect an organization’s ability to reach its customer
• Ability-to-Innovate (A2I) (effectiveness) maximize ability to deliver new and innovative
  • Innovation Rate
    • Growth of technical debt caused by poorly designed and developed software. Budget is progressively consumed keeping the old software alive
    • What percentage of our budget is spent on innovation?
    • The percentage of effort or cost spent on new product capabilities, divided by total product effort or cost
    • This provides insight into the capacity of the organization to deliver new product capabilities
  • Defects
    • Measures increasingly poor quality software, leading to greater resource and budget to maintain it and potential loss of customers
    • How much technical debt are we accumulating?
    • Defects Trends
      • Measurement of change in defects since last measurement
      • A defect is anything that reduces the value of the product to a customer, user, or to the organization itself
      • Defects are generally things that don’t work as intended
  • Installed Version Index
    • The difficulty customers face installing a new release. The relatively low value of new releases, or even the # of customers that are evaluating alternatives
    • What percentage of your customers are able to take advantage of new features on the latest release of your product?
    • The number of versions of a product that are currently being supported
    • This reflects the effort the organization spends supporting and maintaining older versions of software
  • Usage Index