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
    • Determines a product that is burdensome and difficult to use and excess software that must be sustained even though it is rarely used
    • What percentage of our features does not provide value to our customers?
    • Customer Usage Index
      • Measurement of usage, by feature, to help infer the degree to which customers find the product useful and whether actual usage meets expectations on how long users should be taking with a feature