Cost of Delay is because of HiPPO? – WSJF in SAFe way

admin   February 11, 2018   Comments Off on Cost of Delay is because of HiPPO? – WSJF in SAFe way

Cost of Delay is a way of communicating the impact of time on the outcomes we hope to achieve. More formally, it is the partial derivative of the total expected value with respect to time. Cost of delay is central to decision making. It drives the right conversations and decisions around cost and revenue, rather than just the unbalanced conversations of cost many IT divisions suffer today. Cost of delay is the right tool for proper prioritization decision.

Cost of Delay combines urgency and value – two things that humans are not very good at distinguishing between. To make decisions, we need to understand not just how valuable something is, but how urgent it is.

The value of the product features is normally estimated considering 4 different perspectives:

Increase revenue: reflects the revenue provided by new-delighted features,               which attract either new users or current users.

Protect revenue: are small improvements which current users will not be able to not pay any extra money for.

Reduce cost: are improvements in our process to deliver value faster.

Avoid cost: costs that are not incurring right now to occur in the future unless some action is taken.

Effects of Delay: Effects of the delay is not limited to cost most of the times although cost is the major factor, it also triggers lot of disputes, negotiations and sometimes law suits due to regulatory constraints.

Reality is HiPPO Model:

Organisations who operate with some form of “Agile” or waterfall aren’t spared this. Agile/Waterfall has nothing to say about which projects to start, and nothing to say about when to stop and move on to something else. Within the project, most implementations attempt to decouple prioritization by deferring to what we like to call the HiPPO model of prioritization. This is where prioritization is mostly driven by the Highest Paid Person’s Opinion. Ever found yourself doing something that everyone on the team believes is mad, but someone much further up the food chain has made apparently made a commitment that everyone feels powerless to do anything about. Welcome to HiPPO-land 😊. This will create chaos in the prioritization of the backlog and conflict of the interests.

HiPPO will bring lot of ambiguity in the whole process of value chain and thereby affecting the morale of the people in the eco system. SAFe (Scaled Agile for enterprises) has come up with better prioritization based on the cost of delay and criticality factors.

SAFe (Scaled agile for enterprises) advises the way to determine the cost of delay based on the Business value, Time Criticality. But this will not be 100% fool proof but will help you in terms of understanding the cost of delay better prioritization of the backlog, which is proven model and self-experienced with running Value Streams and ARTs (Agile Release Trains) for prioritization and successful implementation of features/Products with SAFe.

SAFe – WSJF: a better way to identify the COD

Weighted Shortest Job First (WSJF) : is a Scaled Agile Framework (SAFe) method of determining what features to work on first. This is a calculated value that combines Business ValueTime Criticality, and Risk Reduction inputs to create a combined Cost of Delay valueWSJF is then calculated by dividing the Cost of Delay by the job estimated size or Swag. The items with the largest WSJF value should be worked on first. This article provides instructions on how to display the WSJF column in portfolio item grids and how to rank the work items.

 

Weighted Shortest Job First (WSJF) is a prioritization model used to sequence jobs (ex., Features, Capabilities, and Epics) to produce maximum economic benefit. In SAFe, WSJF is estimated as the Cost of Delay (CoD) divided by job size.

Basic idea to deal with Cost of Delay is to address the prioritization of the features based on the highest value and critical ones first and reduce the risk. This is very vital attribute which needs to be thoroughly analysed before finalizing the back log for any of the product before starting the development.

Most of the times, things do change in the present scenario of dynamic market conditions, we need to ensure the reality check especially at frequent intervals to reduce the risk factor at the end. This is a continuous process of evaluating and refining the backlog time to time.

Better prioritization of value stream will improve the overall productivity index of the Organization in various ways.

1.      Better understanding on the business priorities and planning

2.      Smoother communication across the stakeholders

3.      Code Quality and code management

4.      Enhance team engagement as it is collective commitments made

5.      Motivated team and increased productivity

6.      Release train with sustainable predictability

The above factors not only produce the better results, it brings cadence to the system.