Productivity vs velocity vs business value in agile
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1. The document discusses key metrics like velocity and productivity that are commonly used to track agile team performance but questions whether these truly measure business value. 2. Productivity is defined as accomplishing more with the same resources and may be a more meaningful metric than velocity, which can fluctuate. Productivity remains relatively constant as a team gains experience. 3. Velocity measures the amount of work a team can complete in a sprint but is not a good measure for comparing teams or evaluating performance, as story point sizes vary between teams. Business value, defined at the intersection of what can be successfully implemented, what customers want, and what excites the team, should be the key indicator used.
Productivity vs velocity vs business value in agile
- 1. When I was discussing with some of my friends working in IT industries, they were discussing about Productivity and Velocity tracked by management for the team’s performance. These are very familiar metrics for the industries follows Agile. Some questions came in mind. 1. Is it right to compare the teams with respect to the velocity they deliver? 2. Is productivity of the team adding value to the customer? 3. Anybody cares about Business Value delivered by the team? PRODUCTIVITY “Productivity is defined as the efficient use of resources, capital, land, materials, energy, information,in the production of various goods and services. Higher productivity means accomplishing more with the sameamountof resourcesorachieving higheroutputin termsof volumeand quality fromthesameinput.” The productivitycanbe a more meaningful metricthanthe velocity.Velocitycanfluctuate dependingon changes in resource availability (vacations, holidays, sick leave, loss or addition of team members). However, the productivity should remain relatively constant, or ideally improve over time as the team becomes more skilled and efficient and better at estimating the size of stories. Most scrum teams recognize that a team member can only realistically contribute 4-6 hours per day toward their iteration tasks. This number multipliedby the number of days that the team member is available during the iteration (accounting for weekends, vacations, holidays, or any other leave time) is the team member's capacity.
- 2. Productivity is calculated by dividing the total number of user story points by the available task hour capacity of all team members.Forexample,if the total hourlycapacityof all developersinaniterationis 25, and the team completes 9 points of user story work, their productivity is 0.36 points per hour. The productivitycanalsobe usedas a planningtool tocalculate the target numberof pointsthatshould be scheduledforthe nextiteration.First,determine the team'stotal capacity in the nextiteration,then multiply that by the average productivity rate. This target number of points can be assigned to the Resources field when creating the next iteration. VELOCITY “Velocityis a measureof theamountof worka Teamcan tackleduring a singleSprint and isthekey metric in Scrum.Velocity is calculated at the end of the Sprint by totaling the Points for all fully completed User Stories and accepted by the Product Owner.” The story pointssize isnotsame forall teamsworkingforthe same organization.Forexample,whenone teamisinvolvedinbuildingawebpageandotherteamisworkingonperformanceaspectsof the product, their reference Userstories for the story point estimation are not similar. During the sprint planningthe reference baseline userstory used by the team has the dependency on the complexity of the product, technologystackandenvironments,no.of workingdaysetc.These dependentfactorsimpactthe team’s commitmentforthe sprint.Basedon the commitmentteamtriestodeliverthe Userstoryat the endthe sprint. By totaling the Points for all fully completed User Stories and accepted by the Product Owner, team’s velocity can be determined. So Velocityisnot the right parameterto compare one team withother team and also it cannot usedbe used as a performance indicator of the team. But it is very good indicator for the teams to plan their activity for the future sprints. Business Value Business Value results from the intersection of three dimensions: What you can implement successfully and sustainably What your customers want and will buy (even if they don’t know it yet) What your team is excited about creating The development team provides the points for size, because only they are qualified to judge how big a feature/Userstory is, relative to another. Whereas the business value points should come from the Product Owner/BusinessOwner. Aside of prioritization, putting a business value in points against every itemon the backlogallowsyou to calculate 'BusinessValue'isdeliveredineachSprint. Thinkingoutside the box, identifying businessvalue before writing the user storiesis much better than writing and then trying to evaluate. Creating value can often require a change in perspective from the normal project’s tasks and functions. The firstprinciple of the Agile Manifestotalksaboutdeliveringvaluable software tothe customer,many agile practitioners are constantly thoughtful of the value in each step of the software-development lifecycle. Team having high velocity, highproductivitymay or may not have the high business value end of the sprint.
- 3. So fromall of the above keymetricsBusinessValueisgivingreal valuetomanagementandcustomerand this one should be used as key indicator for the performance of the team.