Wednesday, June 30, 2010

How much worth is the man

Do you put a dollar on the value your epics deliver to the business?  If not you should; it will help you determine epics’ prioritization and give the the business owners an idea of value the project is delivering.

Consider this example: your software is used by 75 sales people and your changes save an average of 2 hours a week per person, you save 2 hour * 75 people or 150 hours a week which translates to 7,500 hours a year (50 weeks).  That's 3.75 people's time.  

If those people have an average salary of $40 an hour, that's a cost savings $300,00 a year (not bad).  If on the other hand each person produces $250,000 in new sales over a year (hopefully you expect staff value is more than their salary) you free up the  250K * 3.75 = $937,500. In the one case you save $300,000 by reallocating people and not growing the business, in the other case you can potentially grow the business by nearly a million.
Next time you’re calculating what a feature is ‘worth’, look at not only the cost savings side but the opportunity side - a perspective that many people miss.