Quantifying the value of a Modern Software Factory
When people up the food chain ask about the return on investment, what will you respond?
Let’s assume you’re implementing a modern software factory. You’re developing new capabilities to provide better customer experiences. You’ve deployed software that enables rapid development, and you’re nurturing an agile mindset with a primary focus on customers. At some point along this journey, people up the food chain will ask about their return on investment. Do you have a process or framework in place to respond to their question with knowledge derived from quantifiable data?
The approach I recommend is to leverage aspects of W. Edwards Deming’s management philosophy on quality improvement. It’s known as the Deming Cycle, or the Plan, Do, Check, and Act (PDCA) Cycle, a logical sequence of four repetitive steps for continuously improving your services.
Phase 1: Plan
The Plan phase identifies the strategy for the improvement and defines what you will measure. In this phase, you answer questions related to the overall vision of the organization:
Answers to these questions might include goals such as:
Once the stakeholders understand and agree on goals, the next step of this phase is to define what you will measure. Questions you should ask include: “Where are we now?” and “Where do we want to be?” Consider conducting a gap analysis to help answer the question “How do we get there?” A gap analysis helps to:
Phase 2: Do
The Do phase gathers raw data, typically pulled from several underlying tools; the data becomes the basis for the answer to “Did we get there?” Data can be measured to validate the strategic vision, justify the investment and/or determine if intervention is necessary.
If done without planning, this phase can lead to a deluge of data and the risk of not providing the necessary insights initially outlined. For this reason, it’s essential to measure just one aspect of a critical service at a time, reaping a quick win before moving on to the next task. For example, you can measure net promoter score to track the customer experience of a health care benefits management system and guide the evolution of your services.
Phase 3: Check
The Check phase is where we process the data and turn it into useful information. In other words, we align the data back to KPIs. Keeping in mind that data is coming from multiple sources, the goal of this phase is to coordinate and rationalize the data to give it context that can be compared to KPIs.
After processing the data, analyze it by comparing data with targets to see if the investment added value and/or improvements are required to evolve your business. For instance, you might answer the questions, “What evidence do we have that we are delivering a better user experience for customers who use our heath care management system?”
Phase 4: Act
The Act phase is where we communicate the answer to the question, “Did we get there?” A summary presentation shows how the investment performed, and you build and present action plans. Action plans may consist of a roadmap focusing on new services or processes, or they may demonstrate a need to tweak one or more KPIs.
Your goal is to uncover clarity of the overall quality of the business services you provide to your customers. The approach outlined here follows a continual service improvement process such as the PDCA Cycle. The cycle will give you the knowledge to validate the value of your services based on proper analysis of information gathered from specific data sets.
To gain a better understanding of the approach for building a modern software factory, I recommend you look at Digitally Remastered: Building Software into Your Business DNA, a new book by CA Technologies Chief Technology Officer Otto Berkes.