Chapter 5 Summary : Think Customer value not Project Cost

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What is DevOps?

What is DevOps?

DevOps is the continuous delivery of prioritised value to an organisation. For more click here.

Atlassian Fastrack

This is a Summary of the fifth chapter of a book Daysha DevOps published titled 1Faat (one feature at a time). The book is an ongoing summation of our consultants' experience as they help our clients to transform digitally.

Building a financial case for change and engaging Accountants is a balancing act between cost control and unlocking customer value. Accountants often focus on budget constraint and the allocation of costs between the departments benefiting from the expenditure over a specific timeframe at the expense of the holistic return from an investments in technology.

While budgeting is crucial for cost containment in large organizations, it’s equally important to consider revenue generation or cost-saving calculations. The difference between budgetary control and realizing value from budgeted expenditures needs strong emphasis. Introducing a financial representative within the IT leadership team reporting to the CTO or CIO can bridge the gap between technology and finance, translating the value expressed in lay mans terms to something an Accountant can grasp.

Historically computers were primarily used for financial accounting and payroll, automation aimed at cutting costs through reduced manual toil. This mindset persists in digital projects, where the goal may be to extract more revenue from online customers but Finance wants to see cost reductions. Challenges arise from the annual IT budget, with a significant portion (up to 80% in organisations with unmanaged technical debt) allocated to “Keep The Lights On” (KTLO) activities, leaving business stakeholders frustrated as they struggle to find budget to unlock customer value.

Addressing waste in KTLO budgets also involves considering departmental structures. Siloed software development creates a complex situation where integration between different parts of the organization becomes necessary, resembling a many-headed hydra that requires continuous feeding. Also known as Conways law.

In the present context, technology serves as a clear driver of profit rather than a cost, particularly in enhancing customer engagement. However, organizations with rigid structures may struggle to adapt to this evolving role for IT, leading to IT being seen as an excuse for failure. Leaders facing competition from ‘born digital’ companies must address this challenge and shift mindsets within their engineering teams from viewing themselves as costs to recognizing their role as value contributors tasked with delighting customers.

Organizations that prioritize customer delight create an environment where engineers feel more motivated and productive, focusing on delivering value without being overly concerned about the costs. Effective communication between business and technology teams is essential, and can be achieved through using a common language centered around customer behaviour and money.

Before any work is undertaken, the emphasis should be on maximizing customer value and determining when it can be realized. Value Stream Mapping, a lean tool, can identify and eliminate inefficiencies in customer engagement processes, including back-office functions that impact the customer experience.

To make Value Stream Mapping a live and successful process, costs and revenue data should be automatically captured. Value Stream Management tools, as distinct from Value Stream Mapping, offer web browser-based solutions to collect relevant data from the Software Development Life Cycle (SDLC) including Observability to capture customer transactions and then present it on company wide ‘visible’ dashboards.

Bringing the customer into the heart of conversations with both business and technical teams is essential. Customer journey mapping, collaborating around whiteboards and reviewing customer interactions with competitors or on social media, helps keep delivery teams focused on customer needs. Use data, such as average customer lifetime value and specific product-focused metrics as a cornerstone for decision-making.

Shift the perspective from considering engineers merely as costs to recognizing them as teams capable of adding customer value. Establishing a common language between business professionals and engineers is essential, and money proves to be an effective medium for communication. Familiarize finance functions with the concepts of Value Stream Mapping and Value Stream Management to facilitate a shared understanding and collaboration between finance and technology teams.

Finally never attempt to explain the how of building software to Finance teams. Invariably you dumb down and use analogies which come back to haunt you. Focus on the why and avoid the how.

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POSTED IN: Agile, Agile Best Practice, Agile Methodology, DevOps, DevOps culture