Business goals

How to Monitor Business Goals with Value Chain Management

Even as organizations and their teams struggle to stay on top of meaningful improvement practices, many are still missing a big piece of the puzzle: linking software initiatives to business results.

Optimization of the software system from a technical point of view is a laudable achievement overall, but the benchmarking of its value can be elusive. This is problematic, as these efforts must advance business goals for business leaders (and bean counters) in order to quantify net worth.

How can management support the claim that improving software drives desired business outcomes? By incorporating objectives and key results (OKRs). Recognized as the cornerstone of goal setting frameworks for setting and tracking goals and their outcomes, OKRs can help your software teams align their work with what matters most to the C suite: results .

This connection helps management make critical decisions and prioritize updates, change requests, and other most important software activities. It also informs value chain management (VSM), moving it from a granular effort focused on metrics to a holistic opportunity by linking value chain activities to business results.

Here is what you need to know.

The evolution of OKRs

The concept of results monitoring, and OKRs in particular, were born from ideas developed by the famous management consultant Peter Drucker in the 1950s. Widely regarded as the father of modern management theory, Drucker wrote Management by objectives, which described a process for setting goals that are tracked from goals to outcomes. (Drucker was one of the first VIPs in the software world; he is also credited with develop agility, the precursor of the agile methodology.)

More recently, the concept of OKR has gained prominence in Jeans Doerrthe book of, Measuring What Matters: How Google, Bono, and the Gates Foundation Are Changing the World with OKRs. (Intel’s Andy Grove is credited with developing the concept of OKRs. He taught it to John Doerr, who codified it.)

The book focuses on how benchmarking and organizational improvement related to business results can propel explosive growth. While not specific to software, its message resonates with business owners who increasingly depend on reliable software to run their businesses. In addition, his knowledge underpins the model of integration of OKRs with VSM.

A model for using OKRs

Here’s a business-focused example of how OKRs can inform and improve software development initiatives.

Company objective: to grow by 30% over the next five years

Management / financial management objective: Maintain strict cost control

The idea is to excise as much fat and as much effort as possible, to maintain a favorable cost / benefit ratio.

  • Management evaluates every aspect of the project to ensure that the price of the growth of the business does not exceed the value of the growth.
  • Certain activities, such as sales development and marketing, are considered current operating expenses for the project and automatically included in the budget.
  • Management views upgrading / updating software systems to support growth as a questionable necessity. Finance recommends adopting a wait-and-see attitude.

Software management objective: Validate the value of software improvements

Validate with both company management and decision-makers in the finance department the value of improvements to the software system, both at the outset and during the life of the project. At the same time, further quantify the VSM based on their definition of “business value”.

To achieve these two goals, software teams will need to develop a model that maps software activities to business outcomes through OKRs.

The software team performs a sequence of activities

These include:

  • Divide software improvement / optimization activities into their individual tasks, which become epics and features of the software process flow.
  • Combine all of the elements of that flow, from epics to fixing flaws, with a relevant OKR.
  • Extract and visualize software project metrics and frame them in terms of achieving business results.
  • Help management perform a quantitative analysis of the mapping effort, associated with business results.
  • Work with management on prioritization of tasks where OKRs indicate the highest business value. (Schedule items with a lower or longer ROI for later or put them on hold.)
  • Obtain approval of agreed projects.

While this example is speculative, I have personally witnessed results as good or better. If the core components of the software initiative had not been linked to OKRs, these software project teams would not have been able to provide the data for management to validate updates and enhancements and prioritize them into depending on the budget.

Keep things moving

This example is just one of many scenarios in which linking OKRs to software development – and preferably VSM directly – validates software initiatives while giving business leaders vital clarity to take control. decision. Integrating OKRs with the software delivery workflow is no longer a bonus. It has become a necessity.

Software systems are no longer a “niche” business catalyst. Most successful companies are software companies, and software excellence has become a recognized competitive differentiator. Given the number of critical legacy systems that are still running (and often need to be integrated with much faster, more agile systems), OKRs will only become more important over time.

To deliver the greatest value and drive digital transformation, software activities must be linked to business results. The OKRs are the engine that propels this effort.

With OKRs in play, the software moves from being a supporting actor (a set of features and functions) to a driving force behind success. It supports the high-level business outcomes that the C suite cares about the most.

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