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Striking the Balance: Using Technology Effort Estimates as Targets, Not Deadlines

July 2, 2024July 2, 2024Leave a comment

Striking the Balance Between Accuracy and Realism

To ensure commercial awareness, accurate effort estimates are crucial for project planning and execution. However, treating these estimates as strict deadlines can lead to unrealistic expectations and project failures. Instead, they should be used as targets, guiding the project towards completion while allowing flexibility. In this blog post, we will delve into the importance of accurate estimates, various estimation methods, and the significance of the KPI of forecast vs. actuals. We’ll also discuss why estimates should be seen as targets rather than deadlines and explore ways to improve estimation accuracy. Finally, we’ll examine the value to businesses in getting these aspects right.

The Importance of Accurate Estimates

Accurate effort estimates are foundational to successful project management. They help in:

Resource Allocation: Properly estimated efforts ensure that the right amount of resources—time, money, and manpower—are allocated to the project.
Budget Planning: Accurate estimates prevent cost overruns by aligning the budget with the project’s scope and timeline.
Stakeholder Communication: Clear estimates foster transparent communication with stakeholders, setting realistic expectations and building trust.
Risk Management: By understanding the effort involved, potential risks can be identified and mitigated early in the project lifecycle.

Estimation Methods

Several methods are used to estimate project efforts, each with its strengths and weaknesses:

Expert Judgement: Involves consulting with experienced team members or industry experts to make educated guesses. It’s quick but can be biased and subjective.
Analogous Estimation: Uses historical data from similar projects as a reference. It’s useful for quick estimates but may not account for project-specific nuances.
Parametric Estimation: Applies statistical models based on historical data and project variables. It’s more accurate but requires extensive data.
Bottom-Up Estimation: Breaks down the project into smaller tasks, estimates each, and aggregates them. It’s detailed and accurate but time-consuming.
Three-Point Estimation: Calculates optimistic, pessimistic, and most likely estimates to provide a range. This method accounts for uncertainty but requires careful analysis.
Agile Poker (Planning Poker): This collaborative estimation technique is widely used in Agile development. Team members use a deck of cards with numbers representing the complexity of tasks. Each member selects a card anonymously, and the team discusses discrepancies before converging on an estimate. This method promotes team consensus and leverages collective intelligence.

The Significance of Forecast vs. Actuals

The KPI of forecast vs. actuals measures the accuracy of estimates by comparing predicted efforts with actual efforts expended. This metric is significant because:

Performance Tracking: It helps track the performance of estimation practices over time, highlighting areas for improvement.
Continuous Improvement: By analysing discrepancies between forecasts and actuals, teams can refine their estimation processes.
Accountability: It holds project managers and teams accountable for their estimates, fostering a culture of precision and reliability.
Stakeholder Confidence: Consistently meeting forecasted targets builds stakeholder confidence and supports long-term project planning.

Deadlines vs. Targets: The Right Perspective

While deadlines are essential for maintaining project momentum and ensuring timely delivery, treating effort estimates as strict deadlines can be problematic:

Inherent Uncertainty: Estimates are inherently uncertain and subject to change due to unforeseen circumstances.
Flexibility: Viewing estimates as targets rather than rigid deadlines allows for flexibility, accommodating changes and adjustments without compromising project quality.
Realistic Expectations: Setting targets based on estimates helps in setting realistic expectations with stakeholders, reducing stress and pressure on the team.

Improving Estimation Accuracy

To improve the accuracy of estimates and align them more closely with project deadlines, consider the following methods:

Historical Data Analysis: Use data from previous projects to inform current estimates, identifying patterns and common pitfalls.
Regular Reviews: Conduct regular reviews and updates of estimates throughout the project lifecycle to account for changes and new information.
Collaboration: Involve the entire team in the estimation process to leverage diverse perspectives and expertise.
Training: Invest in training team members on estimation techniques and tools to enhance their skills and confidence.
Use of Tools: Utilise estimation tools and software that can provide data-driven insights and improve estimation accuracy.

The Value to Business

Getting estimates and deadlines right provides immense value to businesses:

Efficiency: Accurate estimates lead to better resource management and efficient project execution.
Cost Savings: Reducing the risk of budget overruns and delays results in significant cost savings.
Competitive Advantage: Reliable project delivery enhances the company’s reputation and competitiveness in the market.
Employee Morale: Realistic targets and manageable deadlines contribute to higher employee satisfaction and productivity.
Stakeholder Trust: Consistently delivering projects on time and within budget strengthens stakeholder trust and long-term relationships.

Conclusion

Effort estimates play a critical role in technology project management, but they should be treated as targets rather than strict deadlines. By using accurate estimation methods and regularly comparing forecasts with actuals, businesses can improve their project planning and execution. This approach not only enhances efficiency and cost savings but also builds stakeholder trust and supports sustainable business growth. Investing in improving estimation accuracy is a strategic move that pays dividends in the long run, ensuring successful project outcomes and a competitive edge in the technology landscape.

Also Read – The Art of IT Effort Estimation

Data is the currency of technology

October 6, 2023June 28, 2024Leave a comment

Many people don’t realize that data acts as a sort of digital currency. They tend to imagine paper dollars or online monetary transfers when they think of currency. Data fits the bill—no pun intended—because you can use it to exchange economic value.

In today’s world, data is the most valuable asset that a company can possess. It is the fuel that powers the digital economy and drives innovation. The amount of data generated every day is staggering, and it is growing at an exponential rate. According to a report by IBM, 90% of the data in the world today has been created in the last two years. This explosion of data has led to a new era where data is considered as valuable as gold or oil. There is an escalating awareness of the value within data, and more specifically the practical knowledge and insights that result from transformative data engineering, analytics and data science.

In the field of business, data-driven insights have assumed a pivotal role in informing and directing decision-making processes – the data-driven organisation. Data is the lifeblood of technology companies. It is what enables them to create new products and services, optimise their operations, and make better decisions. Companies irrespective of size, that adopt the discipline of data science, undertake a transformative process enabling them to capitalise on data value to enhance operational efficiencies, understand customer behaviour, identify new market opportunities to gain an competitive advantage.

Innovation: One of the most significant benefits of data is its ability to drive innovation. Companies that have access to large amounts of data can use it to develop new products and services that meet the needs of their customers. For example, Netflix uses data to personalise its recommendations for each user based on their viewing history. This has helped Netflix become one of the most successful streaming services in the world.
Science and Education: In the domain of scientific enquiry and education, data science is the principal catalyst for the revelation of profound universal truths and knowledge.
Operational optimisation & Efficiency: Data can also be used to optimise operations and improve efficiency. For example, companies can use data to identify inefficiencies in their supply chain and make improvements that reduce costs and increase productivity. Walmart uses data to optimise its supply chain by tracking inventory levels in real-time. This has helped Walmart reduce costs and improve its bottom line.
Data-driven decisions: Another benefit of data is its ability to improve decision-making. Companies that have access to large amounts of data can use it to make better decisions based on facts rather than intuition. For example, Google uses data to make decisions about which features to add or remove from its products. This has helped Google create products that are more user-friendly and meet the needs of its customers.
Artificial Intelligence: Data is the fuel that powers AI. According to Forbes, AI systems can access and analyse large datasets so, if businesses are to take advantage of the explosion of data as the fuel powering digital transformation, they’re going to need to artificial intelligence and machine learning to help transform data effectively, so they can deliver experiences people have never seen before or imagined. Data is a crucial component of AI and organizations should focus on building a strong foundation for their data in order to extract maximum value from AI. Generative AI is a type of artificial intelligence that can learn from existing artifacts to generate new, realistic artifacts that reflect the characteristics of the training data but don’t repeat it. It can produce a variety of novel content, such as images, video, music, speech, text, software code and product designs. According to McKinsey, the value of generative data lies within your data – properly prepared, it is the most important thing your organisation brings to AI and where your organisation should spend the most time to extract the most value.
Commercial success: The language of business is money and business success is measured in the commercial achievement on the organisation. Data is an essential component in measuring business success. Business success metrics are quantifiable measurements that business leaders track to see if their strategies are working effectively. Success metrics are also known as key performance indicators (KPIs). There is no one-size-fits-all success metric, most teams use several different metrics to determine success. Establishing and measuring success metrics is an important skill for business leaders to develop so that they can monitor and evaluate their team’s performance. Data can be used to create a business score card, an informed report that allows businesses to analyse and compare information that they can use to measure their success. An effective data strategy allows businesses to focus on specific data points, which represent processes that impact the company’s success (critical success criteria). The three main financial statements that businesses can use to measure their success are the income statement, balance sheet, and cash flow statement. The income statement measures the profitability of a business during a certain time period by showing its profits and losses. Operational data combined/aligned with the content of the financial statements enable business to measure, in monetary terms, the key success indicators to drive business success.
Strategic efficacy: Data can also be used to assess strategy efficacy. If a business is implementing a new strategy or tactic, it can use data to gauge whether or not it’s working. If the business measured its metrics before implementing a new strategy, it can use those metrics as a benchmark. As it implements the new strategy, it can compare those new metrics to its benchmark and see how they stack up.

In conclusion, data is an essential component in business success. Data transformed into meaningful and practical knowledge and insights resulting from transformative data engineering, analytics and data science is a key business enabler. This makes data a currency for the technology driven business. Companies that can harness the power of data are the ones that will succeed in today’s digital economy.

Data insight brings understanding that leads to actions driving continuous improvement, resulting in business success.

Business Driven IT KPIs

April 30, 2018August 21, 20182 Comments

KPIs (Key Performance Indicators) are a critical management tool to measure the success and progress of effort put in towards achieving goals and targets – to continually improve performance.

Every business set their specific KPIs to measure the criteria that drive the business success – these vary from business to business. One thing every modern business has in common though, is IT – the enabler that underpin operational processes and tools used to commerce daily. Setting KPIs that measure the success of IT operations does not just help IT leadership to continuously improve but also proof the value of IT to the business.

Here are ten IT KPIs that matter most to modern business

1. % of IT investment into business initiative (customer-facing services and business units)
How well does the IT strategy, reflected in the projects it is executing, align with the business strategy? This metrics can help to align IT spend with business strategy and potentially eliminate IT projects for IT that does not align directly with business objectives.

2. % Business/Customer facing Services meeting SLAs (Service Level Agreements)
IT is delivering service to customers; these are internal to the business but can also be delivered external to the business’ client/customers directly. Are these services meeting required expectations and quality – in the eye of the customer? What can be done to improve.

3. IT Spend vs Plan/Budget
Budgets are set for a purpose – it is a financial guideline that indicates the route to success. How is IT performing against budget, against plans? Are you over-spending against the set plans? Why? Is it because of a problem in the planning cycle or something else? If you are over-spending/under-spending, in which areas do this occur?

Knowing this metrics give you the insight to take corrective actions and bring IT spend inline with budgets.

4. IT spend by business unit
IT service consumptione is driven by user demand. How is IT costs affected by the user demands by business unit – are business units responsible to cover their IT cost, hence owning up to the overall business efficiency. This metrics put the spotlight on the fact that IT is not free and give business unit manager visibility of their IT consumption and spend.

5. % Split of IT investment to Run, Grow, Transform the business
This is an interesting one for the CIO. Businesses usually expects IT to spend more money in growing the business but reality is that the IT cost of running the business is driven by the demand from IT users with an increased cost implication. Business transformation, now a key topic in every board meeting, needs a dedicated budget to succeed. How do these three investment compare in comparison with business strategic priorities.

6. Application & Service TCO (Total Cost of Ownership)
What is the real cost of delivering IT services and application. Understanding the facts behind what makes up the total cost of IT and which applications/services are the most expensive, can help to identify initiatives to improve.

7. Infrastructure Unit Cost vs Target & Benchmarks
How do you measure the efficiency of your IT infrastructure and how does this compare with the industry benchmark? This is a powerful metrics to justify ROI (Return on Investment), IT’s value proposition, IT strategy and the associated budget.

8. % Projects on Time, Budget & Spec
Is the project portfolio under control? Which projects need remediation to get back on track and what can be learned from projects that do run smoothly?

9. % Project spend on customer-facing initiatives
How much is invested in IT projects in the business for the business (affecting the bottom line) in comparison with customer-centric projects that impacts the business’ top line.

10. Customer satisfaction scores for business/customer facing services

Measure the satisfaction of not just the internal business units that consume IT services but also the business’ customer’s satisfaction with customer-facing IT services. Understand what the customer wants and make the needed changes to IT operations to continuously improve customer satisfaction.

In the famous words of Peter Drucker “What gets measured gets improved”, KPIs give you the insight to understand:

your customer
your market
your financial performance
your internal process efficiency
your employee performance

Insight brings understanding that leads to actions driving continuously improve.

Performance Improvement: Effective & Efficient

February 24, 2018March 11, 20181 Comment

Performance is simply the action taken or process followed in doing a task or function.

Performance improvement – the continuous driver to be better, to grow, to achieve great things!

Directly related to business performance is the ability to change the business processes for greater effectiveness and efficiency increasing productivity while terms like specialisation, standardisation comes to mind followed by measurement, data analysis, statistical analysis, root cause analysis and finally process control and quality control and the overriding metric – customer satisfaction.

Remember the saying by Peter Drucker: “What gets measured, gets improved”…

Measuring performance involves the ability to measure the effectiveness of an initiative or action as well as the efficiency in which it is achieved. Similarly performance improvement involves the enhancement of effectiveness while optimising the efficiency.

Effective: Success in delivering a desired or intended result.

Efficient: Achieving maximum productivity through optimal use of resources with minimum waste or expense.

Depending on your business and your situation you must select or develop key performance indicators (KPIs) to calculate the effectiveness and efficiency of your activities – for business this is usually calculated in monetary terms. Once you understand your current performance you can set KPI targets and work on improvement initiatives.

I found this flow on Pinterest that gives a great overview of the processes involved in enhancing effectiveness and efficiency to increase business performance summarised in 5 habits of the mind:

Know where time goes
Focus on outward contribution
Build on Strengths
Concentrate on selected area that produce outstanding results
Make effective decisions

Linking appropriate KPIs to this flow can measure progress and deliver improving results.

Performance Management

Performance (Effectiveness and Efficiency) can be influenced by various different factors – illustrated in the diagram below.

In using this diagram, a critical path (Shown in red above) can be drawn to improve performance in a specific area i.e. staff performance.

First performance is defined,
then measured to get a specific result (and understanding the impact it has overall).
Understanding the results to determine which key skills, abilities and competeencies or lack there-of are contributing to the specific performance.
Talent is needed to deliver performance – talent skills, abilities and competencies can be trained or recruited.
Engagement is key – involve, motivate and empower your talent to respond and interact with the business – engagement brings a sense of happiness, which is a great motivator for creativity and performance.
And the cycle repeats in never ending quality improvement loop.

This methodology can be adapted and used for performance improvement in any area of the business value chain.

Remember performance improvement is always reflected in the customer satisfaction. Satisfied customers engage with the business recurrently – hence revenue growth!

Let’s Talk – renierbotha Ltd specialises in the performance improvement of business and IT operations. Are you looking to achieve your goals faster? Create better business value? Build strategies to improve growth? We can help – make contact!

Case Study – Renier Botha’s Game-Changing Leadership at Systems Powering Healthcare (2015-2017)

December 1, 2017May 28, 2024Leave a comment

Posted on November 1, 2017

Introduction:
Back in December 2015, Renier Botha stepped in as the big boss—Managing Director and Head of Service at Systems Powering Healthcare, aka SPHERE. This place is all about delivering top-notch IT services and infrastructure to a whole lot of NHS healthcare workers—over 10,000 to be exact. Let’s dive into how Botha totally revamped SPHERE in his two year tenure, turning it into a powerhouse through his sharp strategic moves, cool innovations, and rock-solid leadership.

Facing the Music and Setting Goals:
Right off the bat, Botha was up against some big challenges. He had to shift SPHERE from an old-school cost-plus model to a snazzy commercial-service-catalogue model while also trying to attract more clients. His main to-dos were to get the company on stable footing, map out a strategic game plan, and make sure they were all about putting customers first.

Key Moves and Wins:

Strategic Master Plan: Botha wasted no time. Within the first three months, he whipped up a six-year strategic plan that laid out all the key investments and milestones to get SPHERE to grow and thrive.
From Startup to Star: Managing a team of 75, Botha steered SPHERE from its startup phase to become a well-known medium-sized business, hitting their three-year targets way ahead of schedule – in just two years!
Tech Makeover: One of his big programmes was pouring £42M into beefing up SPHERE’s tech – think better networks, better hosting, the works. This move was all about making sure they could keep up and stay ahead in the long run.
Service Delivery Shake-up: Botha brought in a new, customer-focused operating model and rolled out Service-Now to up their tech game. This not only made things run smoother but also saved a ton of money, giving them a killer return on investment.
Financial Growth: Under his guidance, SPHERE’s dough rolled in 42% thicker thanks to smart mergers, acquisitions, and raking in new clients. They also managed to save the NHS about £3m a year with their shared service gig.
Cost-Cutting Genius: He managed to slash the “Cost per IT User” by 24% in two years, showing just how much bang for the buck SPHERE could offer.
Big Win: Thanks to a revamped service catalogue, SPHERE nailed a whopping £10m contract to provide IT services for Northumbria Healthcare NHS Foundation Trust.
Happy Campers: Botha didn’t just focus on the numbers; he also built a workplace where people actually wanted to stick around. Employee retention jumped from 82% to a whopping 98% by the end of his run.

Conclusion:
Renier Botha’s time at SPHERE shows just what can happen when you mix visionary leadership with a knack for making smart moves in healthcare IT. He not only met the big challenges head-on but also made sure that SPHERE became a go-to example of how IT can seriously improve healthcare services. His story isn’t just about a job well done; it’s about setting a whole new standard in the industry.