Sunday, June 12, 2011

Why a Good Product Owner Will Increase Revenue at Least 20%


Maurits Rijk did a Monte Carlo simulation of a project where implementation is not prioritized (blue) versus prioritized by return on investment (green). Value delivered is the region under the curve.

Interestingly, prioritizing only by business value (orange) and not accounting for cost lowers earned value but not as much as having an unprioritized backlog. Also doing the easiest stories first (red) delivers more value faster, even better than return on investment in this analysis. Whether a customer would like this strategy is open to question.

If you have a $100M company, a good product owner team can increase your revenue by over 20%. With 20M dollars you can afford the best product owner team on the planet.

We knew this previously from data published in the book "Software by Numbers" yet more than half the Scrum teams in the world have poor user stories - i.e bad product owners. Why do managers leave so much money on the table?

Maritz helped us do the analysis on a study of hyperproductive distributed/outsourced teams where each team is half onshore and half offshore. The simulation reflects a typical situation for his high performing teams.

3 comments:

kennethvr said...

hi,

I think there is a small error. At the end, you say that half of the team is onshore... I suppose the other half is off-shore?

Uersu said...

Hello,
this is an interesting little article. But how exactly does the graph support the following statement "a good product owner team can increase your revenue by over 20%"?

The graph shows the "unprioritized" curve lagging behind, but obviously at the end it catches up. So, is 20% the average of more value that the prioritized implementation has at the ends of the different sprints?

Jeff Sutherland said...

A good product owner ships early and generates revenue. He also then gets feedback to change the remaining backlog to produce higher value at project end if the customer wants this.