Features and ROI

Features and Business Case

The last blog post was about how we justify the project and the business case from an agile perspective along with a study from The Standish Group.  The reason attaching the business case to the product backlog, or in the case of conventional project management specific requirements, is so we have a prioritization of the feature set that makes sense, specifically, connected to the value brought to the customer and by extrapolation to the organization.

Customer Features Use

In fact, the results of a study found in Agile & Iterative Development – A Manager’s Guide by Craig Larman shows that 45% of the features are never used. The graphic further details the actual use of features as illustrated below[1].


Customer Feature Use

Customer Feature Use


Value Equation and Feature Use

This means, the company took time, spent money and accepted additional risk to develop a feature that the customer will never use.  The cost incurred to develop features that are not used, must be covered by the product features used.  A simple equation for value is demonstrated below:


Rudimentary Value Calculation

Rudimentary Value Calculation


We see as the customer’s perceived benefits are based upon the feature content or how well the product meets their needs.  The cost is the product cost.  The product cost is based upon the material and labor cost, but also on the profit margins on the product the company must make to remain viable.  Features not used by the customer, are not valued by the customer and do not add to the PerceivedBenefits.  However, the Cost portion of the equation goes up based upon the money spent on developing additional features.  So the development of additional features is pointless and adds cost that the value proposition to the customer will not desire to support, thereby lowering the Value equation for the product.


Conclusion: Value, Features, and ROI

Using the ROI calculation to prioritize the individual features, whether for agile or for conventional projects is important as this streamlines the value proposition ensuring the best value to the customer and return on the investment for the company doing the development work.  As we can see, adding and paying for features not used erodes the value equation and that is not in the best interest of the customer or the company.

[1] Larman, C. (2004). Agile and iterative development: A manager’s guide (p. 57). Boston, MA: Addison-Wesley

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