3 min read

Should scrum teams track their time?

By Amanda Babb on Feb 5, 2021 8:03:49 AM

Blogpost-display-image_Should scrum teams track their time-"How many hours are in a Story Point? Pink. Because penguins don't like ice cream." -Amanda Babb in every conversation about hours and story points. 

While I use this example as a cheeky way to say the two methods of estimation (hours and story points) don't coincide, the reality, of course, is much more complex. Business and product teams typically think in terms of dates and schedules. Development and operations teams typically think in terms of level of effort. That's not to say story points and dates do not nor will ever coincide, it's a matter of how to speak each other's language. 

What is a Story Point?

Our Dragon of the West, Christopher Pepe, explained it well in a previous post. Humans are terrible at numbers. That's why we have so many ways to express things without using numbers. For example, I have Big Dog (Leonard) and Tiny Dog (Howard). Tiny is small in comparison to Big Dog. However, at 50 pounds, he's not small compared to, say, a Chihuahua. This is what we call relative estimation in the agile world. This thing is larger or more complex than the other thing over there: it will take a larger level of effort to complete. 

Computers, on the other hand, are wonderful at numbers. It's part of the reason we invented them. In Jira Software, a story point is simply the numerical expression of a relative estimate. When we need to understand the level of effort of more than one thing, we aggregate the relative estimate into a total level of effort. This is known as the commit in a velocity chart. As we complete work, we burn down the level of effort until we understand what's left. At the end of a sprint, we determine whether we met our commit or not. The completion of the work over several sprints determines our velocity. From there, we can reasonably predict the level of effort we can complete during a sprint. 

Why can't a team estimate in hours? 

It's not a matter of can't. At Praecipio Consulting, we've seen many teams succeed well in estimating their level of effort in hours. However, this involved a significant effort to run time studies on routine tasks for the team. In a time study, an outside party will watch a person do a task and time it. Then watch them do it again...and again...and again. Then, the outside party watches another person perform the same task several times. The outside observer will continue with this until they feel they have sufficient data to make a reasonable assumption (read: average) of the time it takes to complete said task. Rinse and repeat for all tasks all personnel complete in a day and through out the week. 

Estimating in hours works well in repetitive work environments. The same tasks must be completed the same (or similarly enough) throughout the day and week. However, when we're thinking about software development, we all know this is rarely the case. What may seem like a simple feature request can become a significant effort when looking at how the new feature interacts with the rest of the services, modules, or products. Yes, we've done something similar before and it took four hours. But what has changed since the last time we implemented something similar? What else have we deployed? Did we change our methods? Are we integrating this with another system? Have the APIs been updated or changed? How many releases have been performed since the last time we did this? 

The shoulds and shouldn'ts of tracking time in Scrum

Why are teams being asked to track time when they estimate and understand level of effort in story points? In a word, Money. Under complex financial and regulatory practices, most businesses report quarterly earnings to regulatory bodies and markets. The best way a business has to gather and report this information is through complex financial systems that aggregate data from inputs across the organization. One of the more critical inputs? Time tracking. So how should we and shouldn't we track time in a scrum team? 

  • You should establish the minimum time guideline such as 15-minute or 30-minute increments
  • You should not expect accuracy down to the minute for a given task
  • You should expect the team(s) to continue to estimate their level of effort in story points
  • You should not make the team switch to hours to estimate their level of effort
  • You should centralize where the team should track time
  • You should not expect the user to log in to multiple tools to track time
  • You should download our Lean Budgets White Paper which details different ways of managing the data and provides a solution in Jira Align
  • You should not expect to implement a fundamental change in financial tracking and reporting across your organization without help

At Praecipio Consulting, we have implemented several solutions to this problem across industries and with all sizes of organizations. For help regarding how your teams can balance time tracking, scrum, and financial reporting, feel free to reach out to us! 

Topics: blog plan process scrum lean-budgets agile
6 min read

How Jira Align Helps Enterprises Embrace Lean Budgets

By Amanda Babb on Jul 1, 2020 2:30:21 PM

2020 Blogposts_Lean Budgets in SAFe and Jira Align

Hopefully, you've followed my posts and webinars on Portfolio for Jira, as well as how to manage Lean Budgets in Atlassian and its ecosystem. We released a White Paper providing a solution for mid-sized organizations that have embraced SAFe® and want to also incorporate Lean Budgets concepts within the Atlassian technology stack. After all, one of the most critical pieces of adopting an agile mindset is to break the cycle of traditional Project Cost Accounting. 

Project Cost Accounting and agile frameworks (regardless of the flavor) are in direct conflict with one another. Moving teams to work in a Project Cost Accounting model does not work in agile frameworks. Instead, we move work to teams. When we scale agile, regardless of the model, all we're doing is connecting the overarching strategic initiatives to execution. Also, we're all still trying to figure out how to understand the costs associated with the work. SAFe® offers the seductive allure of Lean Budgets. Simply define the Enterprise budget and allocate it to the Portfolios to do what they will. Wait, what? Just hand over $100,000,000 to a Portfolio for the year and trust that they'll make the right decisions? As Yogi Berra once said, "In theory, there's no difference between theory and practice. In practice, there is." 

Lean Budgets Guardrails

While the Atlassian tools and ecosystem are not intended to be the financial system of record for any organization, one key part of Lean Budgets, which is called out several times in the Lean Portfolio Management competency in SAFe® 5.0, is to provide Guardrails. The four Guardrails are as follows: 

  1. Guiding investments by horizon
  2. Applying capacity allocation to optimize value and solution integrity
  3. Approving significant initiatives
  4. Continuous Business Owner engagement

© Scaled Agile, Inc.

The Atlassian tools, and specifically Jira Align, are uniquely positioned to provide the Guardrails for Lean Budgets. By adhering to the SAFe® Core Values of Transparency and Program Execution, Jira Align provides complete aggregation from the corporate strategy, including Mission, Vision, and Values, all the way through team-level execution and back up again. This includes Allocation, Estimate, and Actual comparisons based on the Program Increment. Mind-blowing, right? 

While you will have to wait for the full solution (details are coming soon), here are a few tips to assist you in your journey. 

Create a Strategic Snapshot

Your organization has a well-established Mission, Vision, and Values. They're likely plastered all over your organization's intranet or when in an office, you'll find them displayed every 25 feet down the halls. Add these into the Enterprise Room in a strategic snapshot that aligns with your fiscal year. Break down the Mission, Vision, and Values into long-term, annual goals and establish your Strategic Themes. Add those into Jira Align to start tying execution to these items.

Screen Shot 2020-06-24 at 10.03.55 PM

Themes are an entity in Jira Align. Think of them as an Issue Type that drives the rest of the hierarchy. However, one of the key strengths of Jira Align is ensuring, at every level, the entity is tied to execution. In SAFe® the key execution entity is the Program Increment (PI). Even if a Theme straddles several PIs, you must commit to the timebox of the PI. This drives the entire organization to say, "This thing is important to us, and this is how and when we plan on executing it." While at first, you may have no idea, you can always go back and add the information after the fact. 

Determine Theme Allocation for the PI

While you may not know the exact dollar amount while planning the budget, you've likely done the SWAG for the fiscal year. SWAG, of course, stands for Scientific Wild Ass Guess. As you're determining your Themes and Portfolio Epics for the Fiscal Year (or just your Themes), you will likely have a high-level idea of how much of the pie you will allocate to each Theme. Since they are also ranked by highest to lowest priority, the allocations should follow suit as well. If a Theme is ranked number one, it should have a higher percentage allocated than, say, Theme number 10. Theme allocations can be updated as your organization moves through the budget cycle. Jira Align will do the calculation for you as you determine the overall budget. 

However, to truly succeed at Lean Budgets in Jira Align, you must determine the budget for the PI. Again, as you're working through your organization's budget cycle, you can start with your SWAG. For example, if you have an overall budget of $100,000,000 for the fiscal year and your PI cadence puts you at 12-week PIs, then allocate $25,000,000 per PI to start. By tagging your Themes with the PI(s), you can start to understand the dollars, as well as the overall level of effort, needed for a specific PI. As you get closer to final budget approval, continue to refine these numbers. 

Determine a Blended Rate

While I've proposed a series of different methods for translating Story Points to dollars either via Cost Per Story Point or Total Cost of Solution or Monetized Opportunity Cost, the fact remains that we live in a time-based world (sigh). And our best method for translation still comes from determining a Blended Rate. In Jira Align, once you've determined the Blended Rate for the PI, you simply enter it into a field and the magic starts to happen. But how do we determine a Blended Rate? 

Remember, a fixed Team equals a fixed cost. Take the combined salary of the team members, divide it by workweeks, then divide it by work hours. You can skip a step if you remember the exact number of working hours are in a year, but that number will vary based on your geolocation. You can always adjust as needed based on PTO policies and holidays to determine the Blended Rate. From there, Jira Align takes over once you're in execution mode. 

Budget, Estimate, and Actual

In the Portfolio section of Jira Align, you can quickly access a report called Investment versus Actuals. Wait, what? It's that simple? I click a button, and I can compare plan, actual, and variance? That can't be right. 

To be honest, it truly is that simple. However, if Teams aren't fostering good data in Jira Software and if RTEs, Program Owners, Epic Owners, and the like, aren't making the connections in Jira Align, you will end up with junk. This leads to frustration, as well as low adoption levels of the solution. Take a deep breath, and remember Principle #1 of SAFe ®: Take an economic view. Just like any other tools your organization uses, you must adhere to the process and commit to the facilitation of that process within the tools. 

Based on the historical Velocity of the individual Teams in a Program, the Blended Rate, the Teams' Burn Hours, and the Theme Allocation, Jira Align will calculate the Estimate (original estimate at the start of the Program Increment) as well as the Actual (actual completed stories in each of the Sprints). This is where the Team discipline comes in. If Teams do not estimate work, move cards across the board, and close Sprints, this fails. You cannot calculate the roll-up, or if you do, it's wildly inaccurate. Thus, the comparisons are out of whack, and when compared against the financial system of record, you find that you've spent your time and money on Theme number 10 instead of Theme number one. 

Want to know more? 

In the coming days, Praecipio Consulting will release a White Paper detailing the solution to managing Lean Budgets with Jira Align. We look forward to your questions and feedback. Lean Budgets is still an emerging concept, and while we have a solid solution, we'd love to know how your organization is currently managing or where you are in your digital transformation journey with the Atlassian tools.

 

Topics: scaled-agile lean-budgets jira-align safe
8 min read

Project Cost Accounting in Agile | Part 2 of 3

By Amanda Babb on Apr 5, 2019 12:00:00 PM

Second of Three

This is the second of a three series blog. When we last left our intrepid writer, we learned that the secret of Project Cost Accounting in Agile is Nothing. Fixed Teams means Fixed Costs. Fixed Teams means predictable velocity. In Kung Fu Panda 2, however, there is a danger lurking on the horizon: Lord Shen (a peacock) believes in a prophecy which leads him to destroy all pandas in China. He also yearns to regain the respect of his family by conquering China with a new weapon. In many organizations, Lord Shen is the dreaded spreadsheet: the ability to modify project costs based on resource leveling and moving Teams to the work.

Embrace the Past

Let me make this clear: tools are only as effective as the hand that wields them. Lord Shen took gunpowder, used in the making of fireworks, and developed cannons to defeat China. Something that was devised to bring joy to the masses was changed into something destructive which, had it not been for the fortitude of Po and the Furious Five, could have ended disastrously for China. Let's take a look at why project cost accounting can lead us to further victory by embracing our past while securing our future.

The Agile Team Seeks Balance

The Agile Team seeks to maintain balance: deliver the right functionality at the right time producing as much value for the business as possible. Scrum Master, Product Owner, and Team must work together to understand and provide the value. When business value is monetized, it becomes an easy value to track as a KPI, but hard to predict. What did we get for the $260,000 of labor costs we incurred for the team? In fact, what did we get for the $2.6m of costs we incurred for the Agile Release Train (Team of Teams)? If we were able to make revenue on the effort, then the math is simple: subtract the revenue from the costs and we see our net gain or loss. But we all know that actual financial management in any organization is decidedly more complicated. At least in the United States, there are tax breaks for Research and Development, differences between capitalizable and operational funding, and other financial aspects that many people who are much smarter than me spend their careers managing. Is there a way of reconciling our past models with our current and future state of agile? Can we gain the inner peace Master Shifu states Po (and by proxy, the audience) have yet to attain?

PI Boundary

There has been a debate raging on in the agile community around this concept for a few years. While I do not have all the answers with respect to this topic, I have a few ideas. One organization in particular comes to mind where this worked beautifully: a Value Stream with four Agile Release Trains (ARTs) was given their annual investment of $100m to be spread across seven Strategic Themes. The owners of each Strategic Theme came up with a series of initiatives and prioritized them against one another at each PI Boundary. Since Train costs are fixed at the Program Increment (PI) Boundary, if an initiative was completed, its cost was removed from the $100m pool. Any additional variables such as number of Sprints if an initiative was completed mid-PI were accounted for at the PI boundary as well. Simple, elegant, decentralized.

Lean Budgets

However, there was still the need to understand how much of that chunk of money remained at each PI Boundary and whether additional funds could be allocated to another Strategic Theme or another vertical within the company if money was left over. In Kung Fu Panda 2, Po, upon being confronted with a pack of wolf bandits sees a symbol and flashes back to his youngest memories: he's seen the symbol before, but cannot grasp the importance of it. He only knows it's something to pay attention to. Much like when, in SAFe, we discuss the concept of Lean Budgets. We instinctively know this is something to pay attention to, but we still cling to project cost accounting as our method of reconciliation. Below is an example of Lean Budgets in SAFe. 

Project Cost Accounting in Agile past and future

https://www.scaledagileframework.com/lean-budgets/

Value Stream

The Lean Budgets concept strives to balance governance and empowerment while providing a simple funding model for a given Value Stream. A Value Stream is the organizational structure that provides a continuous flow of value through solutions to the customer (aka the Execution Engine). For example, a Value Stream can be a factory or a hospital. It can also be a development organization - as long as it is focused around solution delivery to a customer. Many organizations struggle to define Value Streams and instead loosely group teams together under a resource manager or other traditional reporting structure and call it an Agile Release Train. While effective on the surface, it complicates coordination across efforts. It's not until a common solution and purpose is defined that the organization can move forward. Lord Shen, as a common enemy across districts, aligns the Valley of Peace and Gongmen City. The teams come together with the needed resources to eventually defeat Lord Shen, but not without trials and tribulations. It is not easy to align an organization to value delivery just as it was not easy to eventually defeat Lord Shen.

If Teams are Fixed, Costs are Fixed

As I stated in the previous post, if Teams are fixed, costs are fixed. If Trains are fixed, costs are fixed. The only funding needed to produce a solution is to cover the cost of the Train. And the cost of the Train should be predictable through a PI. Assuming a single Train in the Value Stream, if each project team costs $260,000 per year, then a Train with 10 teams costs $2.6m per year. Divide the cost of the Train by the number of Sprints in the year (26), then multiply by the number of Sprints in the PIs (typically five), $50,000 is needed for the Train in the PI. Provide the Value Stream $50,000 and watch them work.

Once a Value Stream is defined, Lean Budgets then states it is important to "Empower Value Stream Content Authority." Storming Ox and Croc sit, defeated, in Gongmen City prison. It's only when the Furious Five and Po join them and demonstrate their ability to win a single battle that the two become empowered enough to try and save their city. Before this initial battle, there was no plan other than escaping Lord Shen. The Stretch Goal was to also destroy his cannon. There was no meticulously created work breakdown structure. There were no step-by-step dependencies. There was a single solution the Train needed to implement: learn Lord Shen's plan, escape Lord Shen, regroup to create a plan to defeat him. Our Train (Storming Ox, Croc, the Furious Five, and Po) completed their objective and stretch objective simply by understanding their value and executing on a single purpose.

Project Cost Accounting Starts with the Goal

If, as an organization, we instead try to use project cost accounting, we hinder the Train's ability to provide value. Project cost accounting starts with the goal: defeat Lord Shen. To defeat Lord Shen, we need all three Kung Fu Leaders from Gongmen City: Thundering Rhino, Storming Ox, and Croc. If we have all three, we can defeat him in a day and move onto the next project...er...battle. Three resources for eight hours = 24 resource hours. At $50/hour (our typical cost per hour), $1200 to defeat Lord Shen. This leaves the Furious Five and Po to defend a village from wolf bandits who, in fact, are Lord Shen's minions. The solution does not address the problem as a whole: Lord Shen is the root cause of the battles thus causing the Teams to move to the work. As we move through the story, it took the entire Train to defeat Lord Shen in just one battle and had Po and the Furious Five team members had content authority (knowing what Master Shifu knew about Lord Shen), they might have been able to save Thundering Rhino.

Evidence = Value Delivery Priorities

There are three other parts of Lean Budgets we haven't addressed: Provide objective evidence of fitness for purpose; Approve Epic-level initiatives; Exercise fiscal governance with dynamic budgeting. Let's take objective evidence first. The System Demos and DevOps model addressed in the Program Level of SAFe provides the organization the ability to provide objective evidence. Is it working code in production with dark features toggled on? Yes. Value has been delivered to the customer. Did our intrepid warriors escape? Yes. They were able to escape Lord Shen. However, what happens if value was not delivered? What happens if it takes another PI to deliver the solution? Taking the foundational approach from the project cost accounting model, we have to fund the Train for a second PI. Instead of $50,000 to deliver the solution, it is now $100,000 ($50,000 per PI times two PIs). However, if the cost of the Train has already been accounted for, this is a simple shift in priority, not a movement of funding. You don't have to find another $50,000. Instead, you negotiate whether it makes sense to continue the effort or abandon it based on other value delivery priorities. The path to inner peace starts to become clear.

Approve Epic-Level Initiatives

This ties beautifully into the next part of Lean Budgets: Approve Epic-level initiatives. As we established, the funding is there. If after evaluating the fitness for purpose, the choice is to abandon the effort, the Trains and Teams do not disband. Instead, the work changes as priorities shift toward the next Epic-level Initiative - moving the work to the Teams and Trains. The costs remain constant: only "how" changes, not the "what". The Epic-level initiative is still to defeat Lord Shen: it is the approach that changes for Po and the Furious Five ultimately giving them the flexibility to deliver the victory to China. The Teams and Trains shift to the new strategy and work toward the solutions continue.

Fiscal Governance with Dynamic Budgeting

Lastly, we address the final step on the path toward Inner Peace: Exercise fiscal governance with dynamic budgeting. Much like achieving inner peace, this is not something that is achieved quickly. The recommendation from SAFe is this is addressed semi-annually whereas project cost accounting re-evaluates every work effort once complete. If the effort is small (e.g. 1 month or two Sprints), the allocation of funding to the Team or Train must be evaluated off-cadence meaning mid-sprint or mid-PI. Depending on the internal procurement procedures, this can become a Herculean effort for Business Owners, Epic Owners, and oft times, the Team or Train. It is an unnecessary distraction and thoroughly disrupts the execution. Remember the Kung Fu Leaders of Gongmen City. The first battle with Lord Shen was lost when defined to a specific Team without the proper resources and an unrealistic estimate of the level of effort. Subsequent battles also proved project cost accounting failed the Team: the Furious Five were imprisoned, Po was injured and near death only to be saved by a soothsayer showing him the truth of his past.

Using Agile to Secure the Future

Po reached Inner Peace by embracing the tragedy of his past and letting go. However, we have to remember the lessons we've learned throughout the story. Understanding our past makes us better prepared to embrace our future and win battles. Project cost accounting is a great model when running an organization that is aligned to cost centers. But by realigning cost centers to Value Streams, the burden of project cost accounting is lessened and planning processes can become more efficient. When aligning to the quintessential tenet of agile, trust, you, too, can achieve inner peace.

Topics: accounting scaled-agile roi program-increment lean-budgets project-management

Praecipio Consulting is an Atlassian Platinum Partner

This means that we have the most experience working with Atlassian tools and have insight into new products, features, and beta testing. Through our profound knowledge of Atlassian environments and their intricacies, we can guide your organization as you navigate these important changes.

atlassian-platinum-solution-partner-enterprise

In need of professional assistance?

WE'VE GOT YOUR BACK

Contact Us