CEO — Your Technology is an investment and needs to be treated like one.

If you are the CEO of a large organization and you have moved to an Agile delivery you may have over 800 individual teams and with each team typically costing around $1 million annually, you have around an $800 million dollar investment in your product development and supporting technology. And if you are like most agile organizations, you have not developed any consistent way to identify value nor track that value to ensure you are obtaining an ROI consistent with organizational financial goals.

Here are some of the key components that impact the ROI of your technology investment:

1. Type of software product being developed — Known markets with proven customer demand will provide a higher ROI than speculative products seeking to create a new market. But as any investment professional will tell you, you need both to maximize your ROI, the upside on the speculative can be significant.

2. Development costs — Technical debt is probably number one of the list of costs that negatively impact your internal ROI. When your technology leaders and teams tell you they have lots of tech debt that needs to be dealt with, listen to them and make the investments necessary to clean up the tech stack. What you gain in productivity and quality will be more than enough to justify the cost.

3. Time to Market — This is probably one of the biggest selling points for Agile, yet a large majority of companies still have legacy release cycles and essentially run their old waterfall projects in two-week cycles with long lead times to release anything to the customer. Making investments in your tech stack, especially DevOps and end-to-end automation will move you in the right direction. Another key area of change involves developing a better way to identify and quantify value. My QValue Product and Portfolio scoring model does that for you.

4. Pricing Model — How you price your products is a direct determiner of ROI via revenue generation. We can oftentimes be lulled into a false sense of security if we have high sales volume but don’t have a handle on operational costs, which will squeeze margins and ROI. With low margins, the focus on ensuring we are investing in the most valuable outcomes is important for sustainable profitability.

QValue is a scoring model that develops two key aspects of value management for your business:

1. Value Identification — Provides a score with associated quantifiable outcomes.

2. Value Realization — Provides evidence of the quantifiable outcomes we identified as goals for the products, features, or enhancements to our operational support.

By quantifying the outcomes, we seek, we can place real dollars, productivity improvements, etc… that can provide us the ability to track the outcomes of our investments. No one can continue to make investments in something without making something in return, you eventually run out of capital.

In this scenario, with $800 million invested in your Agile teams, you should be able to make visible anywhere from a 20–35% return on investment (or somewhere in the vicinity of $240 million)

Stop treating your technology efforts as a cost center, they are an investment vehicle and should be treated as one.

If you can’t quantify the outcomes of your investment, talk to me about how QValue can create that transparency and bring clarity and vision to your teams.

www.soundagile.com/qvalue or contact me directly at michael@soundagile.com