A Developer's Guide to Business Value

Glenn Stovall

“Try not to become a man of success, but instead become

a man of value.”

Albert Einstein

The importance of Business Value:

● Many developers don't understand business value.

● This lack of understanding leads to focusing project plans, conversations,

time & effort the wrong things.

● If you own a software business, you could spend countless hours doing work

that doesn't actually move the needle for your business. Your business lives

and dies on the value you provide to others.

● The amount of money you make is correlated to amount of value you provide.

.

Who Am I? ● Glenn Stovall - Developer, Consultant

● Independent for over 3 years, in leadership

positions for 6.

● Written guides on pricing & estimating value

of software projects.

● My revenue literally lives or dies based on

the value I provide.

What you'll Learn today:

#1: What Is Business value?

#2: Things you think are valuable but aren't.

#3: Ways you can increase your value.

#1: What is business value?

● Value is a subjective opinion based on the worth of a product or service. In

an employment situation, your 40 hours a week is your "service".

● The greater the difference between the price of something and the value

provided, the greater the value of that transaction.

● More art than science.

● Different than personal value. B2B sales are fundamentally different than

B2C.

Ways to Define Value

● tangible value: i.e. Increases in revenue, reduction in costs

● intangible value: i.e. risk mitigation, increased opportunity, etc.

Tangible Outcomes * Expected Duration of Outcomes +

Intangible Outcomes * Emotional Impact of Intangibles +

Peripheral Benefits + Variables Positively Affected

-------------------------------------------------------------------------- = VALUE

Fixed Investment Required

Source: Value-Based Fees by Alan Weiss

Alan Weiss’s Value Formula

“Price is What You Pay. Value is What You Get.” -- Warren Buffet

Examples of tangible business value:

● Increase in revenue.

○ Number of sales.

○ Value of sale.

○ Lifetime value of a customer.

● Reduction in costs.

○ Reduction of employee time.

○ Prevention of customer loss /

churn.

Examples of intangible business value:● Risk mitigation. (by far the most important)

○ Guarantee.

○ Reputation / Trust.

● Emotional impact.

○ Customer Support.

○ Happy boss / removal of stress.

● Increased opportunity.

○ More optionality.

○ Freeing up time & resources.

● Any other metric important to the buyer.

○ No. of Users, Daily Activity, Investor Interest

Here are some things you may think provide value, but don't:

● The years of experience you have.

● Your Idea for the “Next Big Thing.”

● Which programming language you use.

● The number of hours spent on a project.

● The number of features your app has.

● The extendability of your code.(sometimes)

● Using the most 'cutting edge' technology.

● Building a custom solution instead of using something 'off-the-shelf'.

Here are some way you can increase value:

● Deliver bug-free, maintainable code.

● Only make commitments you can stick to.

● Provide clear communication.

● Provide documentation & training.

● Use experience to guide technology choices,

not personal wants or tastes.

● Work on increasing the speed of delivery w/o

sacrificing quality.

● Build force multipliers.

#3: Ways You can Increase Value (cont’d)

● Reliability of code: fewer bugs = QA time reduction, reduced risk.

● Good communication: prevents misunderstandings, reduced risk.

● Speed of Delivery: (increased opportunity, and money now > money

later.)

● Guarantees: (huge risk of reduction for project owner).

● Building tools that are a ‘force multiplier’: i.e. Allow skilled workers to

do more of the same job.

Example from my job. How would you

differently price a project?

What should the price be for a project, but...

● delivered faster?

● including guidance & support?

● including documentation & training of other

team members?

● with 30-day support guarantee?

● with 100% money back guarantee?

In conclusion:

● Understanding business value allows you

to better communicate w/ bosses, PMs, and

stakeholders.

● Understanding value helps you deliver

more value / be more valuable.

● If you want to make more, you need to ask

‘how can I worth more’?