In the discussions around #NoEstimates, it's finally dawned on me - after walking the book shelf in the office - the conversation is split across a chasm. Governance based organizations and non-governance based organizations.
Same is the case for product development organizaitons. Those producing a software product for sale or providing a service in exchange for money. There are governance based product organizations and non-governance based product organizations.
I can't say how those are differentiated, but there is broad research on the top of governance and business success using IT. The book on the left is a start. In this book there is a study of 300 enterprises around the world, with the following...
Companies with effective IT governance have profits that are 20% higher than other companies pursuing similar strategies. One viable explanation for this differential is that IT governance specifies accountabilities for IT-related business outcomes and helps companies align their IT investments with their business priorities. But IT governance is a mystery to key decision makers at most companies. Our research indicates that, on average, only 38% of senior managers in a company know how IT is governed. Ignorance is not bliss. In our research senior management awareness of IT governance processes proved to be the single best indicator of governance effectiveness with top performing firms having 60, 70 or 80% of senior executives aware of how IT is governed. Taking the time at senior management levels to design, implement, and communicate IT governance processes is worth the trouble—it pays off.
IT Governance is a decision rights and accountability framework for encouraging desirable behaviours in the use of IT. And I'd add the creation of IT, IT products, and IT services. Since IT is a broad domain, let's exclude development effort for things like games, phone apps, plugins. and in general items that have low value at risk. This doesn't mean they don't have high revenue, but the investment value is low. So when they don't produce their desired beneficial outcome, the degree of loss is low as well.
Asessment of IT Governance focuses on four objectives:
- Cost effectiveness of IT
- Effective use of IT for asset utilization
- Effecrive use of IT for growth
- Effective use of IT for business flexibility
In all four, Weill and Ross provide guidance for assessing the capabilities of IT. In all four Cost is considered a critical success factor.
Without knowing the cost of a decision, the choices presented by that decision cannot be assessed. So when we hear #NoEstimates is about making decisions, ask of those decisions are being made in a governance based organization?
Then ask the question who has the decision rights to make those decisions? Who has the need to know the cost of the value produced by the firm in exchange for that cost. The developers, the management of the development team, the business management of the firm, the customers of the firm?
The three dependent variables of all projects are schedule, cost, and technical perfomance of produced capabilities (this is a wrapper word for everything NOT time and cost). The value at risk is a good starting point for deciding to apply governance processes or not. If you fix one of these variables - say budget (which is a place holder for cost until the actuals arrive), then the other two (time and technical) are now free to vary. Estimating their behaviour will be needed to assure the ROI meets the business goals. In the governance paradigm, these three dependent variables are part of the decision making process. Not knowing one of more puts at risk the value produced by the project or work effort. It's this value at risk that is the key to determining why, how, and when to estimate.
What are you willing to loose (risk) if you don't need to know when you'll be done, or what you'll be able to produce on a planned day, or what that will cost, or determine if the ROI (return on investment), ROA (return on asset value), or ROE (return on equity) to some level of confidence to support your decision making - then estimating is a waste of time.
If on the other hand, the firm or customers you work for writing software in exchange for money have an interest in knowing any or all of those answers to support their decision making, you'll likley going to have to estimate, time, cost, produced capabilities to answer their questions.
It's not about you (the consumer of money). To find out who, follow the money, they'll tell you if they need an estimate or not.
