Technique Summary: BABOK 10.7 and 10.8 and Agile 7.4
By Grant Warden
Below is a summary of Technique 10.7 Business Cases and 10.8 Business Model Canvas from BABOK version 3 and Technique 7.4 Job Stories from the Agile extension to the BABOK guide version 2.
Technique 10.7 – Business Cases
Purpose- A business case provides a justification for a course of action based on the benefits to be realized by using the proposed solution, as compared to the cost, effort, and other considerations to acquire and live with that solution.
Description- A business case captures the rationale for undertaking a change. A business case is frequently presented in a formal document but may also be presented through informal methods. The business case provides sufficient detail to inform and request approval without providing specific intricacies about the method and/or approach to the implementation. A business case is used to:
- define the need,
- determine the desired outcomes,
- assess constraints, assumptions, and risks, and
- recommend a solution.
Need Assessment– The need is the driver for the business case. It is the relevant business goal or objective that must be met. The need assessment identifies the problem or the potential opportunity.
Desired Outcomes– The desired outcomes describe the state which should result if the need is fulfilled. They should include measurable outcomes that can be utilized to determine the success of the business case or the solution. Desired outcomes should be revisited at defined milestones and at the completion of the initiative (or initiatives) to fulfill the business case.
Assess Alternatives– The business case identifies and assesses various alternative solutions. Alternatives may include (but are not limited to) different technologies, processes, or business models. They will be affected by constraints such as budget, timing, and regulatory. The ‘do-nothing’ alternative should be assessed and considered as well. Each alternative should be assessed in terms of:
- Scope: defines the alternative being proposed. Scope statements clearly define what will be included and what will be excluded. Feasibility: The organizational and technical feasibility should be assessed for each alternative. It includes organizational knowledge, skills, and capacity, as well as technical maturity and experience in the proposed technologies.
- Assumptions, Risks, and Constraints: Assumptions are agreed-to facts that may have influence on the initiative. Constraints are limitations that may restrict the possible alternatives. Risks are potential problems that may have a negative impact on the solution.
- Financial Analysis and Value Assessment: The financial analysis and value assessment includes an estimate of the costs to implement and operate the alternative, as well as a quantified financial benefit from implementing the alternative. Value estimates are related back to strategic goals and objectives.
Recommended Solution – The recommended solution describes the most desirable way to solve the problem or leverage the opportunity. The solution is described in sufficient detail for decision makers to understand the solution and determine if the recommendation will be implemented. Measurable benefits/outcomes will be identified to allow stakeholders to assess the performance and success of the solution after implementation and during operation.
- Provides an amalgamation of the complex facts, issues, and analysis required to make decisions regarding change.
- Provides a detailed financial analysis of cost and benefits.
- Provides guidance for ongoing decision making throughout the initiative.
- May be subject to the biases of authors.
- Frequently not updated once funding for the initiative is secured.
- Contains assumptions regarding costs and benefits that may prove invalid upon further investigation.
Technique 10.8 – Business Model Canvas
Purpose– A business model canvas describes how an enterprise creates, delivers, and captures value for and from its customers.
Description– A business model canvas is comprised of nine building blocks that describe how an organization intends to deliver value:
|• Key Partnerships||• Value Proposition||• Customer Segments|
|• Key Activities||• Customer Relationships||• Cost Structure|
|• Key Resources||• Channels||• Revenue Streams|
These building blocks are arranged on a business canvas that shows the relationship between the organization's operations, finance, customers, and offerings. The business model canvas also serves as a blueprint for implementing a strategy. A business model canvas allows for the mapping of programs, projects, and other initiatives (such as recruitment or talent retention) to the strategy of the enterprise. In this capacity, the canvas can be used to view where the enterprise is investing, where a particular initiative fits, and any related initiatives.
Key Partnerships– Key partnerships frequently involve some degree of sharing of proprietary information, including technologies. An effective key partnership can, in some cases, lead to more formalized relationships such as mergers and acquisitions. The benefits in engaging in key partnerships include:
- optimization and economy,
- reduction of risk and uncertainty,
- acquisition of particular resources and activities, and
- lack of internal capabilities.
Key Activities– Key activities are those that are critical to the creation, delivery, and maintenance of value, as well as other activities that support the operation of the enterprise. Key activities can be classified as:
- Value-add: characteristics, features, and business activities for which the customer is willing to pay.
- Non-value-add: aspects and activities for which the customer is not willing to pay.
- Business non-value-add: characteristics that must be included in the offering, activities performed to meet regulatory and other needs, or costs associated with doing business, for which the customer is not willing to pay.
Key Resources– Resources are the assets needed to execute a business model. Resources may be different based on the business model. Resources can be classified as:
- Physical: applications, locations, and machines.
- Financial: what is needed to fund a business model, such as cash and lines of credit.
- Intellectual: any proprietary aspects that enable a business model to thrive, such as knowledge, patents and copyrights, customer databases, and branding.
- Human: the people needed to execute a particular business model.
Value Proposition– A value proposition represents what a customer is willing to exchange for having their needs met. The proposition may consist of a single product or service, or may be comprised of a set of goods and services that are bundled together to address the needs of a customer or customer segment to help them solve their problem.
Customer Relationships– In general, customer relationships are classified as customer acquisition and customer retention. Organizations interact with their customers in different ways depending on the relationship they want to establish and maintain.
Channels– Channels are the different ways an enterprise interacts with and delivers value to its customers. Some channels are very communication-oriented (for example, marketing channel), and some are delivery-oriented (for example, distribution channel). Enterprises use channels to:
- raise awareness about their offerings,
- help customers evaluate the value proposition,
- allow customers to purchase a good or service,
- help the enterprise deliver on the value proposition, and
- provide support. Understanding channels involves identifying the processes, procedures, technologies, inputs, and outputs (and their current impact), as well as understanding the relationship of the various channels to the strategies of the organization.
Customer Segments– Customer segments group customers with common needs and attributes so that the enterprise can more effectively and efficiently address the needs of each segment. An organization within an enterprise may consider defining and targeting distinct customer segments based on:
- different needs for each segment,
- varying profitability between segments,
- different distribution channels, and
- formation and maintenance of customer relationships.
Cost Structure– Every entity, product, or activity within an enterprise has an associated cost. Enterprises seek to reduce, minimize, or eliminate costs wherever possible. Reducing costs may increase the profitability of an organization and allow those funds to be used in other ways to create value for the organization and for customers. Therefore, it is important to understand the type of business models, the differences in the types of costs and their impact, and where the enterprise is focusing its efforts to reduce costs.
Revenue Streams– A revenue stream is a way or method by which revenue comes into an enterprise from each customer segment in exchange for the realization of a value proposition. There are two basic ways revenue is generated for an enterprise: revenue resulting from a one-time purchase of a good or service and recurring revenue from periodic payments for a good, service, or ongoing support. Some types of revenue streams include:
- Licensing or Subscription fees: the customer pays for the right to access a particular asset, either as a one-time fee or as a recurring cost.
- Transaction or Usage fees: the customer pays each time they use a good or service.
- Sales: the customer is granted ownership rights to a specific product.
- Lending, Renting, or Leasing: the customer has temporary rights to use an asset.
- It is a widely used and effective framework that can be used to understand and optimize business models.
- It is simple to use and easy to understand.
- Does not account for alternative measures of value such as social and environmental impacts.
- The primary focus on value propositions does not provide a holistic insight for business strategy.
- Does not include the strategic purpose of the enterprise within the canvas.
Technique 7.4 – Job Stories
Purpose– Job Stories are used to represent a product backlog item (PBI) or requirement in terms of a job to be done by a stakeholder.
Description– Job Stories focus on the motivation of the stakeholder. They add context on how a stakeholder wants a desired feature to perform. They are also a communication tool, as they facilitate interaction and collaboration and focus the delivery team on the customer needs
1. Format – A job story follows a specific format; here are two examples:
When <situation> I want to <motivation> so I can <expected outcomes>.
When someone <situation>, actor(s) <motivation> so that <expected outcomes>.
2. Situation – Situation provides context for when the job needs to be completed and encourages the delivery team to think of a wide variety of possible solutions.
3. Motivation – Motivation relates to the perspective of the customer and can include internal and external forces. Desired features or solutions are specifically not included.
4. Expected Outcomes – The outcome should satisfy or alleviate the motivation which prompted the situation.
- This format reduces assumptions and removes personal bias.
- It focuses on stakeholder motivation and not defining implementation
- It’s helpful for user experience design.
- It removes focus on features and instead emphasizes the stakeholder’s desired future state.
- This format can be more verbose than user stories.
- Job stories can decompose into smaller job stories, which require management.
- Job stories and user stories can be confusing, especially when both are in the product backlog.