Details

The concept is based upon Chapter 2: Business Case for Agility in [1].

The simple model displays as V-shaped curve for each release increment. It assumes initial investment (development of product), then delivery, and steady returns thereafter. The slope of investment and returns depends on cost and value parameters (here these are fixed).

The basic case of just one single release is always shown as the baseline.

When there are multiple increments, their cumulative total is plotted with break-even point and difference to the baseline highlighted.

The secondary parameter specifies what percentage of the remaining value will be released in the next increment. The default is 50%, which assumes the delivered value is split in half for each of two increments. Smaller percentages lead to flatter returns on initial increments, larger percentages to steeper returns.

There are three business benefits of releasing in multiple increments:

• sooner break-even: the break-even point moves to the left on the time axis

• smaller investment: the minimum of cash-flow rises

• higher net returns: the shaded area increasing relative to baseline

These three benefits come from earning returns from the customer sooner due to earlier delivery. The more percentage value per increment can be delivered, the bigger these benefits. (If you look at a set of features, the Pareto principle says that a few of them will deliver most of the value to the customer. That said, the next most desirable features may not be easily identifiable or there may be uneven cost associated with delivering them.)

Reference

[1] A. Shalloway, G. Beaver, and J. Trott, Lean-Agile Software Development, Reading, MA: Addison–Wesley, 2010.