Foundation Suite - Return on Investment

How the Foundation Suite of apps help save you time and money

How can our apps save you time and money?

It’s simple: they give you valuable information. They enable you to make better decisions more quickly and with more confidence, and they reduce your exposure to risk.

This was one of our core motivations for writing and sharing these apps!

As scrum masters and project managers, when we run agile delivery teams we try to reduce our planning costs and risk exposure, in two ways:

• Reducing Planning Costs
• Minimising risks - both their likelihood, and impact

When you “do the math”, it turns out that Predict for Jira, Knowledge for Jira and our other apps can save you a great deal of time and money.

We’ve developed two estimating models shown below. We’ve concluded that for an expenditure of just £11 per month in an agile team of six engineers in a large organisation, the cost saving is between £2,500 and £3,000 per month. The apps are exceptional value for money.

Here’s how we worked that out - please feel free to get in touch if you’d like to explore more.

Assumptions

• We’re running an agile team of six (including the scrum master) in a large organisation, running a two week sprint cycle, with a constant team size.
• Each team member has an all-in price of £500 per day (including overheads). This figure will vary in your organisation, and may be more - we recommend that you check with your finance department or PMO
• Over a ten day sprint, the total cost per sprint of labour is 10 days * 6 engineers * £500 per day = £30,000. This is £60,000 per month.
• The organisation has 2000 licensed Jira users, at a nominal monthly license charge per app of $0.77 per user.
• For a team of six, the apps cost £11/month. ($0.77 per app * 3 apps * 6 users = $13.86, approx £11/month).

Value Element 1 - Reducing Planning and Management Costs

When planning we’re continuously asking and seeking answers to questions like:

• How much work is this? Predict for Jira estimates duration and story points
• Do we know how to do this? Knowledge for Jira finds tickets for similar kinds of work that you can consult and learn from
• Has this been done before? Knowledge for Jira advises you on related tickets that have been done before
• Is someone else also working on this? Knowledge for Jira helps you to find similar tasks that you can join forces with
• Might this be a duplicate? Knowledge app for Jira helps you to find similar tasks that are open (i.e. not yet resolved), and avoid backlog duplication
• Who else can I speak to about this? The People app, due for release shortly, will help you.
• Who else has raised tickets like this before? Might they be able to help me phrase it and avoid duplicating work? The People app will help.

These questions consume valuable time and effort resolving, whether that’s during sprint planning, or emerging during the sprints. Duplicate tickets are a particular problem, as they generate additional work identifying, managing and closing.

Direct cost savings:

Model 1: Based on our experience running agile projects, we estimate that the Foundation apps will save us around quarter of a day of work for each team member per sprint. This amounts to 2.5% (0.25d/10d) of the total work, which over a month is 2.5% of £60k = £1,500.

Model 2: Save around 1/2 day of the scrum master per sprint, ie fortnight, or 1 day per month. At £1000 per day for a scrum master (including overhead costs), saving is £1000 per month.

Value Element 2 - Reducing Risks

Where we don’t have sufficiently good answers to the questions posed above, we increase our risk exposure. For example, we experience:

• Sprint over-runs and missed stakeholder commitments
• Loss of trust
• Rework costs due to re-planning
• Team churn
• Missed learning opportunities (not getting the right expertise in, nor sharing that expertise)

These indirect costs can be equal to, if not even much higher, than the direct planning costs.

Indirect cost avoidance:

Model 1: For a smooth, well-established project team in a stable environment and tolerant stakeholders, from experience we estimate the risk cost avoidance at around 2.5% of team cost, which over a month is £1,500.

Model 2: Probability model. The probability of a sprint over-running substantially is about 10%. When this happens, the over-run is about a week i.e. 50% of a sprint. On average the expected cost of over-runs is therefore 10% * 50% = 5%. The apps halve the risk of a sprint over-run, so the expected avoidable cost is 2.5%. With a monthly expenditure of £60,000, the expected loss per month is £1,500.

Of course, for more challenging projects with demanding stakeholders and novel/complex work, the weighted cost of risks maturing can be much higher, and hence the value of avoiding those risks higher too.

Combined Value / ROI

Taken together, the ‘weighted value’ of using the Apps is estimated - in this model - as 5% of the sprint cost (2.5% direct cost, 2.5% risk avoidance).

Model 1: Saving = £1,500 direct plus £1,500 indirect, a total of £3,000

Model 2: Saving = £1,000 direct plus £1,500 indirect, a total of £2,500.

Combining the costs, then on a monthly basis:

Model 1: Saving = £3,000; Cost = £11; ROI = 3000/11 = 27,200%

Model 2: Saving = £2,500, Cost = £11; ROI = 2500/11 = 22,700%

A Substantial ROI

The ROI is colossal. Furthermore, the breakeven point is very low - the app pays for itself if it saves a team member 11 minutes a month, even ignoring risk reduction benefit!

You can take this benefit dividend in various ways: the team can do more work in the same time, more accurately, and with lower risk exposure - boosting customer trust and reputation - which is perhaps the biggest gain of all.