7.22 Value Modelling
Agile Extension to the BABOK® Guide
Value Modelling is used to focus solution development on value delivery by tracing decisions to the value perspective of the stakeholder.
Value Modelling models value creation for stakeholders who use the solution. Value Modelling is also referred to as Customer Value Model.
Value Modelling follows a basic structure:
Customer value = Benefits – Cost
Benefits can be real (solves a problem or completes a job) or perceived (increases status, reputation, likability).
Costs include direct costs such as price and risk, and opportunity costs such as time and travel.
Value Modelling is based on a hypothesis that the purpose of an initiative is to create value for stakeholders. It works well for agile solution development, especially in large initiatives with multiple delivery teams and is a core part of user experience design.
The general steps to create a value model include:
- identifying all the stakeholders for the solution. These stakeholders can be grouped into three areas:
- Internal and external customers.
- Delivery team participating in the initiative.
- Sponsor or owner providing funding.
- Internal and external customers.
- identifying the needs of each stakeholder group and what will provide value to each.
- identifying the process to satisfy those needs.
Value models use qualitative and quantitative research to provide structure and guidance in defining and implementing a project or initiative.
Value Modelling can be used at any Horizon:
- At the Strategy Horizon, value models focus on research and development, marketing and sales, and customers for the entire organization.
- At the Initiative and Delivery Horizons, value models focus on solution development for customers of a specific initiative.
Value Modelling focuses on delivering value to a customer; the intended customer is included in the model.
.2 Desired Outcome or Objective
Value models capture the outcome or objective as the value to be earned or achieved by the customer.
There are several different models to portray the value model. The following examples of value models are detailed below:
- Value Proposition Canvas,
- Flow Chart of Customer Value,
- Means-Value Chart, and
- Value Model.
.4 Value Proposition Canvas
The Value Proposition Canvas highlights the features within a product that align to the needs of the customer.
Figure 7.22.1: Value Proposition Canvas
.5 Flow Chart of Customer Value
The Flow Chart of Customer Value groups stakeholders into internal and external customers, delivery team participating, and sponsor or owner providing resources, and identifies processes to satisfy each group.
Figure 7.22.2: Flow Chart of Customer Value
.6 Means-Value Chart
A Means-Value Chart aligns the features or activities for stakeholders to help the customer realize value. This example uses Revenue and Profits as the central value to be realized, but it can be substituted for the organization's desired outcome.
Figure 7.22.3: Means-Value Chart
.7 Value Model
A Value Model includes the following elements:
- Key partners/Strategic values/Key rivals: focuses on the people involved.
- Costs/Revenues: helps the organization determine if costs are less than revenue.
- Key competencies/Value proposition/Key customers: emphasizes the value to be earned by customers.
Figure 7.22.4: Value Model
- Can be used at any horizon.
- The structure of information is based on how the human mind works, so it documents process and shows traceability with minimal documentation.
- Structures decision making based on value created for customers and stakeholders.
- Research makes assumptions about the stakeholders and may omit nuanced information which could change the solution or outcome.
- It can be too complicated to be advantageous to companies looking for quick information.