Software Measurement & Analysis 2009

Project Orientation
Martin R. Radley Senior Lecturer, Executive Education Program Institute for Software Research Carnegie Mellon University

Directors Overview
Our Company Our Way Our Beliefs ABC Systems Today The Opportunity What We Need

2009, Martin R. Radley

ABC Systems History

ABC Systems has, to date, been a service oriented company ABC Systems has had some experience with in-house software development:
Matador project

2009, Martin R. Radley

ABC Systems Today

Problems with Service Business Model
Revenue stream not predictable Long sales to collection cycle Growth potential is limited

Opportunity for Hybrid Service/Product Model

High growth potential* in the Project Management Tools (PMT) Market
$2B in 2002 $7B in 2007
* http://collaborate.com/announcements/announce_6.html
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Vision
While continuing to build the services business:
Build Viking, an application used for managing bug and action item logging and tracking associated with project artifacts so nothing "slips through the cracks". Unlike other project management tracking tools, Viking's artifact tracking mechanisms are completely user definable so they always fit the customer's needs, they work offline and they work seamlessly with a variety of PDAs.

2009, Martin R. Radley

Recent Interest in Viking

Automates the logging, tracking and management of work artifacts such as action items, bugs, enhancements, to-do lists, risk information and lessons learned (see Viking URD) VP Marketing believes that our current customers are very interested in Viking Use Viking as a starting point
Grow profitable revenue Grow the PMT business product line
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User Pain: Project Manager

Spending time manually (and redundantly) tracking action items, bugs and other artifact attributes No project-at-a-glance view of pertinent project information such as project task status, alerts, action items, etc. Cant easily create & manage tasks that can be assigned to the team & tracked Often difficult to find and retrieve project management documents from similar previous projects
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User Pain: Developer

No easy or consistent way to get action item or bug assignments and the inputs needed to complete them successfully No easy way to report on action item or bug progress, status and issues

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Viking Value Proposition

Generate predictable, profitable revenue Cross-sell products and services

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Viking Approach
Build & pilot Viking software product
Pilot Viking with targeted customers Establish strategic alliances Implement initial business & technical processes

Evaluate results & determine next steps at key points

At the end of the pilot & before each release

Build additional capability based on user needs

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SWOT for Building Viking

STRENGTHS
Domain Expertise
Existing Prototypes SW Development Methods

OPPORTUNITIES
Expanding Market Integration of PM tools Lack of Competition Potential Strategic Alliance with Current Customers

Ability to execute
Processes & Proj. Mgmt

Excellent Customer Relationships

Brand Current Customer Knowledge

THREATS
Competition (Open Source, CRM systems, etc.)

WEAKNESS
No Market Position Organization
Product Sales/Marketing Support Infrastructure
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Viking Risks
Impact
High

1 2 5 43 6 7
Minor Major

Low

1) ABC Systems has little software development, deployment or support experience in a largescale, distributed environment 2) ABC Systems does not have sales channels for products 3) Lack of perceived value by strategic partners & customers 4) Few processes to manage expected business growth 5) Should we outsource? 6) Low product revenue projections 7) Inability to secure additional funding
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Probability

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Viking RoadMap 1st Year

M1

M2

M3

M4

M5

M6

M7

M8

M9

M10

M11

M12

R1 Implementation

Alpha

Finalize

Identify Pilot Project Customers

Partial Delivery to Customer

Evaluate Product Full Pilot Delivery to Customer Sales/Marketing/ Strategic Alliances

Form Initial Strategic Alliances & Initiate product sales and marketing

Finalize Development Partnership for Pilot Project Initial Process Definition and Implementation Implement initial new processes Continuous Improvement Implement additional business & technical processes, as appropriate

Note: Support activities are performed by Development Team during Beta

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Viking Product/Sales Timeline

YEAR 1
Q1 Q2 Q3 Q4

YEAR 2
Q1 Q2 Q3 Q4

YEAR 3
Q1 Q2 Q3 Q4

Pilot

Alpha

1st Release

..

Subsequent Product Releases

Strategic Alliance / Marketing / Sales Calls Product / Solution Sales, Strategic Alliances 1st Orders Accounts Receivables Payments

Solutions Development Customer Support / Training

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Long Term Viking Goals

Develop a high quality architecture, toolkit & components Establish predictable, profitable revenue within three years Form strategic alliances Establish significant market segment share Be regarded as a premier provider of PMT solutions Align organization to support services and product development
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Viking Revenue/Expense Assumptions

Standalone Volume Discount
Small: Qty 30 Medium: Qty 150, 12% Large: Qty 400, 25%

Total Orders (3 years)

12 small, 8 medium, 6 large Licenses and Support Training & Solutions

Timeline
1st Viking release available 9 months after pilot project First sale = Y1 Q3

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Viking Financial Model

Scenario A: Most Likely Y1 Revenue $ 148,600 Expenses $ 800,088 Net Revenue $ (651,488) NPV $ 2,176,562 IRR 101% Max Cash Yr 1 $1,133,633
$10,000,000

Y2 $ 2,201,326 $ 2,212,555 $ (11,229) Cost of Money

Y3 $ 11,874,378 $ 7,740,150 $ 4,134,228 15%

Scenarios:
A: Most Likely C: 6 Months Late B: 3 Months Early D: 1.5x sales volume E: 0.5x sales volume F: 3 Months Early & 1.5x G: 6 Months Late & 0.5x Positive for A, B, D, F Negative for C, E, G >15% for A, B, D, F <0 for C, E, G

Scenario A: Most Likely

NPV

$8,000,000

Scenario B: 3 months early Scenario C: 6 months late Scenario D: 1.5x sales volume Scenario E: 0.5x sales volume Scenario F: 3 months early AND 1.5x sales volume
1 2 3

$6,000,000

IRR

$4,000,000

$2,000,000

$-

$(2,000,000)

Scenario G: 6 months late AND 0.5x sales volume

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Conclusion
ABC Systems services business well established in industry PMT market growth potential high ABC Systems poised for success with new product initiatives Viking profit potential is good Key potential customer lined up for pilot project Time is of the essence
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ABC Systems Organization Chart

CFO

CEO

VP Contract Engineering

HR

VP Product Development

VP Educational Services

CIO

VP Marketing

Tech Support

Sales Engineer (x2)

Viking Matador By Vertical Market By Vertical Market By Vertical Market Course Development Course Delivery

Customer Support

Admin Assistant

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ABC Systems Beliefs

Engineering discipline and the scientific method are critical skills for software intensive systems
The skills to make and then honor business commitments in ways that:
Delight our customer today and tomorrow Leave our firm better prepared for the future

The skills to understand our current productivity, and how we can improve

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Basic Measurement
Weekly 1-page Status Reports
Each person must submit a status report
What I did last week What I will accomplish next week Any Notes, Issues or Roadblocks

Effort logs
Capture the amount of effort you spend on each task you are assigned

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Effort Log
Here are Mimis planned hours for week 1:
Planned Weekly Effort Name:Mimi Starting Date: Monday, March 03, 2008 Cours Measurement Fundam Mon Tue Wed Thu Fri Sat Task Mar 3 Mar 4 Mar 5 Mar 6 Mar 7 Mar 8 In Class 1.50 1.50 Team Meetings 1.00 1.00 1.00 Reading 1.00 1.00 1.00 1.00 1.00 Homework 1.00 1.00 1.00 1.00 Labs 2.00 Meetings with Faculty 1.00 Total 4.50 2.00 3.00 3.50 3.00 2.00
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Sun Total Mar 9 3.00 3.00 5.00 4.00 2.00 4.00 1.00 2.00 20.00
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Effort Log
Here are Mimis actual hours for week 1:
Weekly Effort Recording Form Starting Date: Monday, August 31, 2009 Name:Mimi Cours Measurement Fundament Mon Tue Wed Thu Fri Sat Task Aug 31 Sep 1 Sep 2 Sep 3 Sep 4 Sep 5 In Class 1.50 1.50 Team Meetings 2.00 1.00 1.00 Reading 2.00 2.00 1.00 Homework 2.00 2.00 Labs 2.00 4.00 Meetings with Faculty 1.00 Total 9.50 2.00 3.00 1.50 3.00 4.00
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Sun Total Sep 6 3.00 4.00 5.00 4.00 4.00 10.00 1.00 4.00 27.00
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Pivot Table
Here is a sample of Mimis Planned & Actual Effort from the teams spreadsheet Note that each row is one task per day
Year Semeste Course Task Week 2009 Fall MeasuremeTeam Meetings 1 2009 Fall MeasuremeReading 1 2009 Fall MeasuremeMeetings with Fa 1 1 2009 Fall MeasuremeLabs 1 2009 Fall MeasuremeLabs 2009 Fall MeasuremeIn Class 1 2009 Fall MeasuremeTeam Meetings 1 1 2009 Fall MeasuremeReading 1 2009 Fall MeasuremeHomework 2009 Fall MeasuremeLabs 1 Day lanned/Actua Hours Friday Planned 1 Friday Planned 1 Friday Planned 1 Saturday Planned 2 Sunday Planned 2 Monday Actual 1.5 Monday Actual 2 Monday Actual 2 Monday Actual 2 Monday Actual 2 Team # Student 4 Mimi 4 Mimi 4 Mimi 4 Mimi 4 Mimi 4 Mimi 4 Mimi 4 Mimi 4 Mimi 4 Mimi

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Pivot Table
Here is a sample Pivot Table of Mimis Planned & Actual Effort data

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Other Deliverables ...

As assigned

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