Scrum, Commercially...

Last post 01:47 pm August 12, 2019
by Charlie Cotton
5 replies
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09:01 am August 8, 2019

Hi all,

 

I'm in a graduate role and i'm recently certified in PSM I, and will soon be preparing for my PSPO I with aspirations to be a Product Owner. I wanted to understand more around how commercials work when using Scrum.

My previous experience with a company i no longer work at (albeit limited) has given me the understanding that by working in Scrum the cost of a sprint is fixed and so if a Scrum team is 100% dedicated to a client, that client will be charge 100% of the sprint cost, whereas if there's two clients for a scrum team and work is equally split then they'll be charge 50% each. 

It's worth noting the company wasn't practicing scrum accurately as it had recently adopted it.

I have a few questions around this...

1) is my understanding of the commercial side correct?

          a) can you have more than one client for a scrum team and split cost out depending on the effort for that client?

          b) if so, how will this effort be calculated and presented to the client to show they're being charged for accurately?

2) How have others seen the commercial side to scrum be handled?

 

Looking forward to some insightful responses!

Charlie

10:05 am August 9, 2019

I'd agree that the cost of a Scrum Team is almost always fixed for a Sprint. Going into Sprint Planning, you know your Product Owner, Development Team size, and Scrum Master along with the cost for each of these. It's also a timebox, so you know how many working hours exist. You can do some simple math to figure out how much it costs to run a Scrum Team for a Sprint. This math does neglect vacations, sick time, and other unexpected time off.

I don't necessarily agree that if you have a Scrum Team supporting multiple clients than you can say that you'll simply divide up the cost. The first thing that I can think of is that the value delivered to each client at the end of the Sprint may not be equal - why is the customer paying the same amount each Sprint for potentially different amounts of delivered value?

I'd also be thinking about what type of development you are doing. There's a difference between bespoke development and product development. In bespoke development, you are building a particular solution for a particular client's needs. In product development, you are building a product offering that tries to meet the needs of a large group of stakeholders. How you order the work to be done and measure value delivered - the inputs to and outputs from a Sprint - are different in each case. I'd even argue that bespoke development is probably building different products and a team should be focused on one product in a given Sprint, so the team should be delivering value to one client at a time.

11:51 am August 9, 2019

How have others seen the commercial side to scrum be handled?

Sometimes there is a danger of knowing the price of everything and the value of nothing. How important do you think it is to have a Product Owner who accounts not only for costs incurred, but for value delivered?

01:15 pm August 12, 2019

Thomas - thanks for the input! To give a bit more context  the teams were performing bespoke development for multiple clients, hence why I had questions around how this would be handled from a commercial aspect. My example of dividing the cost of a scrum team was maybe a little too simple as i agree with what you've said regarding charging clients based on value. When i said 'if there's two clients for a scrum team and work is equally split then they'll be charged 50% each.' I meant in terms of value. Say if a scrum team's velocity is 40 story points per sprint, they'd allocate 20 for each client and bill 50% accordingly, similarly if they allocated a client 4 story points in a sprint and the other 36, they'd bill for 10% of the cost and 90% of the cost. Although that could easily raise issues with clients if the 20 story points aren't delivered. This all said... the calculation of how much value (story points) is delivered could take place after the sprint has finished, so you can accurately determine the amount of value delivered to each client and then bill accordingly...

 

But i'm not sure... this is why i'm posting

- can a scrum team work on multiple clients?

- Is story points delivered the best way to charge for clients?

01:34 pm August 12, 2019

can a scrum team work on multiple clients?

I'm not sure that Scrum is appropriate in this context. That isn't to say that you can't take some lessons or ideas from Scrum, but Scrum itself is centered around the idea of a product. When you are doing bespoke development, each thing that you are making is its own product. Having a single Scrum Team support multiple products over the course of a Sprint makes it difficult for the team to focus on delivering a cohesive set of value. Just by nature of the work, they are delivering different value-adding work to different clients and the team has the added overhead of needing to decide on making trade-offs as the Sprint progresses.

Is story points delivered the best way to charge for clients?

I don't believe so. I don't believe that the idea of a Story Point should ever leave the team. Story Points are just a way for a particular team in a particular context to assess the size of work, track how much work they can do in a given period of time (a given Sprint), and aid in forecasting how much work to take on in an upcoming Sprint. They aren't measures of value, they aren't useful across team boundaries, and the definition of 1 Story Point can change over time so it's not stable over long periods.

01:47 pm August 12, 2019

Thanks Thomas! The previous organisation I was at wasn't operating Scrum appropriately then as they had multiple clients (and therefore products) in one scrum team. That makes sense.