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Agile brings with it the “prioritization of work” concept. This helps ensure teams complete work that is most important to the business first. However, while being able to demonstrate that the most important work is done first, prioritization alone doesn’t show the business value delivered by that work.
Definition of business value
I define business value as the combination of all economic, human and intangible forms of importance to the business. Human forms of value include employees, business partnerships and customers. Intangible forms include intellectual property, business model, etc. In an agile or scrum methodology, these all contribute the value attributed to each feature
Prioritization and estimation
Prioritization is the process of putting the card that is most important to the business ahead of the next most important card. In this way, the backlog reflects story cards in the order of importance (highest to lowest) as defined by the business.
You can best estimate business value at the feature or epic level. This ensures value across the entire work item. If you attribute business value to individual components, total value could be skewed. Interdependencies or work that follows could be easier than preceding work tasks, making it difficult to determine how to accurately distribute the value.
Application for product and business owners
Product and business owners can apply business value to the features and identify the most valuable work and the work scheduled to be completed first. As the business assigns teams a to the work with the most value, they are able to break the work down into smaller stories which are then prioritized. This delivers value sprint-by-sprint until the feature is complete.
Together, prioritization and business value help ensure the right work is done at the right time for the benefit of the company. Prioritization of stories gives the team direction on which pieces of a feature to address first. Assigning business value to features ensures the team will work on the feature that delivers the biggest value to the company.