This stuff is cool, but HOW DO I GET MY COMPANY TO DO IT? Businessing the S*** out of Transformative Development

Cloud Native, containers, DevOps, microservices, and more: we go to conferences and get excited about the potential of so many things that could revolutionize our development and change our organizational and professional lives! And then, we go home...and hit the wall. If you've ever asked yourself, "This stuff is cool, but HOW CAN I GET MY COMPANY TO DO IT??!", this is the session for you.

Learn from an experienced software developer (who also happens to have an MBA) how to make your case to leadership, presenting management-ready justifications for changes in "your world" that will positively impact the business as a whole. Topics include:

* How would this change affect your organization's/group's/team's work?
* How would this change impact (positively and negatively) your tech stack (internal considerations)?
* How would this change contribute to recruitment/retention (external considerations)?
* Seeing beyond your borders: how could this change positively - and negatively - affect the business?
* Putting numbers with it: pros, cons, and caveats

Come to this session to dramatically boost your chances of making an actual, positive change to your organization!

Transcript

1. @mkheck This stuff is cool, but… HOW CAN I GET MY COMPANY TO DO IT? Businessing the S*** out of Transformative Development! Mark Heckler Principal Technologist/Developer Advocate Pivotal Software, Inc. www.thehecklers.com mark@thehecklers.com @mkheck
2. @mkheck Who am I? • Author • Speaker • DEVELOPER • Seeker of a better way • MBA
3. @mkheck Presenting in English for Your Safety
4. @mkheck
5. @mkheck The Goal
6. @mkheck Disclaimers • I’m human • Measurements require assumptions… • …but those will be clearly stated and quantified • Estimate benefits conservatively, costs liberally • The numbers you see are EXAMPLES • Adjust sensibly for your circumstances
7. @mkheck With great power…
8. @mkheck What’s on the agenda?
9. @mkheck What’s on the agenda? • Payback • Net Present Value (NPV) • Quantification • Based upon (solid, well-reasoned, calculated) assumptions • Several steps to get there, but don’t panic!
10. @mkheck
11. @mkheck Payback: Formula Cost of Project Annual Cash Inflow (or Savings) = Payback Period
12. @mkheck Payback: Example $500,000 (costs) $200,000/year (new income) = 2.5 years
13. @mkheck Payback: Explanation • Shorter payback period generally better • Longer payback means more uncertainty, greater risk • Prefer < 3 years payback period • Payback < 1 year == essential project
14. @mkheck Payback: Drawbacks • No consideration of total value • 3 year payback, no further value after year 5, lifetime value: $250,000 • 5 year payback, ongoing value, lifetime value: $1,000,000 • Which would you choose? • No consideration of time value of money • Good measure, but incomplete
15. @mkheck Net Present Value (NPV): Formula Net Period Cash Flow (1+R)T = NPV ∑ where R is the Rate of Return and T is the index of that time period
16. @mkheck Net Present Value (NPV): Example 1 $1,000,000 (1+0.05)5 = $783,526 ∑ where R is the Rate of Return and T is the index of that time period
17. @mkheck Net Present Value (NPV): Example 2 = $646,206 $200,000 (1+0.04)2 $400,000 (1+0.03)3 $100,000 (1+0.05)1 + + $184,911 $366,057 $95,238
18. @mkheck Inputs & Associated Challenges • Quantifying qualitative measures • How would this initiative: • affect your organization’s/group’s/team’s work? • impact your tech stack? • contribute to recruitment/retention? • affect the business?
19. @mkheck Putting Numbers with It: Pros & Cons • Pros • Critical analysis yields better understanding of inputs, impacts • Can provide more objective and compelling justification for initiative • Cons • Can be very time-consuming • No automatic conversion between qualitative & quantitative measures
20. @mkheck Putting Numbers with It: Caveats • Time is a constraint • Assumptions form basis of conclusions • Bad assumptions -> Inaccurate conclusions • Good assumptions -> (In?)accurate conclusions • Document assumptions meticulously • Be open to discussion, refinement
21. Let’s run through it (Optional<Suit>)
22. Microservices Assemble to make “more than meets the eye”
23. @mkheck Notes about Microservice Architectures • “Return on Investment (ROI) is driven by accelerated realization of benefits rather than overall business transformation.” • Reduced maintenance costs? • Increased business opportunities through new APIs? • Selective scaling of only high-demand microservices reduces costs • Investment includes upskilling/coaching/mentoring
24. @mkheck Expectations • Small batch sizes, small teams: Microservices • Bounded contexts • API-based contracts for interactions • More functionality delivered to market (or internal end-users) sooner • Building the right product (tight dev loop == tight feedback loop)
25. @mkheck Expectations • Microservices (continued) • Improved quality; small mods vs. major overhauls • Improved end-user satisfaction • Small, frequent releases expose & help resolve process issues “in the small” • When releases are tiny, well-planned & -choreographed events, they can happen at will
26. Monoliths That’s one big app!
27. @mkheck Assumptions: monoliths • Average cadence of releases of key monolithic apps: 1x/year* • 10 months of development before “code freeze” • 1 month of integration testing, bug fixes • 1 month of UAT (confirmations, course corrections, logging “new” requirements) *optimistic in many cases
28. Microservices Assemble to make “more than meets the eye”
29. @mkheck Assumptions: microservices • Average cadence of microservices releases: 7448x/DAY* • If your company is 1/1000th (0.1%) as effective as Amazon, that’s still > 7 releases/day…over 2500 releases/year! • 14 new microservices in first year • Each of your Y1 microservices averages a release every other day *Amazon: 1 every 11.6s in 2011 - YMMV!
30. @mkheck Assumptions: microservices • How much more functionality can be delivered more quickly, more accurately? • If you can approach zero with missed requirements, missed opportunities, missed expectations…how much is that worth? • If users can have needed functionality MONTHS or YEARS sooner, what is that worth to your company?
31. @mkheck Quantification • Volatile functionality • Sales drivers • Product development/engineering • Focus upon producing key abilities, define interfaces in monolith • Average time to get interface APIs “live”: 6 months • Average business size: $500m annual revenue • Impact of high-demand projects implemented via microservices: $1m/microservice
32. @mkheck Quantification • Costs • Upskilling required for relevant tech teams • Ramp-up - offset by avoidance of contextualization issues • Other things that may smooth/speed path omitted* • Platform costs and interface development • Foregone revenue from monolith implementation** *would increase costs and resultant cash flows **assumes some functionality would be implemented otherwise in monolith ($1m) ($2m) ($5m)
33. @mkheck Totals, Year 1 New revenues, year 1 $14m Expenses Upskilling ($1m) Platform costs ($1m) Interfaces ($1m) Opportunity costs ($5m) Y1 NET GAIN/LOSS FROM ADOPTION $6m
34. @mkheck 6.86 months Annual Cash Inflow (or Savings) 14,000,000 Cost of Project 8,000,000 Payback: Microservices = Payback Period APPROVED!
35. Not so fast…
36. @mkheck Totals, Year 1 New revenues, year 1 $14m Expenses Upskilling ($1m) Platform costs ($1m) Interfaces ($1m) Opportunity costs ($5m) Y1 NET GAIN/LOSS FROM ADOPTION $6m
37. @mkheck Y2 Assumptions • Double number of microservices added in Y2 vs. Y1 • 14 new in Y1 + 28 new in Y2 = 42 new microservices @EOY2 • Estimate slightly reduced impact, may be overly pessimistic • 28 * $750k = $21m $14m + $21m = $35m “new” revenue • Assume linear ability to expand monolith, may be overly optimistic • $10m worth of functionality could be implemented in monolith
38. @mkheck Totals, Year 2 New revenues, year 2 $35m Expenses Upskilling ($1m) Platform costs ($2m) Interfaces ($1m) Opportunity costs ($10m) Y2 NET GAIN/LOSS FROM ADOPTION $21m
39. @mkheck Y3 Assumptions • Double number of microservices added in Y3 vs. Y2 • 42 @EOY2 + 56 new in Y3 = 98 new microservices @EOY3 • Estimate further reduced impact, may be overly pessimistic • 56 * $500k = $28m $35m + $28m = $63m “new” revenue • Assume linear ability to expand monolith, may be overly optimistic • $15m worth of functionality could be implemented in monolith
40. @mkheck Totals, Year 3 New revenues, year 3 $63m Costs Upskilling ($1m) Platform costs ($6m) Interfaces ($1m) Opportunity costs ($15m) Y3 NET GAIN/LOSS FROM ADOPTION $40m
41. @mkheck NPV: Microservices = $61,086,277 $21m (1+0.05)2 $40m (1+0.05)3 $6m (1+0.05)1 + + $19,954,649 $35,417,342 $5,714,286 APPROVED!
42. @mkheck Factors Revisited • Quantifying qualitative measures • How would this initiative: • affect your organization’s/group’s/team’s work? • impact your tech stack? • contribute to recruitment/retention? • affect the business?
43. @mkheck In summary… • Critical analysis yields better understanding of inputs, impacts • Can provide more objective and compelling justification for initiative • Be honest • Document & communicate assumptions clearly • Be open to course corrections
44. @mkheck This is Not the Enemy! They are your Allies
45. @mkheck
46. @mkheck Thank You for Participating! Keep the conversation going: • @mkheck • mark@thehecklers.com