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Why story points are mostly useless

I see so many projects trying to use story points as a way to measure effort and time to market, only to fail miserably. The problem is not the story points themselves, but a misconception on what Agile is…

If we start with Agile, then it is an iterative process. It is not a linear process. It focuses on delivering the right value as soon as possible. It is of course a lot more than that, but for the purpose of explaining why story points fail that definition should suffice.

In an iterative process where the development team chisel out the right value over several iterations story points make sense. It is an estimation of effort, risk and complexity. Based on the teams assumed capacity this can then indicate if a certain task have a chance of being delivered to the end user within the next iteration.

That is it.

It is not a cost estimation. It is not a time estimation. It is not even a predictive estimation of when a feature is completed. That is because Agile is iterative and there is no way of knowing when a feature have the right value. This is why Agile is so powerful and why it so often fail in larger organizations as it clash with traditional project organizations.

Agile, regardless if you try to put SAFe on top of it or not, does not work well with project organizations. The reason for that is that project organizations is a financial strucure designed to organize around budgets and portfolios. That type of organization need time lines and cost estimations to work. It is simply a matter of how the organizations work.

If you try to work in an Agile way, using story points within an organization that are focused on budgets controlled by a number of portfolios, then you will be forced to put monetary values into your estimations. It also means that in most cases you will never iterate your features and you will basically be put in a chaotic waterfall situation with Agile elements like standups.

This is a terrible situation to be in.

Anytime you are forced to convert your story points to time, this is the most common reason. Being stuck in a project based organization. So what should you do if you realize this is where you are right now, should you just give up?

Of course not. Many organizations know they are stuck in this situation, but they do not know how to move forward. They need help to understand how Agile works so they can make the changes outside the IT as well. With you continuing to use storypoints it will frustrate the business side because it will clash with their need to maintain budgets.

Eventually they will see the need to focus less on budgets and more on value overall. This is where the Agile mindset will slowly make things like Agile contracts and value streams become more natural. More focus will be on system teams or value teams rather than project teams and maintenance teams and, if all goes well, you might find yourself in a more Agile workplace eveventually.

Just be aware that story points suck. In a project based organization…

It is not because they have no value, it is because the organization is stuck in a different model. The larger the organization, the less likely it is that it will ever change to an Agile way of working. The reason is that the cost of such a massive organization change cost a lot of money and it is usually done in small initiatives on the IT side. These initiatives rarely succceed because the big change is not on the IT side, but on the business side…

It is up to you if you want to fight the windmills and hopefully force the change for your own project at least, or if you will give in and assign time and cost to your story points. Even if you know that it is not how they are supposed to be used…

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