Relating The Factory To Stakeholder Value

Let's set the table. It is a commercial reality that projects compete for resources. Another reality is that the development of products (including digital products) is a long-term game to create and maintain confidence that a product will (or at least will be expected to) reliably generate customer value.

The work of producing digital factories is about realising the delivery of the digital product at scale, which is what is responsible for providing business and customer value. When the digital factory does not reliably deliver the digital product (see issues), it is not possible to assess its quality and worse, negative feedback can proliferate and have a destructive effect on the viability of the entire project.

Only when the factory reliably delivers the digital product and when the digital product is successful in its aims to generate customer and business value are software projects generally considered successful. To get there, technology professionals specify the product, break the work up, and form the plan with the help of the digital supply chain to create executable software.

The journey to delivering the product goes something like this:

1. A strategy is formed for a digital product to provide business value.
2. The product is fleshed out in more concrete terms to realise the strategy.
3. Because the scope of work is very large, the product is broken into pieces and mapped to what we may refer to as tasks or tickets.
4. Engineers map what they understand about the product (in tickets and in more ambiguous signals) to production processes that computers will operate. This is a high-level description of The Plan, much of which could probably be described in human language - depending on how granular we are speaking, this may be referred to as software architecture at a big picture level, or as pseudocode on a much more detailed level. Engineers ultimately produce a revised version of The Plan referring to digital primitives with divisions of labour and technology choice as code. The code is transformed into executable software, most often by tools produced by large technology companies.
5. Executable software is run by the device, and the running software is presented to users.

From strategy to realised product, we have many layers of abstraction. The Strategy is mapped to The Idealised Product (2), which is mapped to Tasks (3), then to software architecture, then code, then executable software (4) the executable is now running software. The Factory is this running software working in tandem with third-party sources as required to deliver The Realised Product (5). A lot of redirection to maybe realise value someday.

The early days of software pricing had an exchange that resembled transactions for physical goods. One-time payments. Various forces have worked against this over a period of many years, but perhaps the most significant is that the devices people use have become continuously evolving platforms. As these platforms evolve, there is generally nothing ensuring that the Factory built and tested on device with operating software version 1 continues to work without modification on device with operating software version 2. The consequence of this to the fixed-price model is that the costs to maintain the integrity of existing promises are ongoing but the revenue stream is not.

Markets for digital games make for an interesting case study. There are product classes where subscription pricing models are the norm, others where "free" is the norm, and there is also "fixed-price" but with a caveat. Significant discounting is common and some customer segments have come to expect it to the point that paying the sticker price is not an option.

Social media applications generate business value through data collection, and customer value through messaging services and content delivery. Other kinds of digital platforms (marketplaces or otherwise) such as those that serve video and digital games generate business value at a point of sale upstream of where they deliver content.

We have talked about where the money comes from and where it goes and the relationship that engineering has to business and customer value.

Once we understand what value the digital product generates, we can use signals to understand how to grow.

A story for next time.