The Business Value of Short Branches

Context: I recently wrote this for an internal email. I thought I would share it with the rest of my friends. :)

In the world of software development, we can’t say it’s done until the code is in production, working, and providing the company with value. It doesn’t matter how pretty my code is, if its sitting in a branch. 

Show me the Money

One way to understand the reality that shipping early and often provides more value to the company is to take a look back at Finance 101. Now if you managed to avoid this class, you may have missed out on a very cool concept, the “Time Value of Money”. This concept states, among other things, that $100 today is worth more than $100 tomorrow

In the book ‘Software by Numbers’ the authors discuss just this in quite some detail. If you can get a hold of a copy, even reading chapter 2 is quite eye opening.

But let’s go over a simple example to see what we are talking about. One of the equations that came out of the Time Value of Money is the “Present Value”. The present value (PV) of a sum of money is equal to the future value (FV) multiplied by one plus the interest rate (i) to the power of the number of payments (n) or PV=FV*(1+i)-n 

For example, lets say we have the awesome new feature X. Feature X is going to bring the company a value of $10,000 once it ships, and if you will humor me, the interest rate of this investment is 10% (more than likely this number would be based on another financial term IRR but lets leave that alone for now). The last part is the ‘n’ and this is the one we are going to play with. In terms of shipping software the value of ‘n’ is going to be the number of times we ship. 

So if I said shipping feature X would give the company a business value of $10,000. And we shipped it all at the end the PV of that feature would be PV=$10,000*(1+0.1)-2 or $8264.46. The ‘n’ is a 2 in this case to represent the cost of waiting two releases (the amount the next example is going to use). But what if we broke this up into two releases, each one providing some value but not the whole value. Furthermore, let’s say the first release doesn’t provide a lot of value, so $3,000 and $7,000. Using those numbers then then the first release has a PV of PV=$3,000*(1+0.1)-1  or 2727.27 and the second release has a PV of PV=$7,000*(1+0.1)-2 or $5785.12. If you add that up $2727.27 + 5785.12 = $8512.39. That’s a gain in business value of $247.93, just because we shipped multiple releases. 

Not only that, but there is another part of this story that we haven’t discussed. Let’s say we ship the first part and learn that if we make a few tweaks to the project we could net more than $7,000! If so, then the return for the company goes up even higher further increasing the business value of the project over the original $8,264.46. Conversely, we get the added benefit of the other side of the coin. If after shipping the first iteration we notice that the business has changed and we need to move in another direction, then we have only cost the company for the first iteration, shipped it, got some value and can now redirect onto another, more lucrative, project.

So, enough with the fancy math. How can we actually take what we have learned and apply it to our day to day jobs? One of the simplest ways to detect this is to look at how old your branch is from master. Have you been working on a branch for a week, two weeks, a month? That might be too long, or you may be trying to push too much into one branch. Can you break the work up so that you are shipping code sooner? Teams that practice Continuous Deployment will often ship the database changes way before the application changes. Then they might deploy the new code behind a feature toggle so that stakeholders can review, and then finally they will make it active to the user base. Each one of those is a push towards a specific feature and each one provides value to the business in terms of feedback on the progress, on how the systems will react to the changes, etc.

So think about how you can make smaller branches that will push into master sooner. As a team member, once a PR hits Github take a moment to help the teammate out and give it a code review, the quicker we can give feedback to our colleagues the faster we can all learn and improve the way we work. In addition we don’t want WIP to hang out too long either. A topic for another post as this one is quite long already.

About Dru Sellers

Sr. Software Engineer at Dovetail Software.
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  • Dru Sellers

    Ah, thank you for pointing out the math issue, i changed the investment rate to 10%. I think I got all of the ‘power of’s too. :)

  • Steven van Dijk

    Great topic, but I am not sure the numbers work out. If investment rate is 1 percent, shouldn’t the term in the formula be 0.01 instead of 0.1? Also, your superscript for the “power of” is not visible (at least on my phone).