EBM Metrics and Calculations

ROI Calculations

Basic ROI Formula

ROI = (Value Delivered - Cost) / Cost × 100

Example: Product delivers $100,000 value with $60,000 cost:

• ROI = ($100,000 - $60,000) / $60,000 × 100
• ROI = $40,000 / $60,000 × 100
• ROI = 66.67%

Velocity Calculations

Velocity Improvement

Target Velocity = Current Velocity × (1 + Improvement %)

Example: Team velocity is 40 story points, aiming for 25% increase:

• Target = 40 × 1.25 = 50 story points

Cycle Time Calculations

Cycle Time Reduction

New Cycle Time = Current Cycle Time - Reduction
New Lead Time = Wait Time + New Cycle Time

Example: Current cycle time 20 days, reduce by 25%:

• Reduction = 20 × 0.25 = 5 days
• New Cycle Time = 20 - 5 = 15 days

Improvement Percentage Needed

Improvement % = (Current - Target) / Current × 100

Example: Current 8 days, target 5 days:

• Improvement = (8 - 5) / 8 × 100 = 37.5%

Market Value Calculations

Market Share Revenue

Revenue = Market Size × Market Share %
Additional Revenue = Market Size × (New Share - Current Share)

Example: Market worth $2 million, share from 15% to 25%:

• Additional share = 25% - 15% = 10%
• Additional revenue = $2,000,000 × 0.10 = $200,000

NPS Revenue Correlation

Example: Each NPS point = $100,000 revenue increase:

• NPS increase from 30 to 50 = 20 points
• Revenue increase = 20 × $100,000 = $2,000,000

Flow Metrics

Lead Time Components

Lead Time = Wait Time + Cycle Time

Work in Progress (WIP)

Little's Law:

Lead Time = WIP / Throughput

Lower WIP = Lower Lead Time = Faster flow

Quality Metrics

Defect Rate

Defect Rate = Defects Found / Total Units Delivered × 100

Escaped Defects

Escaped Defect Rate = Production Defects / Total Defects × 100

Innovation Metrics

Technical Debt Ratio

Tech Debt Ratio = Time Spent on Debt / Total Development Time × 100

Innovation Rate

Innovation Rate = New Feature Time / Total Development Time × 100

On-Product Index

On-Product Index = Product Work Time / Total Work Time × 100

Higher is better (less time on overhead/meetings).

Sprint Metrics

Velocity Trend

Track velocity over 3-5 sprints for meaningful trends:

• Increasing = Improving delivery capability
• Decreasing = Potential issues (tech debt, turnover)
• Stable = Predictable for forecasting

Sprint Goal Success Rate

Success Rate = Sprints with Achieved Goals / Total Sprints × 100

Interview Questions