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Game of roulette: Software development effort estimation - II,How ‘knowing software effort estimation is more about biases and human misjudgment’ can help Part 2: Authority & Availability Bias  

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Earlier in Part 1 I talked about Anchor bias at play in bid management, Agile poker planning and a sales situation. In part II of this series I share my opinion on Authority and Availability bias at play in estimations.
Authority bias is the tendency to attribute greater accuracy to the opinion of an authority figure (unrelated to its content) and be more influenced by that opinion. It is a conditioned bias that make us ‘believe’ individuals dressed as  doctors talking about a particular toothpaste brand, people seeming like police, lawyers or government authorities talking about law, Senior or management though non-technical make better technology or project choices !  In order to make short cuts  & make easier choices as humans we implicitly follow authority.     



Have you seen the technology choices and solution direction changed because the management wanted Jack to review the solution ?  ‘Mr Jack of all  ‘ lacks mastery of the specific subject, but the CEO of the private compan…
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Game of roulette: Software development effort estimation  - Part I - ‘Knowing software effort estimation is more about biases and human misjudgment’ can help us make better decisions 
Software effort estimation is by definition ‘mapping the unknown’, an approximation game. There are various techniques to estimations including processes like WBS, analogy based estimation, poker planning, models like expert estimations, group estimations etc. The consensus among industry practitioners is techniques, process and tools when used well and topped with right reviews should create reasonably accurate estimations. This is far from the truth !
The role of human biases and influences on development effort estimations is accepted, but they are not widely discussed or accepted. Effort estimations are actually fertile grounds for human misjudgment. 
      "Man is not a rational animal, he is a rationalising animal” - Robert A. Heinlein
For example, it is common to see larger estimated numbers when m…

Girlfriend experience expectation syndrome : How IT service provider relationships often suffers from biases

[Mental models and its application for better product management decisions]

It is very common that companies who outsource product development to external IT service providers expect that they help the company reduce product development uncertainties by being true partners i.e. charter unknowns technology landscape by taking risks alongside, understanding unknown technical choices, trying them out and recommending what would work best in the project. In IT services parlance, this concept is sold to the customers using fancy terms like skin in the game, extended arm of customers, true partners, etc etc.  Most often this arrangement never works, we almost always hear the disappointment from the product managers that a particular service provider is not adding value, they just are not up the curve to be able to provide the right technical choices to be made and at best they execute what is being told to them and thats about it.   Expecting an outsourcing IT service provider to be a true par…

Views: Banking at the bottom of the pyramid: EKO Financial services

When i wrote about the need for banking for a common man in poor Indian villages in February 2009 little did i know that just about the same time elsewhere a start-up was working on this idea. Yesterday this start-up was featured in the Times of India.

The company i am talking about is EKO financial services started by Abhishek sinha and Anubhav sinha. This start-up tied up with SBI to offer no frills account to the people representing the bottom of the pyramid. A common man can walk to a store, similar to buying a Sim card on furnishing identity documents can open an account within 10 minutes. And similar to recharging his mobile currency can deposit money into his account by handing over cash to the shop keeper who acts as a customer service point of EKO. Money transfers can be through the phone. I am immensely happy to see this innovation happening at the grass root levels and also very optimistic about the future of this goldmine. All the best to EKO team.

The following video shows…

Paper Series: Incrementally rewarding your customers based on profitability

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Publications:CFO,Rfpconnect
Volume based incremental or tiered pricing is not new to most of the banks. Banks use this technique to incrementally drive revenues from existing customers by giving him volume pricing or discounts. Depending on the capability of the product system, banks may decide to keep the competitive price definition inside or outside the system. The challenge is in building in tremendous flexibility by parametrization of the solution. A white paper co authored by me is published in CFO.COM and RFPCONNECT.COM

Views: Islamic Banking

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I wanted to write the first blog of the year about a banking practice that is based on ethics. About 8 years back I had first heard about Islamic banking from Mr. Srinivasan, then the vice president at i-flex. He described Islamic banking as 'Allah gives and Allah takes', an interest free banking practice. For a long time it stayed in my mind as a funny cultural and unsustainable practice that was funded by the crazy oil rich Middle Eastern states. But, since my interactions with banks in Saudi Arabia, UAE and Bahrain, etc I started to better understand the underlying principles of Islamic banking. According to the holy Koran, the Shariah is what is acceptable to Islam. There are a set of Islamic values that are in general applicable to all practices of trade and also applied to the banking practices. Shariah prohibits interest or a time value for money. Money as such is not a marketable commodity, but an instrument that can be only put into productive use based on the value…

Research: Costing in transaction banking services and cost based pricing

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One of the casualties of a recessionary environment is the luxury of not changing the way businesses price their products and services. In order to keep up their top lines, most organization have started innovating their pricing strategies moving it closer to the transaction based model, factoring in the risk and cost. Knowing the cost at various levels is relevant for price optimization, capacity utilization and operational efficiency.

As there is a growing importance to measure the productivity and profitability of service delivery channels like ATM, Internet payment gateways, branches, etc Banks need to implement costing practices at various departments. Today costing is generally a grey area in banks. This is because most banks do not know what exactly the cost of an individual transaction level is. Unlike manufacturing industries where cost at an individual unit can be arrived easily, banks product cost cannot be fully arrived at until it is consumed, and the costs are distribute…