Dan North recently wrote about a situation I regretfully recognize too well. Imagine you’re asked to take a number of user stories and estimate them using story points. You spend some time breaking the stories up and start estimating and then you get the question; so how much can be done in one year? You respond it is impossible to know since you don’t know your velocity yet. And so everybody is frustrated. The customer have no idea and thinks story points is stupid because it doesn’t help him. And you feel frustrated because the customer didn’t tell you in the first place that he wanted to know how much could be done in one year.
I believe the use of story points is good since people don’t estimate in time very well. The relative nature of story points and velocity is in my opinion a better way of updating release plans over time. So the effort is not wasted. And after a few iterations the customer will be happy about story points. But you have to do something else in the beginning. I favor making really rough estimates in man-months or man-iterations and using that as an indicator to the customer about the release plan for the next year. But I also tell the customer that this is just a rough estimate and as soon as we have our velocity we will have better prediction of the actual content of the release. Personally I also throw the initial estimates (using time) as soon as they have been presented. And I try to make the customer do the same thing.