the pain points while selling Agile to the business3 they say IT is a pain I have they say this fad is not learnt to live with, there is relevant to their business no hope! needs! the C’s are always agile sounds either interested in “ROI” too easy or too and savings, that stuff complex to them. how is beyond me!!! do I show them the big picture? I am not able to explain the they don’t want to go big tracking & measurement of bang and create chaos. how agile and they say agile is do I let them choose what cowboy style with no control! they want? www.agiletour.org
not relevant for your business ?4business environment human behavior our business is constantly we misunderstand changing, so our needs evolve requirements and only continuously discover the misunderstanding new ideas emerges constantly, not after we have started building just at the beginning when we see working opportunities and threats software, we also see appear unexpectedly, improvements we must respond quickly software building process Agile delivers what we build doesn’t always best in today’s work as well as we expect, so “impatient changes must be made world”! www.agiletour.org
can you relate to this ?5 high risk for customer Long requirement gathering phase low confidence on Tight contracts; rigidity in change outcome Possibility of significant re-work during testing Tunnel effect (low product visibility) between requirement and delivery Large volume of documentation “tunnel effect” Project life cycle Requirement Design Build Testing Deployment Product life cycle www.agiletour.org
how would you like to be here ?6 low risk for customer high confidence Short iterative cycles; features prioritized with client on outcome Regular product demos; welcoming feedbacks High focus on software quality and maintainability Flexible to change Project life cycle 1 2 3 n Product life cycle www.agiletour.org
you don’t always have to live with the pain…7 visibility business adaptability reduced value risk high degree of customer & developer interaction gives features prioritized directly adaptability to changing frequent visibility and maximum visibility by customers and market/customer needs feedback mechanism delivered in iterations give ensures reduced risk better time-to-market and improved business value teamwork product communication high sustainability highly skilled customer professionals quality transparency satisfaction better co-operation maintainability problem solving customer collaboration automated testing strong relationships more trust lightweight traditional development processes and agile development documentation Source : VersionOne LLC www.agiletour.org
rest of the world says…8Data from 5183 respondents worldwide suggests consensus on67% more productivity, 65% more Qualityand 49% better on cost compared with traditionalmethods. Survey also suggests : Number of world-wide developers using agile is rising Agile is not just confined to small organizations; size of organizations using agile is getting larger Productivity Quality Cost Year Organization Author # Respondents increase increase reduction 2003 Shine Johnson 131 93% 88% 49% 2006 Agile Journal Barnett 400 45% 43% 23% 2007 Microsoft Begel et al. 492 14% 32% 16% 2007 UMUC Reco et al. 250 81% 80% 75% 2008 AmbySoft Ambier 642 82% 72% 72% 2008 IT Agile Wolf, et al. 207 78% 74% 72% 2008 Version One Hanscom 3061 74% 68% 38% Average 67% 65% 49% Source : The Business Value of Agile Software Methods by Dr. F Rico, Dr. H Sayani, Dr. S Sone Page 89 www.agiletour.org
numbers proven through many studies…11productivity (lines of code / hour) quality (defect density)26 studies with 726 programmers show average 21 studies with 323 programmers give averageproductivity of 21 LOC / hour defect density of 1.79 defects / KLOC 10 to 20 19 times times higher higher Agile proves to be highly productive (fast and efficient) and of higher quality than traditional 10 Measures Traditional Agile92 8 21.24 LOC / hour (7.931169 Productivity .85 LOC / hour adjusted) 646 Defect density 33.33 defects / KLOC 1.797 defects / KLOC 4 Development 5,087.89 hrs ($508,789 ) / 471 hrs ($47,087) / KLOC23 2 cost KLOC Total Life cycle 18,751 hrs ($4,509,997) / 0 0 2268 hrs ($217,712) / KLOC cost KLOC 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 Productivity (LOC / hour) Quality( Defects / KLOC) Tangible benefits (Traditional – Agile) $4,292,285 / KLOC assumption : $100 as cost of development / hour www.agiletour.org Source : Benediktsson, O., & Dalcher, D. (2005). Estimating size in incremental software development projects. Journal of Engineering Manufacture, 152(6), 253-259.
what it means to the bottom-line…12TCO advantage ~ $ 4 million savings per 1000 lines of codeAgile increases economic benefits in two ways increase revenue through collaboration, interaction, listening to customers, capturing their needs as flexible stories, implement the stories with highest business value first reduce development and maintenance cost through increased productivity (reduce development cost)and improved quality (reducing maintenance cost ) thereby decreasing total cost of ownership www.agiletour.org Source : Benediktsson, O., & Dalcher, D. (2005). Estimating size in incremental software development projects. Journal of Engineering Manufacture, 152(6), 253-259.
how do we quantify the business value ? Metric Definition Agile context Formula Total amount of money Total development cost (includes nCosts spent (Life Cycle Cost) training, coaching, automated tools) ΣCostiSum of Costs i=1 Total amount of money Economic benefit from new systemBenefits nSum of Benefits gained (includes maintenance, rework ΣBenefiti savings) i=1 Ratio of benefits to Includes development, BenefitsB/CR costs maintenance and businessBenefit to Cost Ratio CostROI Ratio of adjusted Benefits – Costs benefits to costsReturn on Investment Cost n Discounted cash flows Time value considered. PreferredNPV for Agile ΣCosti Benefitsi .- Costs 0 (1+Discount Rate) YearsNet Present Value i=1 Point when benefits New Costs .BEP exceed costsBreakeven Point Old Costs / New Costs − 1 Value gained from Considers ‘risk factor’ and N(d1 ) × Benefits − N(d2 ) × Costs XROA strategic delay reduction in possible loss due toReal Options Analysis delays in investment e−Rate × Years d1 = [ln(Benefits ÷ Costs) + (Rate + 0.5 × Risk2) × Years] ÷ Risk × √ Years d2 = d1 − Risk × √ Years Source : The Business Value of Agile Software Methods by Dr. F Rico, Dr. H Sayani, Dr. S Sone www.agiletour.org
make your CFO smile 14 79 studies with quantitative data proves average ROI of 2633% ($26 return for $1 Category Low% Median% High% invested) for Agile Development Cost 10 26 70 Schedule 11 71 700 ROI is due to high Productivity 14 122 712 productivity and high Quality Satisfaction 10 70 75 70 1000 70 quality; ROI 240 2633 8852 Total Cost Benefits B/CR ROI% NPV BEP ROA ISO 9001 $1,73,000 $5,69,841 3:1 229% $3,20,423 $11,96,206 $5,03,345 CMMI® $11,08,233 $30,23,064 3:1 173% $15,09,424 $5,45,099 $26,33,052 SW-CMM® $3,11,433 $30,23,064 10:1 871% $23,06,224 $1,53,182 $28,28,802 Agile Methods $2,17,712 $42,92,285 20:1 1,872% $34,98,958 $11,043 $41,25,209 www.agiletour.org Source : The Business Value of Agile Software Methods by Dr. F Rico, Dr. H Sayani, Dr. S Sone
…and your CEO too 15 Cost Benefits (Million $ / KLOC) Cost Benefit Ratio ROI (Million $ / KLOC) 5 2100% Millions 25 1800% 4 20 1500% 3 1200% 15 2 900% 10 600% 1 5 300% 0 0 0% Cost Benefits Cost / Benefit Ratio ROI Agile CMMI® SW-CMM® ISO 9001 Agile CMMI® SW-CMM® ISO 9001 Agile CMMI® SW-CMM® ISO 9001 NPV BEP ROA 4 1.5 5 Millions Millions Millions 1.2 4 3 0.9 3 2 0.6 2 1 0.3 1 0 0 0 NPV Break Even Point Real Options Analysis Agile CMMI® SW-CMM® ISO 9001 Agile CMMI® SW-CMM® ISO 9001 Agile CMMI® SW-CMM® ISO 9001 www.agiletour.org Source : The Business Value of Agile Software Methods by Dr. F Rico, Dr. H Sayani, Dr. S Sone