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Dancing With The Agile Goddess Israel Gat Agile 2008 August 8, 2008 Toronto, Canada 06/07/09

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Agenda <ul><li>What can Definitely be Accomplished - Agile Success in R&D </li></ul><ul><li>You Can Do It – A Secret Sauce for Level I Agile Enterprise </li></ul><ul><li>The Deeper Nature of Agile - Agile as a Dual Disruptive Methodology </li></ul><ul><li>Blueprint for Level II Agile Enterprise - End-to-End Agile </li></ul><ul><li>(Blueprint for Level III Agile Enterprise – Agile-Based-Market-Of-One </li></ul><ul><li>Benefits: </li></ul><ul><ul><li>Customer-vendor interactions </li></ul></ul><ul><ul><li>Software creation and delivery paradigm </li></ul></ul><ul><ul><li>Nontraditional value chains) </li></ul></ul>© Copyright 06/07/09 BMC Software, Inc.

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Agenda <ul><li>What can Definitely be Accomplished - Agile Success in R&D </li></ul><ul><li>You Can Do It – A Secret Sauce for Level I Agile Enterprise </li></ul><ul><li>The Deeper Nature of Agile - Agile as a Dual Disruptive Methodology </li></ul><ul><li>Blueprint for Level II Agile Enterprise - End-to-End Agile </li></ul><ul><li>Blueprint for Level III Agile Enterprise – Agile-Based-Market-Of-One </li></ul><ul><li>Benefits: </li></ul><ul><ul><li>Customer-vendor interactions </li></ul></ul><ul><ul><li>Software creation and delivery paradigm </li></ul></ul><ul><ul><li>Nontraditional value chains </li></ul></ul>© Copyright 06/07/09 BMC Software, Inc.

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© Copyright 06/07/09 BMC Software, Inc. <ul><li>Two major BMC Software releases were assessed (BMC Performance Manager R2.3 and R2.4). </li></ul><ul><li>Characteristics of the two releases: </li></ul><ul><ul><li>90 – 95* full-time equivalent staff (FTEs) </li></ul></ul><ul><ul><li>Started implementing the Scrum methodology in early 2005 (Waterfall environment until then) </li></ul></ul><ul><ul><li>Rally software tools and consulting </li></ul></ul><ul><ul><li>Twelve Scrum teams coordinated through Scrum of Scrums </li></ul></ul><ul><ul><li>1,450 story cards </li></ul></ul><ul><ul><li>~1.4 million lines of new and modified code. </li></ul></ul><ul><ul><li>(*) This figure applies to the BPM 2.3 and 2.4 projects; all in all BMC currently has close to 1,000 “Scrummers” </li></ul></ul><ul><ul><li>[This and the next six slides are based on the BMC/QSMA/Cutter Consortium study; August 2007] </li></ul></ul>The BMC/QSMA/Cutter Consortium Study

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Industry Data from the QSM SLIM-Metrics Database <ul><li>Spans 20+ years </li></ul><ul><li>Large heterogeneous database contains over 7,000+ projects </li></ul><ul><li>Represents over 685+ million SLOC, 7+ million function points, over 600 languages, from 500+ organizations in 18 countries </li></ul><ul><li>Adding 200 – 400 projects/year </li></ul>© Copyright 06/07/09 BMC Software, Inc.

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© Copyright 06/07/09 BMC Software, Inc. Trendline Assessment – Schedule Story Cards 100 1,000 Months 1 100 10 Build Phase Time Faster 12-13 months BMC is much faster than the overall industry trend: >95 th percentile. 4-5 months BPM 2.4 BPM 2.3 BMC QSM SLIM database 1 Sigma line style

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© Copyright 06/07/09 BMC Software, Inc. Trendline Assessment – Schedule – Agile Sample Story Cards 10 1,000 Months 1 100 10 Build Phase Time Faster BPM 2.4 BPM 2.3 BMC much faster to market than the Agile sample for >100 story cards releases BMC QSMA SLIM database 1 Sigma line style Agile Companies 100

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© Copyright 06/07/09 BMC Software, Inc. Trendline Assessment – Quality Stories 100 1,000 Bugs/Defects Bugs/Defects (Hardening Iterations) 10 10,000 1,000 100 Defects at normal levels in spite of fast speed BPM 2.4 BPM 2.3 BMC QSM SLIM database 1 Sigma line style

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Productivity Index Assessment © Copyright 06/07/09 BMC Software, Inc. BMC QSM SLIM database 1 Sigma line style Agile Companies Higher productivity in spite of running with more Scrum teams than other Agile projects Story Cards 10 1,000 100 Productivity Index (PI) 0 35 15 25 20 5 10 30 BPM 2.4 BPM 2.3 Productivity Index

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© Copyright 06/07/09 BMC Software, Inc. Productivity Index (PI) Industry values by application type 0 2 4 6 8 10 12 14 16 18 20 22 24 Productivity Index (PI) w/ ±1 Standard Deviation 28 26 Business Information Command and Control Process Control Scientific System Telecommunications Engineering Avionics Microcode Real Time Real Time

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Agenda <ul><li>What can Definitely be Accomplished - Agile Success in R&D </li></ul><ul><li>You Can Do It – A Secret Sauce for Level I Agile Enterprise </li></ul><ul><li>The Deeper Nature of Agile - Agile as a Dual Disruptive Methodology </li></ul><ul><li>Blueprint for Level II Agile Enterprise - End-to-End Agile </li></ul><ul><li>Blueprint for Level III Agile Enterprise – Agile-Based-Market-Of-One </li></ul><ul><li>Benefits: </li></ul><ul><ul><li>Customer-vendor interactions </li></ul></ul><ul><ul><li>Software creation and delivery paradigm </li></ul></ul><ul><ul><li>Nontraditional value chains </li></ul></ul>© Copyright 06/07/09 BMC Software, Inc.

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The Secret Sauce of BMC’s Success <ul><li>The three ingredients of BMC’s secret sauce were: </li></ul><ul><ul><li>The passion and pride of the craftsman </li></ul></ul><ul><ul><li>Creating a learning organization </li></ul></ul><ul><ul><li>Providing “air cover” for a long enough time for harnessing the Scrum methodology to our specific environment/circumstances </li></ul></ul><ul><li>Agile at BMC pretty much followed the evolutionary biologists “Punctuated Equilibrium” paradigm advocated by Stephen Jay Gould - confluence of several factors that mature all-at-once: </li></ul><ul><ul><li>Long intervals of additive evolution (“Equilibrium&quot;) </li></ul></ul><ul><ul><li>“ Punctuated&quot; by short, revolutionary transitions , in which species became extinct and replaced by wholly new forms </li></ul></ul><ul><ul><li>The Punctuated Equilibrium paradigm has successfully been applied to explain phenomena in other domains, e.g. revolution in military affairs </li></ul></ul><ul><ul><li>It can/should happen in your company </li></ul></ul><ul><li>What BMC accomplished can be achieved by any fully committed company that has the leadership, know-how, flexibility and patience to let the Agile process evolve and mature </li></ul>

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What A Company Needs for Agile Success © Copyright 06/07/09 BMC Software, Inc.

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Sample Proof Points for Significant Agile Success <ul><li>BMC </li></ul><ul><li>Exigen </li></ul><ul><li>Follett Software </li></ul><ul><li>IDX/GE Healthcare </li></ul><ul><li>SirsiDynix </li></ul><ul><li>Xebia </li></ul>

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Agenda <ul><li>What can Definitely be Accomplished - Agile Success in R&D </li></ul><ul><li>You Can Do It – A Secret Sauce for Level I Agile Enterprise </li></ul><ul><li>The Deeper Nature of Agile - Agile as a Dual Disruptive Methodology </li></ul><ul><li>Blueprint for Level II Agile Enterprise - End-to-End Agile </li></ul><ul><li>Blueprint for Level III Agile Enterprise – Agile-Based-Market-Of-One </li></ul><ul><li>Benefits: </li></ul><ul><ul><li>Customer-vendor interactions </li></ul></ul><ul><ul><li>Software creation and delivery paradigm </li></ul></ul><ul><ul><li>Nontraditional value chains </li></ul></ul>© Copyright 06/07/09 BMC Software, Inc.

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Between Christensen and Corporate Inertia © Copyright 06/07/09 BMC Software, Inc. Agile: a disruptive methodology on two dimensions Interplay of 2 Dimensions

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Agenda <ul><li>What can Definitely be Accomplished - Agile Success in R&D </li></ul><ul><li>You Can Do It – A Secret Sauce for Level I Agile Enterprise </li></ul><ul><li>The Deeper Nature of Agile - Agile as a Dual Disruptive Methodology </li></ul><ul><li>Blueprint for Level II Agile Enterprise - End-to-End Agile </li></ul><ul><li>Blueprint for Level III Agile Enterprise – Agile-Based-Market-Of-One </li></ul><ul><li>Benefits: </li></ul><ul><ul><li>Customer-vendor interactions </li></ul></ul><ul><ul><li>Software creation and delivery paradigm </li></ul></ul><ul><ul><li>Nontraditional value chains </li></ul></ul>© Copyright 06/07/09 BMC Software, Inc.

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End-to-End Enterprise Agility © Copyright 06/07/09 BMC Software, Inc. Agile Component Team Agile Teams of Teams Agile Enterprise Scale (perpetual) Measurement A B C D Requirements runway Intentional Architecture Enterprise Tooling Iterate Iterate (2 wks) Design Test Build Release (3-4 mo) Harden and Ship Req Plan Iterate Iterate Iterate Agile Release Train Organizational Change Organizational Change Agile Release Train Requirements runway

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3 Levels of Participation © Copyright 06/07/09 BMC Software, Inc. Direct Field Participation Release Planning I1 I3 I2 I4 I6 I5 I7 I8 Market Planning Market/Solution Release Plan Product Roadmap Product Release Plan Product Release Plan Iteration Demos / Requirements Backlog 3-4 months I1 I3 I2 I4 I6 I5 I7 I8 2 weeks Release Mgt

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Agile GTM Process – Roy Ritthaler’s Design © Copyright 06/07/09 BMC Software, Inc. “ xi” release Marketing Release Train “ bsm” release R1 60-90 days 60-90 days 60-90 days 60-90 days R2 R3 R4 R5 R&D Release Train Engineering & Product Management Driven Frequency Market Driven Frequency “ beta” release “ maintenance” release Collaborative Asynchronous GTM Processes

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Transition to Agile Organization © Copyright 06/07/09 BMC Software, Inc. Waterfall Optimized Organization Agile Organization Agile R&D Teams Operational Team Executive Team R&D Teams Executive Management

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Agenda <ul><li>What can Definitely be Accomplished - Agile Success in R&D </li></ul><ul><li>You Can Do It – A Secret Sauce for Level I Agile Enterprise </li></ul><ul><li>The Deeper Nature of Agile - Agile as a Dual Disruptive Methodology </li></ul><ul><li>Blueprint for Level II Agile Enterprise - End-to-End Agile </li></ul><ul><li>Blueprint for Level III Agile Enterprise – Agile-Based-Market-Of-One </li></ul><ul><li>Benefits: </li></ul><ul><ul><li>Customer-vendor interactions </li></ul></ul><ul><ul><li>Software creation and delivery paradigm </li></ul></ul><ul><ul><li>Nontraditional value chains </li></ul></ul>© Copyright 06/07/09 BMC Software, Inc.

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Systemic Problems with Level II Agile Enterprise <ul><li>In a typical corporate value chain, change in velocity in any single link exposes inefficiencies in the subsequent link(s) </li></ul><ul><ul><li>PM  Dev  QA  Marketing  Sales  Revenue Recognition  Back Office  Customer Support  … </li></ul></ul><ul><li>Change in velocity of a few consecutive links often generates a catastrophe downstream </li></ul><ul><li>Consequently, one encounters innate corporate drive to “harness” the disruptive Agile methodology </li></ul><ul><ul><li>Largely at a level lower than consciousness </li></ul></ul><ul><ul><li>Typically in the form of some kind of “executive governance” </li></ul></ul><ul><ul><li>“ Collaborative governance happens in the trenches, among people who interact everyday. The real governance solutions happen outside the executive suite…” </li></ul></ul><ul><li>[William Ulrich in “The Cutter Edge”; April 15, 2008] </li></ul><ul><li>Bringing logic and reason to an interdisciplinary corporate balance which evolved over many years is not necessarily sufficient for success… </li></ul>© Copyright 06/07/09 BMC Software, Inc.

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Sacred Laws of Software Engineering Revisited <ul><li>The BMC experience reported earlier in this presentation can be summarized as follows: </li></ul><ul><ul><li>Aggressive staffing: 2-3X the typical number of co-dependent Scrum project teams </li></ul></ul><ul><ul><li>Racing against short deadline without incurring a hit on productivity </li></ul></ul><ul><ul><li>Gaining big time on productivity without incurring a hit on quality </li></ul></ul><ul><ul><li>(Distributed development environment) </li></ul></ul><ul><li>It seems that for this kind of Hyper-productivity in Scrum, two cornerstones laws of software engineering could be relaxed*: </li></ul><ul><ul><li>Brook’s law </li></ul></ul><ul><ul><li>Puttnam’s 4 th law </li></ul></ul><ul><li>With some very far reaching ramifications with respect to the traditional release concept…. </li></ul><ul><li>(*) I am deeply indebted to Michael Mah for this observation </li></ul>

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Release-centric Agile Planning © Copyright 06/07/09 BMC Software, Inc. Collect Customer Requirements Establish a Prioritized Backlog R1 R3 R4 R5 R6 R7 R8 R9 R10 R2 R1 R3 R4 R5 R6 R7 R8 R9 R10 R2 Define a Release Based on Priorities time Release R5 R6 R9 R2 R1 R3 R4 R7 R8 R10 Backlog

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Made-to-Order Releases © Copyright 06/07/09 BMC Software, Inc. … Define a Release Based on Priorities <ul><li>Additional Customer Requirements </li></ul><ul><li>“ Specials” would be added in real-time </li></ul><ul><li>“ Specials” do not get “stuck” in the backlog </li></ul>C2 C1 <ul><li>Create Customer-tailored Releases </li></ul><ul><li>Certain features, e.g. R9, get “demoted” to the backlog </li></ul>R9 Release R5 R6 R2 R1 R3 R4 R7 R8 R10 Backlog C-1 Release R5 R6 R9 R2 C-2 Release <ul><li>The customer gets the “release” in 3-4 months max </li></ul><ul><li>Managing the Overall Project </li></ul><ul><li>During an interim period; N special releases exist </li></ul><ul><li>Once a year all special releases get consolidated to a standard release </li></ul>Release R1 R3 R4 R7 R8 R10 Backlog R5 R6 R2 R5 R6 R2 R9 R1 R3 R4 R7 R8 R10 Backlog Release R5 R6 R2 C2 C1

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Agenda <ul><li>What can Definitely be Accomplished - Agile Success in R&D </li></ul><ul><li>You Can Do It – A Secret Sauce for Level I Agile Enterprise </li></ul><ul><li>The Deeper Nature of Agile - Agile as a Dual Disruptive Methodology </li></ul><ul><li>Blueprint for Level II Agile Enterprise - End-to-End Agile </li></ul><ul><li>Blueprint for Level III Agile Enterprise – Agile-Based-Market-Of-One </li></ul><ul><li>Benefits: </li></ul><ul><ul><li>Customer-vendor interactions </li></ul></ul><ul><ul><li>Software creation and delivery paradigm </li></ul></ul><ul><ul><li>Nontraditional value chains </li></ul></ul>© Copyright 06/07/09 BMC Software, Inc.

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© Copyright 06/07/09 BMC Software, Inc. Agile-Based-Market-Of-One in the Context of Customer-Vendor Interactions & Relations Source: Crawford & Mathews; The Myth of Excellence; New York, NY; Crown Business, 2001 Level Access/Ease Experience Price Product Service III: Consumer seeks the Company (Dominate) Give me a solution; help me out in a bind Establish intimacy with me by doing something no one else can Be my agent; let me trust you to make my purchases Inspire me with an assortment of great products I didn’t know about Customize the product or service to fit my needs II: Consumer prefers the Company (Differentiate) Make the interaction convenient for me Care about my needs and me Be fair and consistent in your pricing. I’m not necessarily after the lowest price Be dependable in your selection and in stock position, so I can rely on you when I’m in a bind Educate me when I encounter a product or a situation I don’t understand I: Consumer accepts the Company (Operate at Par) Make it easy for me to find what I need, get in and out in a hurry Respect me; treat me like a human being Keep the prices honest; don’t jack them up or offer big savings when there are none Be credible in your product and service offerings Accommodate me; bend over backward sometimes to show me you care Consumer Underworld Block my way, hassle me, keep me waiting, make it hard for me to get in and out Dehumanize me; disrespect me; ignore my needs Be inconsistent, unclear, or misleading in your pricing Offer me poor quality merchandise and services that I can’t use Give me an experience I’d just as soon forget; me a reason to tell my friends and relatives to stay away

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What does Customer Intimacy Really Mean?

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Agile-Based-Market-Of-One in the Context of the Software Creation and Delivery Paradigm <ul><li>Revolution in how we conceive, do and deliver the “sausage” to the top N customers </li></ul><ul><ul><li>Disintermediation of the “filters” between the customer and the R&D lab </li></ul></ul><ul><ul><li>Delivery straight from the R&D lab to the user </li></ul></ul><ul><ul><li>Major value migration back to products/solutions: </li></ul></ul><ul><ul><ul><li>The economics driven by 150-400% attach rates through professional and ancillary services are turned around </li></ul></ul></ul>© Copyright 06/07/09 BMC Software, Inc.

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Agile-Based-Market-Of-One Blows Traditional Value Chains to Bits © Copyright 06/07/09 BMC Software, Inc.

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Continuing our Dialog <ul><li>Israel Gat </li></ul><ul><li>[email_address] </li></ul><ul><li>www.theagileexecutive.com </li></ul>© Copyright 06/07/09 BMC Software, Inc.