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Business Value of
Agile Methods
Using ROI & Real Options
     Dr. David F. Rico, PMP, ACP, CSM
                  Twitter: @dr_david_f_rico
             Website: http://www.davidfrico.com
       LinkedIn: http://www.linkedin.com/in/davidfrico
Facebook: http://www.facebook.com/profile.php?id=1540017424
Author Background
 DoD contractor with 28+ years of IT experience
 B.S. Comp. Sci., M.S. Soft. Eng., & D.M. Info. Sys.
 Large gov’t projects in U.S., Far/Mid-East, & Europe




     Published six books & numerous journal articles
     Adjunct at George Washington, UMUC, & Argosy
     Agile Program Management & Lean Development
     Specializes in metrics, models, & cost engineering
     Six Sigma, CMMI, ISO 9001, DoDAF, & DoD 5000
     Cloud Computing, SOA, Web Services, FOSS, etc.
                                                           2
Today’s Whirlwind Environment

                           Global                                                                         Reduced
                         Competition                                                                     IT Budgets
      Work Life                                                                                                                 Obsolete
     Imbalance                                                                                                              Technology & Skills
                                               Demanding                           81 Month
                   Overruns                   Customers                          Cycle Times                  Inefficiency
   Vague           Attrition                                                                                  High O&M                   Overburdening
Requirements       Escalation                                                                                 Lower DoQ                 Legacy Systems
                   Runaways                                                                                   Vulnerable
                   Cancellation                                                                               N-M Breach
                                             Organization                           Redundant
                                             Downsizing                            Data Centers
    Technology                                                                                                                          Poor
      Change                System                                                                    Lack of                       IT Security
                           Complexity                                                            Interoperability



           Pine, B. J. (1993). Mass customization: The new frontier in business competition. Boston, MA: Harvard Business School Press.
           Pontius, R. W. (2012). Acquisition of IT: Improving efficiency and effectiveness in IT acquisition in the DoD. Second Annual
           AFEI/NDIA Conference on Agile in DoD, Springfield, VA, USA.                                                                                 3
Software in U.S. DoD Systems
   No. of software-intensive systems is growing
   80% of US DoD functions performed in software
   Major driver of cost, schedule, & tech. performance




         Kennedy, M. P., & Umphress, D. A. (2011). An agile systems engineering process: The missing link. Crosstalk, 24(3), 16-20.
                                                                                                                                      4
Traditional Projects
                       Big projects result in poor quality and scope changes
                       Productivity declines with long queues/wait times
                       Large projects are unsuccessful or canceled
                                         Size vs. Quality                                                             Size vs. Requirements Growth
                       16.00                                                                                40%
Defect Density




                       12.80                                                                                32%




                                                                                               Percentage
                        9.60                                                                                24%

                        6.40                                                                                16%

                        3.20                                                                                8%

                        0.00                                                                                0%
                               0   2         6          25        100       400                                   0        2          6            25   100   400
                                   Lines of Code (Thousands)                                                               Lines of Code (Thousands)


                                       Size vs. Productivity                                                                    Size vs. Success
                        5.00                                                                                60%
Code Production Rate




                        4.00                                                                                48%
                                                                                               Percentage



                        3.00                                                                                36%

                        2.00                                                                                24%

                        1.00                                                                                12%

                        0.00                                                                                0%
                               0   2         6          25        100       400                                   0        2          6            25   100   400
                                   Lines of Code (Thousands)                                                               Lines of Code (Thousands)

                                   Jones, C. (1991). Applied software measurement: Assuring productivity and quality. New York, NY: McGraw-Hill.                    5
Global Project Failures
             Challenged and failed projects hover at 67%
             Big projects fail more often, which is 5% to 10%
             Of $1.7T spent on IT projects, over $858B were lost
                                                                                                          $1.8
       2010       33%                41%                     26%

       2008       32%                44%                      24%
                                                                                                          $1.4




                                                                                 Trillions (US Dollars)
       2006        35%                  46%                    19%

       2004       29%                 53%                       18%                                       $1.1
Year




       2002       34%                    51%                     15%

       2000      28%                49%                       23%                                         $0.7


       1998      26%               46%                      28%
                                                                                                          $0.4
       1996      27%          33%                       40%

       1994     16%           53%                          31%
                                                                                                          $0.0
           0%         20%    40%         60%            80%          100%                                        2002 2003 2004 2005 2006 2007 2008 2009 2010

                Successful         Challenged                  Failed                                                Expenditures       Failed Investments

                              Standish Group. (2010). Chaos summary 2010. Boston, MA: Author.
                              Sessions, R. (2009). The IT complexity crisis: Danger and opportunity. Houston, TX: Object Watch.
                                                                                                                                                                6
Requirements Defects & Waste
   Requirements defects are #1 reason projects fail
   Traditional projects specify too many requirements
   More than 65% of requirements are never used at all
            Defects                                                                                        Waste
                                                                                                                     Never
                 Requirements
                                                                                                                      45%
                     47%
Other 7%                                                                     Always 7%

Implementation
                                                                                Often 13%
     18%                                                                                                                      Rarely
                        Design                                                                                                 19%
                         28%                                                                        Sometimes
                                                                                                       16%




                 Sheldon, F. T. et al. (1992). Reliability measurement: From theory to practice. IEEE Software, 9(4), 13-20
                 Johnson, J. (2002). ROI: It's your job. Extreme Programming 2002 Conference, Alghero, Sardinia, Italy.
                                                                                                                                       7
What is Agility?
   A-gil-i-ty (ə-'ji-lə-tē) Property consisting of quickness,
    lightness, and ease of movement; To be very nimble
     The ability to create and respond to change in order to
       profit in a turbulent global business environment
     The ability to quickly reprioritize use of resources when
       requirements, technology, and knowledge shift
     A very fast response to sudden market changes and
       emerging threats by intensive customer interaction
     Use of evolutionary, incremental, and iterative delivery
       to converge on an optimal customer solution
    Maximizing BUSINESS VALUE with right sized, just-
       enough, and just-in-time processes and documentation                                                   
                Highsmith, J. A. (2002). Agile software development ecosystems. Boston, MA: Addison-Wesley.
                                                                                                              8
What are Agile Methods?
   People-centric way to create innovative solutions
   Product-centric alternative to documents/process
   Market-centric model to maximize business value
                Customer Collaboration                                                                            Contracts

     Frequent comm.
      Close proximity
      Regular meetings
                          Multiple comm. channels
                          Frequent feedback
                          Relationship strength
                                                                                  valued
                                                                                 more than
                                                                                                            Contract compliance
                                                                                                            Contract deliverables
                                                                                                            Contract change orders

              Individuals           & Interactions                                                                 Processes
      Leadership                    Competence                                  valued                    Lifecycle compliance
      Boundaries                    Structure                                  more than                  Process Maturity Level

     Empowerment                   Manageability/Motivation

                     Working Software
                                                                                                            Regulatory compliance

                                                                                                               Documentation

     Clear objectives      Timeboxed iterations
      Small/feasible scope  Valid operational results
      Acceptance criteria   Regular cadence/intervals
                                                                                  valued
                                                                                 more than
                                                                                                            Document deliveries
                                                                                                            Document comments
                                                                                                            Document compliance

                   Responding to Change                                                                         Project Plans
      Org. flexibility      System flexibility                                  valued                    Cost Compliance
      Mgt. flexibility      Technology flexibility                             more than                  Scope Compliance

     Process flexibility  Infrastructure flexibility                                                     Schedule Compliance


         Agile Manifesto. (2001). Manifesto for agile software development. Retrieved September 3, 2008, from http://www.agilemanifesto.org
                                                                                                                                              9
How Do Agile Methods Work?
   Agile methods DON’T mean deliver it now & fix it later
   Lightweight, yet disciplined approach to development
   Reduced cost, risk, & waste while improving quality
         What                                                          How                                                                 Result
     Flexibility                Use lightweight, yet disciplined processes and artifacts                                        Low work-in-process
     Customer                Involve customers early and often throughout development                                                Early feedback
      Prioritize                 Identify highest-priority, value-adding business needs                                            Focus resources
      Descope                    Descope complex programs by an order of magnitude                                                 Simplify problem
    Decompose                         Divide the remaining scope into smaller batches                                            Manageable pieces
       Iterate                 Implement pieces one at a time over long periods of time                                                Diffuse risk
     Leanness                    Architect and design the system one iteration at a time                                       JIT waste-free design
       Swarm                 Implement each component in small cross-functional teams                                            Knowledge transfer
    Collaborate              Use frequent informal communications as often as possible                                         Efficient data transfer
     Test Early                   Incrementally test each component as it is developed                                             Early verification
    Test Often               Perform system-level regression testing every few minutes                                              Early validation
        Adapt                  Frequently identify optimal process and product solutions                                       Improve performance

    Rico, D. F. (2012). What’s really happening in agile methods: Its principles revisited? Retrieved June 6, 2012, from http://davidfrico.com/agile-principles.pdf
                                                                                                                                                                      10
Agile World View
   “Agility” has many dimensions other than IT
   It ranges from leadership to technological agility
   The focus of this brief is program management agility
                           Agile Leaders
                   Agile Organization Change
                 Agile Acquisition & Contracting
                    Agile Strategic Planning

                   Agile Capability Analysis
                   Agile Program Management
                                                   
                   Agile Project Management
                    Agile Systems Development
                    Agile Processes & Practices
                             Agile Tools
                     Agile Information Systems
                            Agile Tech.                 11
Agile Enterprise Delivery Model
   Begins with a high-level product vision/architecture
   Continues with needs development/release planning
   Includes agile delivery teams to realize business value




    Leffingwell, D. (2011). Agile software requirements: Lean requirements practices for teams, programs, and the enterprise. Boston, MA: Pearson Education.
                                                                                                                                                               12
Agile Methods
       VersionOne found 80% using agile methods today
       Most are using Scrum with several key XP practices
       Number of CSMs have doubled to 200,000 in 2 years







               House, D. (2012). Sixth annual state of agile survey: State of agile development. Atlanta, GA: VersionOne.   13
Agile Practices
   VersionOne found 65% using Scrum practices
   55% are using some of top XP technical practices
   Lean-Kanban is a rising practice with a 24% adoption


                                                                            
                       
                                                                                                                        Continuous
                                                                                                                        Integration
                      
                      




           House, D. (2012). Sixth annual state of agile survey: State of agile development. Atlanta, GA: VersionOne.
                                                                                                                               14
Studies of Agile Methods
   Dozens of surveys of agile methods since 2003
   100s of Agile and CMMI case studies documented
   Agile productivity, quality, and cost better than CMMI




      Rico, D. F. (2008). What is the return-on-investment of agile methods? Retrieved February 3, 2009, from http://davidfrico.com/rico08a.pdf
      Rico, D. F. (2008). What is the ROI of agile vs. traditional methods? TickIT International, 10(4), 9-18.
                                                                                                                                                  15
Agile Cost of Quality (CoQ)
   Agile testing is 10x better than code inspections
   Agile testing is 100x better than traditional testing
   Agile testing is done earlier “and” 1,000x more often




         Rico, D. F. (2012). The Cost of Quality (CoQ) for Agile vs. Traditional Project Management. Fairfax, VA: Gantthead.Com.
                                                                                                                                   16
Agile Cost & Benefit Analysis
   Costs based on avg. productivity and quality
   Productivity ranged from 4.7 to 5.9 LOC an hour
   Costs were $588,202 and benefits were $3,930,631




                          
                              5
                              i 1




          d1 = [ln(Benefits  Costs) + (Rate + 0.5  Risk2)  Years]  Risk   Years, d2 = d1  Risk   Years

    Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile software methods: Maximizing ROI with just-in-time processes and documentation.
    Ft. Lauderdale, FL: J. Ross Publishing.                                                                                                                      17
Benefits of Agile Methods
   Analysis of 23 agile vs. 7,500 traditional projects
   Agile projects are 54% better than traditional ones
   Agile has lower costs (61%) and fewer defects (93%)
                         2.8                                                               18
                                                        Before Agile                                                     Before Agile
        3.00                                                            20
                                                        After Agile                                                      After Agile
        2.25                                                            15                               11
                                       1.1
        1.50                                                            10




                                                                                                                                       
        0.75                                           61%                5                                             39%
                                                      Lower                                                             Less
                                                       Cost                                                             Staff
               Project Cost in Millions $                                             Total Staffing


                          18                                                             2270
                                                        Before Agile                                                     Before Agile
         20                                                            2500
                                       13.5             After Agile                                                      After Agile
         15                                                            1875

         10                                                            1250
                                                                                                        381



                                                                                                                                       
          5                                            24%             625                                             93%
                                                                                                                       Less
                                                      Faster                                                          Defects
               Delivery Time in Months                                             Cumulative Defects



               Mah, M. (2008). Measuring agile in the enterprise: Proceedings of the Agile 2008 Conference, Toronto, Canada.
                                                                                                                                            18
Agile vs. Traditional Success
   Traditional projects succeed at 50% industry avg.
   Traditional projects are challenged 20% more often
   Agile projects succeed 3x more and fail 3x less often
                 Agile                                                              Traditional
                                                                             Success
             Success
                                                                               14%
               42%

                                                                                            Challenged
                                                                                               57%
                                                                        Failed
    Failed             Challenged                                        29%
     9%                   49%




                           Standish Group. (2012). Chaos manifesto. Boston, MA: Author.
                                                                                                         19
Agile vs. Traditional Outcomes
        Agile requirements implemented in slices vs. layers
        User needs with higher business value are done first
        Reduces cost & risk while increasing business success
           Agile                                                                                                                      Traditional
                          Faster                             1                                  2 3                             Late 
                                                                               GUI
                     Early ROI                                                                                                  No Value 
                                                                              APIs
                 Lower Costs                                          Applications                                              Cost Overruns 
              Fewer Defects                                            Middleware                                               Very Poor Quality 
                                                                  Operating System
          Manageable Risk                                                                                                       Uncontrollable Risk 
                                                                          Computer
       Better Performance                                                 Network
                                                                                                                                 Slowest Performance 
 Smaller Attack Surface                                                 Seven Wastes
                                                                                                                                 More Security Incidents 
                                                                       1.Rework
     JIT, Just-enough architecture                                    2.Motion                                                      Myth of perfect architecture
     Early, in-process system V&V                                     3.Waiting                                                     Late big-bang integration tests
     Fast continuous improvement            MINIMIZES                 4.Inventory                  MAXIMIZES                        Year long improvement cycles
     Scalable to systems of systems                                   5.Transportation                                              Breaks down on large projects
     Maximizes successful outcomes                                    6.Overprocessing                                              Undermines business success
                                                                       7.Overproduction

                                  Shore, J. (2011). Evolutionary design illustrated. Norwegian Developers Conference, Oslo, Norway.                                     20
Benefits of Organizational Agility
   Study of 15 agile vs. non-agile Fortune 500 firms
   Based on models to measure organizational agility
   Agile firms out perform non agile firms by up to 36%




         Hoque, F., et al. (2007). Business technology convergence. The role of business technology convergence in innovation
         and adaptability and its effect on financial performance. Stamford, CT: BTM Institute.
                                                                                                                                21
Agile Industry Case Studies
       80% of worldwide IT projects use agile methods
       Includes regulated industries, i.e., DoD, FDA, etc.
       Agile now used for safety critical systems, FBI, etc.
         Industry                   Org                Project                Purpose                      Size                           Metrics
                                                                                                    20 teams                1,838 User Stories
        Electronic
                                 Google               Adwords              Advertising              140 people              6,250 Function Points
        Commerce                                                                                    5 countries             500,000 Lines of Code
                                                             15 teams                                                       26,809 User Stories
         Shrink                                    Project
       Wrapped
                             Primavera Primavera             90 people
                                                 Management  Collocated
                                                                                                                             91,146 Function Points
                                                                                                                             7,291,666 Lines of Code          
                                                                                                    4 teams                 1,659 User Stories
         Health                                                                Blood
         Care
                                   FDA                 m2000
                                                                              Analysis
                                                                                                    20 people
                                                                                                    Collocated
                                                                                                                             5,640 Function Points
                                                                                                                             451,235 Lines of Code            
                                                                                                    10 teams                3,947 User Stories
        Law                                                                  Case File
   Enforcement
                                    FBI               Sentinel
                                                                             Workflow
                                                                                                    50 people
                                                                                                    Collocated
                                                                                                                             13,419 Function Points
                                                                                                                             1,073,529 Lines of Code          
           U.S.                                                            Knowledge  3 teams                               390 User Stories
                               Stratcom                SKIweb                         12 people                             1,324 Function Points
           DoD                                                            Management  Collocated                            105,958 Lines of Code


           Rico, D. F. (2010). Lean and agile project management: For large programs and projects. Proceedings of the First International Conference on Lean
           Enterprise Software and Systems, Helsinki, Finland, 37-43.
                                                                                                                                                               22
Perceptions of Agile Methods
         Structure, reward, decision, staffing, leadership, etc.
         Top-down, individualism, regulation, compliance, etc.
         Focus on reforming acquisition & procurement system
     Type/Kind Common DoD Agile Perceptions                                                   Reality with Respect to Agile Methods

    Discipline          Undisciplined Cowboy Coding                         Rigorous process, plans, requirements, QA, CM, testing, documents etc.


    Scalability          Only Applies Small Projects                        Used by 100, 500, 1,000, 10,000+ person person projects & organizations

        Domain

    Management
                       Only for Protoperational Systems  Used in DoD, medical devices, avionics, autos, electronics, etc.

                         Flexible Scope/Can't Use EVM                        Lightweight EVM model is used with its release planning methodology
                                                                                                                                                                       
   Requirements           Doesn't Use Requirements                          Always begins with valuable, well-defined, & prioritized requirements


   Architecture Spaghetti Code from Iterations  Begins with lean architecture or create waste-free emergent design


       Quality         No Documents/Unmaintainable  Electronic plans, requirements, designs, tests, manuals, documents, etc.

    Inspections         High CoQ from No Inspections                         One or two orders of magnitude more inspections & tests performed
                                                                                                                                                                       
       Security          Vulnerabilities from Hacking                       Security practices result in smaller attack surface & fewer vulnerabilities



          Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile software methods: Maximizing ROI with just-in-time processes and documentation.
          Ft. Lauderdale, FL: J. Ross Publishing.
                                                                                                                                                                       23
Conclusion
    Agility is the evolution of management thought
    Confluence of traditional and non-traditional ideas
    Improve performance by over an order of magnitude
                         Agile methods are …
                          Systems development approaches
                          New product development approaches
                          Expertly designed to be fast and efficient
                          Intentionally lean and free of waste (muda)
                          Systematic highly-disciplined approaches


                         Capable of producing high quality systems
                          Right-sized, just-enough, and just-in-time tools
                          Scalable to large, complex mission-critical systems
                                                                                                                                
                          Designed to maximize business value for customers

        “The world of traditional methods belongs to yesterday”
“Don’t waste your time using traditional methods on 21st century projects”
         Wysocki, R.F. (2010). Adaptive project framework: Managing complexity in the face of uncertainty. Boston, MA: Pearson Education.   24
Books on ROI of SW Methods
   Guides to software methods for business leaders
   Communicates business value of software methods
   Rosetta stones to unlocking ROI of software methods




             http://davidfrico.com/agile-book.htm (Description)
             http://davidfrico.com/roi-book.htm (Description)
                                                                   25

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Business Value of Agile Methods: Using ROI and REal Options

  • 1. Business Value of Agile Methods Using ROI & Real Options Dr. David F. Rico, PMP, ACP, CSM Twitter: @dr_david_f_rico Website: http://www.davidfrico.com LinkedIn: http://www.linkedin.com/in/davidfrico Facebook: http://www.facebook.com/profile.php?id=1540017424
  • 2. Author Background  DoD contractor with 28+ years of IT experience  B.S. Comp. Sci., M.S. Soft. Eng., & D.M. Info. Sys.  Large gov’t projects in U.S., Far/Mid-East, & Europe  Published six books & numerous journal articles  Adjunct at George Washington, UMUC, & Argosy  Agile Program Management & Lean Development  Specializes in metrics, models, & cost engineering  Six Sigma, CMMI, ISO 9001, DoDAF, & DoD 5000  Cloud Computing, SOA, Web Services, FOSS, etc. 2
  • 3. Today’s Whirlwind Environment Global Reduced Competition IT Budgets Work Life Obsolete Imbalance Technology & Skills Demanding 81 Month  Overruns Customers Cycle Times  Inefficiency Vague  Attrition  High O&M Overburdening Requirements  Escalation  Lower DoQ Legacy Systems  Runaways  Vulnerable  Cancellation  N-M Breach Organization Redundant Downsizing Data Centers Technology Poor Change System Lack of IT Security Complexity Interoperability Pine, B. J. (1993). Mass customization: The new frontier in business competition. Boston, MA: Harvard Business School Press. Pontius, R. W. (2012). Acquisition of IT: Improving efficiency and effectiveness in IT acquisition in the DoD. Second Annual AFEI/NDIA Conference on Agile in DoD, Springfield, VA, USA. 3
  • 4. Software in U.S. DoD Systems  No. of software-intensive systems is growing  80% of US DoD functions performed in software  Major driver of cost, schedule, & tech. performance Kennedy, M. P., & Umphress, D. A. (2011). An agile systems engineering process: The missing link. Crosstalk, 24(3), 16-20. 4
  • 5. Traditional Projects  Big projects result in poor quality and scope changes  Productivity declines with long queues/wait times  Large projects are unsuccessful or canceled Size vs. Quality Size vs. Requirements Growth 16.00 40% Defect Density 12.80 32% Percentage 9.60 24% 6.40 16% 3.20 8% 0.00 0% 0 2 6 25 100 400 0 2 6 25 100 400 Lines of Code (Thousands) Lines of Code (Thousands) Size vs. Productivity Size vs. Success 5.00 60% Code Production Rate 4.00 48% Percentage 3.00 36% 2.00 24% 1.00 12% 0.00 0% 0 2 6 25 100 400 0 2 6 25 100 400 Lines of Code (Thousands) Lines of Code (Thousands) Jones, C. (1991). Applied software measurement: Assuring productivity and quality. New York, NY: McGraw-Hill. 5
  • 6. Global Project Failures  Challenged and failed projects hover at 67%  Big projects fail more often, which is 5% to 10%  Of $1.7T spent on IT projects, over $858B were lost $1.8 2010 33% 41% 26% 2008 32% 44% 24% $1.4 Trillions (US Dollars) 2006 35% 46% 19% 2004 29% 53% 18% $1.1 Year 2002 34% 51% 15% 2000 28% 49% 23% $0.7 1998 26% 46% 28% $0.4 1996 27% 33% 40% 1994 16% 53% 31% $0.0 0% 20% 40% 60% 80% 100% 2002 2003 2004 2005 2006 2007 2008 2009 2010 Successful Challenged Failed Expenditures Failed Investments Standish Group. (2010). Chaos summary 2010. Boston, MA: Author. Sessions, R. (2009). The IT complexity crisis: Danger and opportunity. Houston, TX: Object Watch. 6
  • 7. Requirements Defects & Waste  Requirements defects are #1 reason projects fail  Traditional projects specify too many requirements  More than 65% of requirements are never used at all Defects Waste Never Requirements 45% 47% Other 7% Always 7% Implementation Often 13% 18% Rarely Design 19% 28% Sometimes 16% Sheldon, F. T. et al. (1992). Reliability measurement: From theory to practice. IEEE Software, 9(4), 13-20 Johnson, J. (2002). ROI: It's your job. Extreme Programming 2002 Conference, Alghero, Sardinia, Italy. 7
  • 8. What is Agility?  A-gil-i-ty (ə-'ji-lə-tē) Property consisting of quickness, lightness, and ease of movement; To be very nimble  The ability to create and respond to change in order to profit in a turbulent global business environment  The ability to quickly reprioritize use of resources when requirements, technology, and knowledge shift  A very fast response to sudden market changes and emerging threats by intensive customer interaction  Use of evolutionary, incremental, and iterative delivery to converge on an optimal customer solution   Maximizing BUSINESS VALUE with right sized, just- enough, and just-in-time processes and documentation  Highsmith, J. A. (2002). Agile software development ecosystems. Boston, MA: Addison-Wesley. 8
  • 9. What are Agile Methods?  People-centric way to create innovative solutions  Product-centric alternative to documents/process  Market-centric model to maximize business value Customer Collaboration Contracts   Frequent comm.  Close proximity  Regular meetings  Multiple comm. channels  Frequent feedback  Relationship strength valued more than  Contract compliance  Contract deliverables  Contract change orders Individuals & Interactions Processes  Leadership  Competence valued  Lifecycle compliance  Boundaries  Structure more than  Process Maturity Level   Empowerment  Manageability/Motivation Working Software  Regulatory compliance Documentation   Clear objectives  Timeboxed iterations  Small/feasible scope  Valid operational results  Acceptance criteria  Regular cadence/intervals valued more than  Document deliveries  Document comments  Document compliance Responding to Change Project Plans  Org. flexibility  System flexibility valued  Cost Compliance  Mgt. flexibility  Technology flexibility more than  Scope Compliance   Process flexibility  Infrastructure flexibility  Schedule Compliance Agile Manifesto. (2001). Manifesto for agile software development. Retrieved September 3, 2008, from http://www.agilemanifesto.org 9
  • 10. How Do Agile Methods Work?  Agile methods DON’T mean deliver it now & fix it later  Lightweight, yet disciplined approach to development  Reduced cost, risk, & waste while improving quality What How Result Flexibility Use lightweight, yet disciplined processes and artifacts Low work-in-process Customer Involve customers early and often throughout development Early feedback Prioritize Identify highest-priority, value-adding business needs Focus resources Descope Descope complex programs by an order of magnitude Simplify problem Decompose Divide the remaining scope into smaller batches Manageable pieces Iterate Implement pieces one at a time over long periods of time Diffuse risk Leanness Architect and design the system one iteration at a time JIT waste-free design Swarm Implement each component in small cross-functional teams Knowledge transfer Collaborate Use frequent informal communications as often as possible Efficient data transfer Test Early Incrementally test each component as it is developed Early verification Test Often Perform system-level regression testing every few minutes Early validation Adapt Frequently identify optimal process and product solutions Improve performance Rico, D. F. (2012). What’s really happening in agile methods: Its principles revisited? Retrieved June 6, 2012, from http://davidfrico.com/agile-principles.pdf 10
  • 11. Agile World View  “Agility” has many dimensions other than IT  It ranges from leadership to technological agility  The focus of this brief is program management agility Agile Leaders Agile Organization Change Agile Acquisition & Contracting Agile Strategic Planning  Agile Capability Analysis Agile Program Management  Agile Project Management Agile Systems Development Agile Processes & Practices Agile Tools Agile Information Systems Agile Tech. 11
  • 12. Agile Enterprise Delivery Model  Begins with a high-level product vision/architecture  Continues with needs development/release planning  Includes agile delivery teams to realize business value Leffingwell, D. (2011). Agile software requirements: Lean requirements practices for teams, programs, and the enterprise. Boston, MA: Pearson Education. 12
  • 13. Agile Methods  VersionOne found 80% using agile methods today  Most are using Scrum with several key XP practices  Number of CSMs have doubled to 200,000 in 2 years  House, D. (2012). Sixth annual state of agile survey: State of agile development. Atlanta, GA: VersionOne. 13
  • 14. Agile Practices  VersionOne found 65% using Scrum practices  55% are using some of top XP technical practices  Lean-Kanban is a rising practice with a 24% adoption    Continuous Integration        House, D. (2012). Sixth annual state of agile survey: State of agile development. Atlanta, GA: VersionOne. 14
  • 15. Studies of Agile Methods  Dozens of surveys of agile methods since 2003  100s of Agile and CMMI case studies documented  Agile productivity, quality, and cost better than CMMI Rico, D. F. (2008). What is the return-on-investment of agile methods? Retrieved February 3, 2009, from http://davidfrico.com/rico08a.pdf Rico, D. F. (2008). What is the ROI of agile vs. traditional methods? TickIT International, 10(4), 9-18. 15
  • 16. Agile Cost of Quality (CoQ)  Agile testing is 10x better than code inspections  Agile testing is 100x better than traditional testing  Agile testing is done earlier “and” 1,000x more often Rico, D. F. (2012). The Cost of Quality (CoQ) for Agile vs. Traditional Project Management. Fairfax, VA: Gantthead.Com. 16
  • 17. Agile Cost & Benefit Analysis  Costs based on avg. productivity and quality  Productivity ranged from 4.7 to 5.9 LOC an hour  Costs were $588,202 and benefits were $3,930,631  5 i 1 d1 = [ln(Benefits  Costs) + (Rate + 0.5  Risk2)  Years]  Risk   Years, d2 = d1  Risk   Years Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile software methods: Maximizing ROI with just-in-time processes and documentation. Ft. Lauderdale, FL: J. Ross Publishing. 17
  • 18. Benefits of Agile Methods  Analysis of 23 agile vs. 7,500 traditional projects  Agile projects are 54% better than traditional ones  Agile has lower costs (61%) and fewer defects (93%) 2.8 18 Before Agile Before Agile 3.00 20 After Agile After Agile 2.25 15 11 1.1 1.50 10   0.75 61% 5 39% Lower Less Cost Staff Project Cost in Millions $ Total Staffing 18 2270 Before Agile Before Agile 20 2500 13.5 After Agile After Agile 15 1875 10 1250 381   5 24% 625 93% Less Faster Defects Delivery Time in Months Cumulative Defects Mah, M. (2008). Measuring agile in the enterprise: Proceedings of the Agile 2008 Conference, Toronto, Canada. 18
  • 19. Agile vs. Traditional Success  Traditional projects succeed at 50% industry avg.  Traditional projects are challenged 20% more often  Agile projects succeed 3x more and fail 3x less often Agile Traditional Success Success 14% 42% Challenged 57% Failed Failed Challenged 29% 9% 49% Standish Group. (2012). Chaos manifesto. Boston, MA: Author. 19
  • 20. Agile vs. Traditional Outcomes  Agile requirements implemented in slices vs. layers  User needs with higher business value are done first  Reduces cost & risk while increasing business success Agile Traditional  Faster 1 2 3 Late  GUI  Early ROI No Value  APIs  Lower Costs Applications Cost Overruns   Fewer Defects Middleware Very Poor Quality  Operating System  Manageable Risk Uncontrollable Risk  Computer  Better Performance Network Slowest Performance   Smaller Attack Surface Seven Wastes More Security Incidents  1.Rework  JIT, Just-enough architecture 2.Motion  Myth of perfect architecture  Early, in-process system V&V 3.Waiting  Late big-bang integration tests  Fast continuous improvement MINIMIZES 4.Inventory MAXIMIZES  Year long improvement cycles  Scalable to systems of systems 5.Transportation  Breaks down on large projects  Maximizes successful outcomes 6.Overprocessing  Undermines business success 7.Overproduction Shore, J. (2011). Evolutionary design illustrated. Norwegian Developers Conference, Oslo, Norway. 20
  • 21. Benefits of Organizational Agility  Study of 15 agile vs. non-agile Fortune 500 firms  Based on models to measure organizational agility  Agile firms out perform non agile firms by up to 36% Hoque, F., et al. (2007). Business technology convergence. The role of business technology convergence in innovation and adaptability and its effect on financial performance. Stamford, CT: BTM Institute. 21
  • 22. Agile Industry Case Studies  80% of worldwide IT projects use agile methods  Includes regulated industries, i.e., DoD, FDA, etc.  Agile now used for safety critical systems, FBI, etc. Industry Org Project Purpose Size Metrics  20 teams  1,838 User Stories Electronic Google Adwords Advertising  140 people  6,250 Function Points Commerce  5 countries  500,000 Lines of Code  15 teams  26,809 User Stories Shrink Project  Wrapped Primavera Primavera  90 people Management  Collocated  91,146 Function Points  7,291,666 Lines of Code   4 teams  1,659 User Stories Health Blood  Care FDA m2000 Analysis  20 people  Collocated  5,640 Function Points  451,235 Lines of Code   10 teams  3,947 User Stories Law Case File  Enforcement FBI Sentinel Workflow  50 people  Collocated  13,419 Function Points  1,073,529 Lines of Code  U.S. Knowledge  3 teams  390 User Stories Stratcom SKIweb  12 people  1,324 Function Points DoD Management  Collocated  105,958 Lines of Code Rico, D. F. (2010). Lean and agile project management: For large programs and projects. Proceedings of the First International Conference on Lean Enterprise Software and Systems, Helsinki, Finland, 37-43. 22
  • 23. Perceptions of Agile Methods  Structure, reward, decision, staffing, leadership, etc.  Top-down, individualism, regulation, compliance, etc.  Focus on reforming acquisition & procurement system Type/Kind Common DoD Agile Perceptions Reality with Respect to Agile Methods  Discipline Undisciplined Cowboy Coding  Rigorous process, plans, requirements, QA, CM, testing, documents etc.  Scalability Only Applies Small Projects  Used by 100, 500, 1,000, 10,000+ person person projects & organizations Domain Management Only for Protoperational Systems  Used in DoD, medical devices, avionics, autos, electronics, etc. Flexible Scope/Can't Use EVM  Lightweight EVM model is used with its release planning methodology   Requirements Doesn't Use Requirements  Always begins with valuable, well-defined, & prioritized requirements  Architecture Spaghetti Code from Iterations  Begins with lean architecture or create waste-free emergent design  Quality No Documents/Unmaintainable  Electronic plans, requirements, designs, tests, manuals, documents, etc. Inspections High CoQ from No Inspections  One or two orders of magnitude more inspections & tests performed   Security Vulnerabilities from Hacking  Security practices result in smaller attack surface & fewer vulnerabilities Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile software methods: Maximizing ROI with just-in-time processes and documentation. Ft. Lauderdale, FL: J. Ross Publishing. 23
  • 24. Conclusion  Agility is the evolution of management thought  Confluence of traditional and non-traditional ideas  Improve performance by over an order of magnitude Agile methods are …  Systems development approaches  New product development approaches  Expertly designed to be fast and efficient  Intentionally lean and free of waste (muda)  Systematic highly-disciplined approaches   Capable of producing high quality systems  Right-sized, just-enough, and just-in-time tools  Scalable to large, complex mission-critical systems   Designed to maximize business value for customers “The world of traditional methods belongs to yesterday” “Don’t waste your time using traditional methods on 21st century projects” Wysocki, R.F. (2010). Adaptive project framework: Managing complexity in the face of uncertainty. Boston, MA: Pearson Education. 24
  • 25. Books on ROI of SW Methods  Guides to software methods for business leaders  Communicates business value of software methods  Rosetta stones to unlocking ROI of software methods  http://davidfrico.com/agile-book.htm (Description)  http://davidfrico.com/roi-book.htm (Description) 25