Agile and the Bottom Line

Applies to: Agile

Authors: Greg Smith and Ahmed Sidky

Get this book in Print, PDF, ePub and Kindle at manning.com. Use code “MSDN37a” to save 37%.

This topic contains the following sections.

• How This Book Will Help You Become More Agile
• Key Points to Remember
• Copyright

If you’re an executive, you may wonder whether Agile can provide any value for what matters: the company’s bottom line. If Agile can’t help you make money and reduce costs, is it worth pursuing? Most companies would say, “no, we don’t need Agile if it doesn’t help us make money.” Thankfully, Agile does tie directly to the bottom line. To see the financial correlation, let’s start by looking at statistics related to Agile adoption.

In 2007, VersionOne, a leading provider of Agile management tools, surveyed 1,700 people in 71 countries. All the participants were using Agile to some extent in their companies. VersionOne asked the participants to identify specific improvements they had realized from implementing Agile practices; see Figure 1.4.

Figure 1.4 Teams that use Agile attest to the benefits.

VersionOne’s data shows that Agile does help in key areas related to software development, with increased productivity, fewer defects, quicker time to market, and reduced costs. We have witnessed similar results with the companies we’ve helped move to Agile.

The VersionOne survey provides proof that Agile worked for most of the companies interviewed, but the main question for most people remains: “Will Agile help my specific company with my specific situation?” Agile will help your company if you have changing requirements and a need to deliver functioning software frequently. If your requirements rarely change and you have the luxury of delivering when you feel the product is satisfactory, then you may not obtain the full benefits recorded in VersionOne’s survey. (Note that we’ve never worked for any companies where this was true.)

It’s valuable to see how well Agile has worked for others, but the most important thing is how Agile correlates to the bottom line. How does Agile help you to increase revenue and/or reduce costs?

To increase revenue and profits indefinitely, your company must identify the key objectives that ensure success within your business environment. These objectives will vary depending on your customers, your competition, and your product market. But almost all companies list the following five items among their key objectives:

1. Customer retention. Retaining customers is key for almost all businesses. An existing customer provides continuous revenue and spreads the word to other potential customers, leading to increased revenues.

2. Accurate delivery. To be successful, you need to understand the needs of your market. You must deliver what the customer needs, or satisfaction will decline and revenues will go down.

3. Innovation. Not only must you help customers address their known needs, you must also anticipate their future needs. Innovative companies solve problems that their customers don’t realize they have.

4. Fast delivery. Similar to the Sunday newspaper analogy at the start of the chapter, you must deliver while the need still exists.

5. Motivated workforce. As the poet Hebbel noted, “Nothing great in the world has ever been accomplished without passion.” Executives know their development teams need to be passionate about their projects; otherwise, the projects and the company will remain mediocre.

If these are the strategic objectives, then what principles do companies follow to obtain these objectives? We believe the following Agile principles should be pursued:

1. Embrace change. The world is volatile, and many discoveries occur during any development project. You’ll discover missing requirements, business needs may change, or you may encounter a technical constraint. The goal is to succeed, not to make excuses. A good development team adapts and delivers in the face of adversity

2. Plan and deliver software frequently. To ensure customer satisfaction and timely delivery, you must work with customers and prioritize their needs. After the needs are prioritized, the team works to deliver the functionality iteratively, starting with the minimal features necessary to deploy a working system.

3. Use human-centric methods. Don’t abandon practices and disciplines, but put more focus on individuals and interactions. Your focus should be on collaboration and communication. Productive teams have frequent face-to-face interaction, minimizing delays due to email chains or the need to formally schedule meetings.

4. Achieve technical excellence. You want processes that enhance quality during development. Solid development processes ensure delivery of a quality product and do wonders for team morale and pride in customer collaboration. To ensure timely delivery, you must be as efficient as possible when you develop. To be efficient, you require frequent feedback and customer interaction to validate that you’re delivering to the need. Real-time customer collaboration also minimizes the effort required to adjust your work. You can’t wait for testing: you need feedback on your understanding of the requirements, on your design thoughts, on your prototypes, and on your code as you iteratively deliver it.

5. Engage in customer collaboration. To ensure timely delivery, you must be as efficient as possible when you develop. To be efficient, you require frequent feedback and customer interaction to validate that you’re delivering to the need. Real-time customer collaboration also minimizes the effort required to adjust your work. You can’t wait for testing: you need feedback on your understanding of the requirements, on your design thoughts, on your prototypes, and on your code as you iteratively deliver it.

We believe these five principles are the foundation for successfully moving to Agile. Figure 1.5 illustrates the relationship between Agile principles, company strategies, and the ultimate goal.

We’ll reference and use these principles as we work through a case study that follows a company called Acme Media during its migration to Agile.

Figure 1.5 Agile provides the enablers that ultimately lead to company success. (This diagram was inspired by the Strategic Intermediate Objectives Map H. William Dettmer discusses in The Logical Thinking Process, American Society for Quality, 2nd Edition 2007.)

Before we delve into the details, let’s spend a moment discussing how this book can help you with your own move to Agile.

How This Book Will Help You Become More Agile

We’ve helped several companies become more Agile. Greg has been in the United States helping the companies he worked for and the students who take his course at Bellevue Community College. Ahmed has been helping companies all over the world, some as an employee and others as an Agile coach/consultant. We have nothing in common in terms of personal experiences, but amazingly we agree on the best way to bring Agile into an organization. We believe that using a single flavor or approach to migrate to Agile doesn’t make sense—each company needs to approach its migration uniquely.

We believe the following five steps can ensure your success in your own unique move to Agile:

1. Assess your potential for becoming Agile. We’ll provide an assessment tool that will help you identify potential risks. The assessment will also help you determine which Agile practices you are ready for.

2. Ensure company buy-in. We’ll walk you through the steps for obtaining executive management, line management, and team support, ultimately leading the team to ownership of the process.

3. Understand your current process. We’ll walk you through reviewing your existing process and making sure it’s clearly understood before you try to change it. We’ll help you identify your constraints and become Agile within them.

4. Pilot a more Agile process. We’ll walk you through the process of selecting, conducting, and evaluating an Agile pilot project.

5. Perform a retrospective. We’ll show you a solid approach for reviewing, maintaining, enhancing, and scaling a more Agile process across your company. In effect, we’re trying to put all of our migration experience into this book and provide a virtual consultant to help you along the way.

Tip

The need for Agile today: A story from Greg.

A few years ago, I worked for a major financial institution. Interest rates were low, and business was booming. We spent a lot of money on extravagant meetings, everyone was paid well, and almost everyone had a Blackberry. We planned projects for the long term, looking to package in as much functionality as we could. Projects could run 2 or 3 years.

We also went overboard on ensuring that we were compliant with a formal project management lifecycle. Huge groups were dedicated to making sure we followed the process, even if the process overhead marginalized project benefits. Project managers were located in a project-management office and received one-off assignments. A good portion of project time was devoted to project-team members acclimating to each other.

In 2007, my company was hit by the subprime mortgage crisis. Suddenly the Blackberries started disappearing. A group was formed to simplify our project-management process. The goal was to remove bureaucracy and make the process more Agile and lean. The company also disbanded many of the project-management offices and put the project managers directly into the business teams so they could be closer to the customer.

A large project I was helping with was restructured. Instead of trying to deliver mega benefits 2 years down the road, we outlined an iterative plan to deliver critical, minimal functionality within a few months.

My company lacked a sense of urgency when I started working there, but suddenly we were similar to a dotcom. We were fighting for survival, and we began to follow practices that supported the urgency. Looking back, I wish my company had pursued an Agile mentality to prevent the issues in the first place as opposed to trying to use Agile to save the ship.

Key Points to Remember

Here are the key points to remember from this chapter:

• Agile provides solid business values for almost every company.

• Agile isn’t a trend. After 9 years and proven results, Agile is here to stay.

• You must understand the principles behind the Agile practices first, and then apply the practices accordingly.

• Software product development is unpredictable and requires creative adaptation to be successful.

• Agile methods tie directly to the key objectives of most companies: increasing revenue/market share while lowering costs.

• Migrating to Agile is unique for each company. This book will help you approach your migration in a way that provides the best possible chance for long-term success.

Previous article: Agile Values, Principles, and Practices

Continue on to the next article: Getting Started with Agile

Copyright

©2009 by Manning Publications Co. All rights reserved.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by means electronic, mechanical, photocopying, or otherwise, without prior written permission of the publisher.