Fri 13 Feb 2009
Agile Cuts Costs Through Productivity Improvements
Back in 2007, Jean and I developed an evolutionary model of Agile adoption for teams and organizations seeking the benefits of “scaling software agility.” We presented talks on this at the Agile 2007 and Agile 2008 conferences. We call it Flow-Pull-Innovate based on the Toyota Lean principles of Flow-Pull-Perfect.
Productivity gains in Agile development teams come conceptually from eliminating waste. Just getting to the first step of Agile maturity can lead to 10 to 20% productivity increases. We want you to be successful taking the first step, and there is a ton of opportunity in most software development shops. According to Tom and Mary Poppendieck, most software development organizations are only spending 6% of their time doing value-added tasks. The other time is wasted in these categories:
- Partially done work (coding features that get removed from release)
- Extra processes (elaborating requirements that do not get built)
- Extra features (features that are rarely used – more on this in another post)
- Task switching (across multiple projects – losing flow)
- Waiting (requirements, designs, feedback, builds, other teams, larger organization, customer)
- Motion (walking over to interrupt folks for a build or status)
- Defect (internal or external)
Agile works to systematically address these wastes as you mature. In our white paper on moving to Program Pull, Jean and I characterize the steps, roadblocks and benefits found at each step in the Flow-Pull-Innovate maturation process.

On the move to Flow, we find that teams can increase their productivity working as a dedicated team on a single project for a two-week iteration cycle. The reduction in waiting, motion, task switching and partially done work can be dramatic based on your level of multi-tasking. We even find some teams in Flow reduce their extra features, partially done work and defects, but those productivity gains tend to be more associated with the move to Agile Pull.

According to the QSM Associates study of Agile development teams, you can expect to save 16% (the green dots on the graph). Of course the teams that worked with Rally’s products and services achieved on average 25% productivity gains (the red dots on the graph).
(The graph on the right from QSMA shows a white line of the average productivity of different sized projects in their 7,500+ project database. Between the blue dotted lines is the area 1 standard deviation from the norm. You can see only one Agile project was less productive that the average and 7 Agile projects of the total 29 were outside 1 standard deviation. Thus 1/4 of these Agile projects were in the top 16% of all projects ever benchmarked by QSMA – see Michael Mah’s blog for more discussion – OptimalFriction)
Of course, you cannot have your cake and eat it at the same time. That is, you cannot just start running two-week iterations and become 20% more productive overnight, but with a combination of services and Agile project management solutions, you can attain these results in months. That is why we recommend a two-pronged approach to cutting costs with Agile and Rally offers a Guarenteed Succes program that combines our world class services and application in a discounted bundle for new and existing customers. Get started by getting your teams to Flow and the savings can come fast.


Awesome data. Fantastic results. A few questions.
Is Lean the same or a subset of Agile then? Or do both result in a reduction of waste?
What was the cost to produce these results? How mature were the organizations that performed the remarkable Agile projects?
BTW, this sounds like a sentence from my blog. “The reduction in waiting, motion, task switching and partially done work is greatly reduced.” I know what you mean though.
Dennis,
We see Agile Software Development as domain specific application of Lean. We talk to development teams and programs about Agile, but if we are talking to executives we tend to start with Lean and then work to explain the details of its application into the software team. By starting with Lean, it allows us to then discuss the future impact of highly agile teams on the large value chain across the company. I see the Agile Manifesto as completely aligned with the Lean Thinking principles from Womack and Jones.
I would point you to the Agile Impact report and the Agile in Turbulent Times Webinar for details about these efforts and Michael Mah’s blog – http://www.optimalfriction.com. I know the maturity level of these teams varied as well as the amount of time and money spent on coaching/training services.
Thanks for the BTW, too – I edited the sentence:)
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