RallyDev.com
Wed 11 Mar 2009
Agile Cuts Costs by a Factor of Four – or More!
Summary
I hope this illustrative example helps you see how Agile development can have a substantial impact on the managerial economics of your software development operations. These numbers were illustrative, but they were based on the actual savings in time-to-market and productivity that BMC Software achieved against the average of 7500 benchmarked projects as reported in the QSMA Agile Impact Report. You can pick at my numbers, but I will argue that they are in the ball park. Notice that I did not factor in the savings of reduced downstream defects seen by many Agile teams from increased automation in software test. I also did not try to factor in the market window impact of getting these 20 points of value-added features 5 to 7 months sooner.
If you like this view conceptually, you are going to need to calculate the ROI of going Agile. You can use our ROI calculator on the Rally site to see the impact of getting to “pull” and thus reducing your productivity by 25% and reducing by 50% your time-t0-market by incrementally delivering.
I know it is all about productivity in Q1 2009, but with the move to Agile development and Agile project management you can have both the short-term win of quickly cutting costs and the long-term potential of “great” and 4 to 9 times better. What is holding you back?
Download the Factor of Four Calculations spreadsheet (Excel .xls file).
Thanks for this excellent post.
I’m sure a lot of Project Managers out there will strongly disagree with you (I wonder how come no one commented on this post yet), Agilists, of course, will definitely agree.
I’m not going to discuss the charts or the numbers, but I have to say that cutting costs by 4-6-8-10 is no easy thing, and I don’t think it should be attributed to the methodology (alone), the Project Manager and the Project Team should have the lion’s share of the credit for such achievement.
PM Hut – I totally agree! – truly going agile versus adopting agile in name only is not just a change in process. It takes the whole team and organization to get 4 to 10X better productivity and it changes everything including strategy, organization, enabling technology and process. The point of my post was to show that the managerial economics are possible using document changes observed in large, scale distributed teams.
I hope that helps?
Ryan
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