Business Value of Agile Methods - davidfrico.comdavidfrico.com/rico09e.pdf · Scrum productivity 5X more than trad. methods Agile methods productivity 20X more than traditional Rico,

Business Value of

Agile MethodsCost and Benefit Analysis

Dr. David F. Rico, PMP, CSM

2

AgendaSurveys of Business ValueStudies of Business ValueAnalysis of Business ValueExamples of Business ValueEnablers of Business Value

3

Surveys of Agile MethodsNumerous surveys of agile methods since 2003AmbySoft and Version One collect annual dataGenerally include both hard and soft benefits

Rico, D. F. (2008). What is the return-on-investment of agile methods? Retrieved February 3, 2009, from http://davidfrico.com/rico08a.pdf

4

Shine TechnologiesSurvey of 131 international respondentsExtreme Programming (58%) and Scrum (8%)85% of respondents were experts in agile methods

Johnson, M. (2003). Agile methodologies: Survey results. Victoria, Australia: Shine Technologies.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Productivity

Quality

Satisfaction

Cost

Improvement

5

Agile JournalSurvey of 400 international respondentsExtreme programming (28%) and Scrum (20%)80% using agile methods to deliver maximum value

Barnett, L. (2006). And the agile survey says. Agile Journal, 1(1).

0% 10% 20% 30% 40% 50%

Time to Market

Quality

Alignment

Cost

Improvement

6

MicrosoftSurvey of 492 Microsoft respondentsScrum (65%) and Extreme Programming (5%)65% using agile methods in virtual distributed teams

Begel, A., & Nagappan, N. (2007). Usage and perceptions of agile software development in an industrial context: An exploratory study. Proceedings of the First International Symposium on Empirical Software Engineering and Measurement, Madrid, Spain, 255-264.

0% 10% 20% 30% 40% 50% 60% 70%

Communication

Time to Market

Flexibility

Quality

Satisfaction

Productivity

Improvement

7

UMUCSurvey of 250 international respondents70% of respondents using agile methods83% of were from small-to-medium sized firms

Rico, D. F., Sayani, H. H., Stewart, J. J., & Field, R. F. (2007). A model for measuring agile methods and website quality. TickIT International, 9(3), 3-15.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Satisfaction

Productivity

Cycle Time

Quality

Cost

Improvement

8

AmbySoftSurvey of 642 international respondents69% of firms had adopted an agile method62% were from firms with less than 1,000 people

Ambler, S. W. (2008). Agile adoption survey. Retrieved October 17, 2008, from http://www.ambysoft.com/downloads/surveys/AgileAdoption2008.ppt

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Productivity

Satisfaction

Project Success

Quality

Cost

Virtual Success

Improvement

9

IT AgileSurvey of 207 respondents in GermanyScrum (21%) and Extreme Programming (14%)97% of respondents are satisfied with agile methods

Wolf, H., & Roock, A. (2008). Agile becomes mainstream: Results of an Online Survey. Object Spektrum, 15(3), 10-13.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Flexibility

Job Satisfaction

Learning on the Job

Productivity

Project Status

Quality

Improvement

10

Version OneSurvey of 3,061 respondents from 80 countriesScrum (49%), Scrum/XP (22%), and XP (8%)68% from small firms and 57% distributed

Version One. (2008). The state of agile development: Third Annual Survey. Alpharetta, GA: Author.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cycle Time

Project Visibility

Productivity

Quality

Maintainability

Cost

Improvement

11

AgendaSurveys of Business Value

Studies of Business ValueAnalysis of Business ValueExamples of Business ValueEnablers of Business Value

12

Studies of Business ValueAgile (138 pt.) and traditional methods (99 pt.)Agile methods fare better in all benefits categoriesAgile methods 359% better than traditional methods

Rico, D. F. (2008). What is the ROI of agile vs. traditional methods? TickIT International, 10(4), 9-18.

13

Pair ProgrammingPP (49 pt.) and traditional methods (99 pt.)PP fares better in most benefits categoriesPP 470% better than traditional methods

Rico, D. F. (2008). What is the ROI of agile vs. traditional methods? TickIT International, 10(4), 9-18.

14

ScrumScrum (11 pt.) and traditional methods (99 pt.)Scrum fares better in most benefits categoriesScrum 332% better than traditional methods

Rico, D. F. (2008). What is the ROI of agile vs. traditional methods? TickIT International, 10(4), 9-18.

15

Test Driven DevelopmentTDD (26 pt.) and traditional methods (99 pt.)TDD fares better in most benefits categoriesTDD 584% better than traditional methods

Rico, D. F. (2008). What is the ROI of agile vs. traditional methods? TickIT International, 10(4), 9-18.

16

Extreme ProgrammingXP (32 pt.) and traditional methods (99 pt.)XP fares better in most benefits categoriesXP 602% better than traditional methods

Rico, D. F. (2008). What is the ROI of agile vs. traditional methods? TickIT International, 10(4), 9-18.

17

GeneralGen. (20 pt.) and traditional methods (99 pt.)Gen. fare better in most benefits categoriesGen. 107% better than traditional methods

Rico, D. F. (2008). What is the ROI of agile vs. traditional methods? TickIT International, 10(4), 9-18.

18

AgendaSurveys of Business ValueStudies of Business Value

Analysis of Business ValueExamples of Business ValueEnablers of Business Value

19

Analysis of Business ValueAnalysis of 29 agile projects involving 839 peopleAgile projects are 550% better than traditional onesXP (753%) and Scrum (148%) better than traditional

Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile methods. Ft. Lauderdale, FL: J. Ross Publishing.

Agile vs. Traditional Benefits

1,422% 1,195% 712% 45% 1,695% 142% 62%

1,900% 438% 389% 42% 935% 131% 56%

2,657% 349% 344% 41% 830% 128% 54%

3,046% 310% 318% 40% 767% 126% 53%

413% 145% 92% 30% 236% 87% 37%Scrum

PP

TDD

Agile

XP

ProductivityMethod Quality Cost Benefits ROI NPV Real Options

20

Productivity of Agile MethodsPP productivity 32X more than trad. methodsScrum productivity 5X more than trad. methodsAgile methods productivity 20X more than traditional

Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile methods. Ft. Lauderdale, FL: J. Ross Publishing.

33.4044

29.28

21.2374

16.1575

5.4436

1.06190

8

16

24

32

40

PP TDD Agile XP Scrum CMMI®

Software Method

Pro

duct

ivit

y (L

OC

/Hou

r)

21

Quality of Agile MethodsXP quality 13X better than trad. methodsScrum quality 3X better than trad. methodsAgile methods quality 5X better than traditional

Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile methods. Ft. Lauderdale, FL: J. Ross Publishing.

0.7466

1.7972 2.155 2.355

3.945

9.667

0

2.2

4.4

6.6

8.8

11

XP Agile TDD PP Scrum CMMI®

Software Method

Qua

lity

(Def

ects

/KLO

C)

22

Costs of Agile MethodsXP costs 8X less than traditional methodsScrum costs 2X less than traditional methodsAgile methods cost 5X less than traditional methods

Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile methods. Ft. Lauderdale, FL: J. Ross Publishing.

$136,551$226,807 $249,653 $265,436

$578,202

$1,108,233

$0

$325,000

$650,000

$975,000

$1,300,000

XP Agile TDD PP Scrum CMMI®

Software Method

Cos

ts

23

Benefits of Agile MethodsXP benefits 1.5X more than traditional methodsScrum benefits 1.3X more than traditional methodsAgile methods benefits 1.4X more than trad. methods

Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile methods. Ft. Lauderdale, FL: J. Ross Publishing.

$4,372,282$4,282,026 $4,259,180 $4,243,397

$3,930,631

$3,023,064

$2,750,000

$3,237,500

$3,725,000

$4,212,500

$4,700,000

XP Agile TDD PP Scrum CMMI®

Software Method

Ben

efit

s

24

ROI of Agile MethodsXP ROI 18X more than traditional methodsScrum ROI 3.4X more than traditional methodsAgile methods ROI 10X more than trad. methods

Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile methods. Ft. Lauderdale, FL: J. Ross Publishing.

3,102%

1,788%1,606% 1,499%

580%

173%

0%

925%

1,850%

2,775%

3,700%

XP Agile TDD PP Scrum CMMI®

Software Method

Ret

urn

on In

vest

men

t

25

NPV of Agile MethodsXP NPV 2.4X more than traditional methodsScrum NPV 1.9X more than traditional methodsAgile methods NPV 2.3X more than trad. methods

Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile methods. Ft. Lauderdale, FL: J. Ross Publishing.

$3,649,388$3,480,979 $3,438,351 $3,408,902

$2,825,313

$1,509,424

$1,000,000

$1,787,500

$2,575,000

$3,362,500

$4,150,000

XP Agile TDD PP Scrum CMMI®

Software Method

Net

Pre

sent

Val

ue

26

Real Options of Agile MethodsXP ROA 1.6X more than traditional methodsScrum ROA 1.4X more than traditional methodsAgile methods ROA 1.6X more than trad. methods

Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile methods. Ft. Lauderdale, FL: J. Ross Publishing.

$4,265,936$4,105,884 $4,066,678 $4,040,377

$3,608,772

$2,633,052

$2,200,000

$2,825,000

$3,450,000

$4,075,000

$4,700,000

XP Agile TDD PP Scrum CMMI®

Software Method

Rea

l Opt

ions

27

AgendaSurveys of Business ValueStudies of Business ValueAnalysis of Business Value

Examples of Business ValueEnablers of Business Value

28

Examples of Business ValueAnalysis of 23 agile vs. 7,500 traditional projectsAgile projects are 41% better than traditional onesXP (56%) and Scrum (26%) better than trad. projects

Mah, M. (2008). Measuring agile in the enterprise: Proceedings of the Agile 2008 Conference, Toronto, Canada.

29

Agile Time-to-Market83% of agile projects faster than traditional onesXP projects are 62% faster than traditional onesScrum projects are 138% faster than trad. ones

Mah, M. (2008). Measuring agile in the enterprise: Proceedings of the Agile 2008 Conference, Toronto, Canada.

30

Agile Quality50% of agile projects higher quality than trad.XP projects have 100% higher quality than trad.Scrum projects have 12% higher quality than trad.

Mah, M. (2008). Measuring agile in the enterprise: Proceedings of the Agile 2008 Conference, Toronto, Canada.

31

Agile Scalability65% of agile projects larger than traditional onesXP uses 40% less people than traditional onesScrum uses 130% more people than trad.

Mah, M. (2008). Measuring agile in the enterprise: Proceedings of the Agile 2008 Conference, Toronto, Canada.

32

Agile Cost50% of agile projects cost less than trad. onesXP projects cost 59% less than traditional onesScrum projects cost 6% less than traditional ones

Mah, M. (2008). Measuring agile in the enterprise: Proceedings of the Agile 2008 Conference, Toronto, Canada.

33

Agile Productivity83% of agile proj. more productive than trad.XP projects are 21% more productive than trad.Scrum projects are 30% more productive than trad.

Mah, M. (2008). Measuring agile in the enterprise: Proceedings of the Agile 2008 Conference, Toronto, Canada.

34

AgendaSurveys of Business ValueStudies of Business ValueAnalysis of Business ValueExamples of Business Value

Enablers of Business Value

35

Enablers of Business ValueAnalysis of 29 agile vs. 7,500 traditional projectsAgile projects are 33% better than traditional onesRally projects are 28% better than traditional ones

Quality

Productivity

Time-to-Market

AgileCategory Rally Total No.

Agile vs. Traditional Benefits

Rally Software. (2009). The agile impact report. Boulder, CO: Author.

36

Agile Time-to-Market80% of agile projects faster than traditional onesAgile projects are 37% faster than traditional onesRally projects are 50% faster than traditional ones

Rally Software. (2009). The agile impact report. Boulder, CO: Author.

37

Agile Productivity83% of agile proj. more productive than trad.Agile projects are 16% more productive than trad.Rally projects are 25% more productive than trad.

Rally Software. (2009). The agile impact report. Boulder, CO: Author.

38

Agile Quality40% of agile projects higher quality than trad.Agile projects have 33% higher quality than trad.Rally projects have 8.3% higher quality than trad.

Rally Software. (2009). The agile impact report. Boulder, CO: Author.