Business Value of Agile Methods Cost and Benefit Analysis Dr. David F. Rico, PMP, CSM
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
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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
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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
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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
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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
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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
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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
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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
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AgendaSurveys of Business Value
Studies of Business ValueAnalysis of Business ValueExamples of Business ValueEnablers of Business Value
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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.
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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.
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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.
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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.
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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.
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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
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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
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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)
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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)
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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
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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
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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
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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
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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
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AgendaSurveys of Business ValueStudies of Business ValueAnalysis of Business Value
Examples of Business ValueEnablers of Business Value
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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.
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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
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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.
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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.
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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.
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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.