Agile Savings versus Traditional Methods

By Brian Lucas

Time-to-market savings realized by agile methods comes from many different aspects of agile’s natural mechanisms and flows.  Most of these have a combined effect that contributes even greater economies.  To begin with let us look at two aspects of agile.  The first is the work unit basis of small self-contained product backlog items that are developed, tested and released in discrete time boxes.  The second is the serious application of paring down the Pareto Principle to prioritize this development.

With the much improved flow over traditional processes, agile teams increase their productivity working as a dedicated team on a single project for short term iteration cycles.  There are vast reductions in waiting for someone upstream in the process to feed you work, switching between tasks because of a lack of dedication, time lost creating, explaining and interpreting written specifications.  Development teams utilizing Agile practices were on average 37% faster delivering their software to market and increased their teams’ productivity by at least 16% According to a QSM Associates study.

The biggest cost driver for software development is employee salaries.  The best way to control this cost is to only have associates develop features and functions that are actually needed.  The focus of agile of continuous develop-release-feedback in short iterations forces the development concentration to remain on the most important business needs.  This is a great benefit of agile; the emphasis on simple solutions.  All this tight team work and utilization of previous results to guide new work and direction directly results in a continually refined focus on what is most import and avoidance on trivia and features that lack serious consequence.

It’s a maxim that 80% of the effect is derived from 20% of the cause. This is the Pareto Principle.  It is named for the Italian economist Vilfredo Pareto who noted in 1906 that 80% of the land in Italy was owned by 20% of its inhabitants.  The Pareto Principle has wide application in business, software development, and product design. For example, most companies realize 80% of their revenue from 20% of their customers. You will get 80% of your web traffic from only 20% of your keywords. In software development as well, 80% of the features that customers request, they never use.

The noted information technology consulting firm, The Standish Group, has documented over the past decade the breakdown of features requested in enterprise software versus the ones customers actually use. The Pareto Principle is alive and well unfortunately.

Agile helps you focus on the key 20% saving your organization time and money, by enforcing simple, standalone user stories supported by a common understanding throughout the whole team.

What kind of savings numbers does this actually generate?  Well, Agile’s benefits and saving can be quite profound, capable of showing a cumulative 10 to 1 return on investment and reduction in the risk of scope creep ranging from 80% to 10%.  Specifically, agile has shown in two recent large scale surveys to:

  • Improved time to benefit by 69%
  • Reduced cost by 57%
  • Reduced effort by 62%
  • Reduced critical defects by nearly 80%
  • Reduced overall defects by more than 60%

                                                – Forrester Research

  • 91% better schedule
  • 97% better productivity
  • 400% better satisfaction
  • 470% better ROI

                                                – Dr. David Rico PMP, CSM

The productivity and savings numbers of practioners working in agile are very definitive.  Historical studies spanning many different organizations from 1998 through 2007 show the tremendous success of Agile in business and industry as well as government.

Finally, I would point out some additional advantages of agile:

1)     Change which is embraced in agile and resisted in waterfall has very significant impact.  The cost of change in agile does not grow as in waterfall.  It is dealt with constantly and made upon a smaller and more flexible code base.  In fact most major code rewrites are avoided before they ever occur.  It is a fact that it is much cheaper to introduce changes relatively late in an agile project. The constant refactoring, test automation safety net, continuous integration and splitting the work into stories allocated into iterations makes this savings a natural outcome.

2)     Feedback from previous iterations keeps things predictable and based in reality. Actual data on the project’s performance, not plans and wishful thinking is used to understand and estimate effort.

3)     Design and codes defects are discovered at the earliest possible moment because of frequent builds and early releases.

With agile being used successfully from everything from Thomas Edison’s Menlo Park to the Apollo Space Program to Lockheed’s SR-71 Blackbird Program and with companies like Google and 66% of the world’s projects using Agile Methods; Agile’s is an unqualified success.  Can you afford not to bring agility to your organization?  Till next time, keep agile!

About Brian Lucas

In his life, Brian Lucas has been a coach, farm worker, forester, health care advocate, life guard, general contractor, mechanic, mixologist, musician/singer (in a rock group), salesman and teacher. Brian has worked as a project manager, technical marketer, methodologist, manager, software architect, systems designer, data modeler, business analyst, systems programmer, software developer and creative writer. These efforts include over a hundred hi-tech initiatives in almost every business and industrial sector as well as government and military projects. Among them, he designed and developed a quality assurance system for the first transatlantic fiber optic communications network, a manufacturing system for a large computer manufacture’s seven manufacturing centers, a data mining system for steel production, an instrumentation system for cable systems, defined requirements for government’s information systems and designed and developed human performance management systems. Brian has educated and mentored many over the years, designing programs to discover and develop talent. He has also lectured extensively to a variety of audiences. Brian is currently devoting as much time as possible to the innovation of business agility and human capital management along with the next generation of agile software development. As an amateur theoretical physicist he is working on joining general relativity and quantum mechanics through a multidimensional time corollary on string theory and negating the uncertainty principle with Louis de Broglie’s wave/particle hypothesis. He is also an avid blue-water sailor and wilderness backpacker. He enjoys billiards, boxing, chess, cooking, famous battle reenactments and war gaming, fencing, flying, gardening, horseback riding, martial arts (particularly Ninjutsu), philosophy and psychology, playing musical instruments (7 so far), poker, rapid-fire target shooting, reading (he tries to read a new book every night), painting with oils, scuba diving, skiing and recently writing novels.
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9 Responses to Agile Savings versus Traditional Methods

  1. Jordan says:

    Some friends told me about this blog otherwise I would not have found it. This agile saving post is exactly what I was looking for to convince my management to implement agile. Do you have anthing else like this about agile that would help?

  2. Gregory says:

    Very helpful article Brian! This has helped move our agile efforts along considerably. Thanks.

  3. Jessica Devlin says:

    Thanks Brian this was very helpful in getting my management to expand their agile efforts from some small trial software projects. Please keep posting!

  4. Malory Hengyst says:

    Good points on the savings agile provides. Unfortunately some of us are still making this argument with unbelievers.

  5. Shaun Carlyle says:

    Thanks for sharing this helped me make the case for agile!

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