agile from 3 perspectives agile tour2013 distributable

Colm O’hEocha – AgileInnova4on

Slow Down to Speed Up Copyright © 2013 AgileInnova4on

1

How and Why Agile Works: Benefits, Challenges and Strategies for Senior

Management

This material is Copyright Protected under the following Crea4ve Commons License: AGribu4on-‐ShareAlike 3.0 Please use this material freely and derive further work from it. BUT, aGribu4on must be given to the original author, and these same rights must govern all derived works. Please use the following aGribu4on: “Colm O’hEocha, AgileInnova4on Ltd. 2013: www.agileinnova4on.eu”

Stacey Complexity Matrix

REQUIREMENTS STABILITY – A shared understanding of what we need to build

SOLUTION CLARITY – A shared understanding of how to build it Copyright © 2013 AgileInnova4on

Plan-‐Driven Project Management in a non-‐simple domain

Copyright © 2013 AgileInnova4on

Process Control and Complexity CLOSED-LOOP

Empirical - Adaptive OPEN-LOOP

Deterministic- Predictive

Execute Execute

Inspect

Adapt Set Ini4al Target & Plan

Set Target & Plan


AIM & FIRE

FIRE & AIM

3 Perspec4ves

Lean/Agile in IT

Systems Thinking

People & Mo4va4on

Project Economics


Theory without pracEce is useless. PracEce without theory is expensive – Ed Deming


SYSTEMS THINKING Agile PerspecEves

Changing Requirements & Scope Creep

Unrealis4c Plans

Requirements not fully understood

Late Projects

Missed Customer Expecta4ons

Debugging (unpredictable &

unplanned)

Long Hours

Mistakes

Poor Quality

Lost Business

Schedule Pressure

So^ware Development as a System


Big Projects, Phases Features

(Accepted) Demand Exceeds Capacity

Testers Busy

Delays Tes4ng

Slow Feedback

Keep Costs Down Look for Economies of Scale

Sub-‐OpNmizaNon Principle: “If each sub-‐system, regarded separately, is made to operate with maximum efficiency, the system as a whole will not operate with utmost efficiency” – Lars SkyGner, General Systems Theory


•  Converse: Op4mizing the System may mean sub-‐op4mizing sub-‐systems •  Increasing Capacity at the BoGleneck increases System Capacity

•  Increasing it elsewhere can lead to longer cycle 4mes & waste •  Op4mize the Whole -‐ Consider the Whole Value Stream – Concept to Cash

Are your Development Teams Fully UNlised?

In a stochas4c system, maximising u4lisa4on does not maximise throughput

Copyright © 2012 AgileInnova4on 11

60%? 75%? 90%? 100%? 98%?

AGILE & INNOVATION

Agile PerspecEves

You get back to that goddamn cubicle and start thinking outside the box!

•  Plan – Small, Single Factor Experiments •  Do – Run the Experiment •  Check – Look at the Data, What Happened •  Act – Apply what you’ve Learnt

Learning in Complex Environments The ScienNfic Method


If failure is

not an opN

on

then innov

aNon is no

t an

opNon

Experimenta4on Design for Maximum Learning

100% Chance of Success

100% Chance of Failure

Informa4on Genera4on


•  IteraNons: Buy High-‐Value Knowledge, Early, at Low Cost

•  Make it ‘Safe to Fail’

Crea4vity & Innova4on are maximised when:

•  We work in Small Groups – Self-‐Contained, Self-‐Organising, Common Objec4ve

•  We can Focus – Low Distrac4on Level, Low Churn in Objec4ves – Specific, Closed Problems to Solve

•  We are Mo4vated By Importance of the Work – Feedback: Fast, High Fidelity, Rich

Derived from Amibile et al, 1996


ECONOMIES OF SPEED

Agile PerspecEves

Investment Period

Payback Period

Profit Period

Investment Curve

Max. Cash Consumed

Self-‐Funding Point

Break-‐Even Point

Cash

Time

17 Copyright © 2012 AgileInnova4on

Cumulated Profits

NPV: Net Present Value – amount we would gain/loose (in todays money) by invesEng in the project

Max Cash Invested

Pay-‐back Month

RoI 3 yrs

NPV

Single Release

Sample Project


Team%Size 9

Average%Fully%Loaded%Salary 110000

Annual%Cost%of%Capital 6%

Monthly%rate%of%transaction%growth%(8%months) 30%

Maintenance%Costs%%%of%Transaction%Revenue 10%

Year

Month 1 2 3 4 5 6 7 8 9 10 11 12

CostsDevelopment%Costs €82,500 €82,500 €82,500 €82,500 €82,500 €82,500

Maintenance/Support%Costs €0 €0 €0 €500 €650 €1,245 €1,719 €2,234 €2,904 €3,776 €4,908 €6,381

Adjustment%for%Reduced%Variability%T%50%%Less%Change%Mgt

Adjt%for%Reduced%Demand%T%30%%Dev%and%Maintenance%Costs T€24,750 T€24,750 T€24,750 T€24,900 T€24,945 T€25,124 T€516 T€670 T€871 T€1,133 T€1,472 T€1,914

Adjustment%for%Reduced%Risk%T%50%%Chance%Technology%Failure €0

Adjustment%for%Better%Quality%T%10%%less%development%cost T€8,250 T€8,250 T€8,250 T€8,250 T€8,250 T€8,250

Adjustment%for%Less%Overhead%T%5%%Development%Costs%Saved

Costs%Incurred €49,500 €49,500 €49,500 €49,850 €49,955 €50,372 €1,203 €1,564 €2,033 €2,643 €3,436 €4,466

Cumulative,Costs,Incurred €49,500 €99,000 €148,500 €198,350 €248,305 €298,677 €299,879 €301,443 €303,476 €306,119 €309,555 €314,021Costs%Incurred €49,254 €49,009 €48,765 €48,865 €48,725 €48,886 €1,162 €1,503 €1,944 €2,514 €3,252 €4,207Cumulative,Costs,Incurred €49,254 €98,262 €147,027 €195,893 €244,617 €293,504 €294,665 €296,168 €298,112 €300,626 €303,878 €308,085

BenefitsRevenue%on%Feature%Delivery €100,000 €80,000 €30,000

Revenue%on%Transaction%fees €5,000 €6,500 €12,450 €17,185 €22,341 €29,043 €37,755 €49,082 €63,807

Adjustment%for%Prioritised%Delivery

Adjustment%for%Innovation%10%%more%Benefit

Adjustment%for%Motivation%T%10%%more%Value%by%the%Team

Benefits%Realised €0 €0 €0 €105,000 €6,500 €92,450 €47,185 €22,341 €29,043 €37,755 €49,082 €63,807

Cumulative,Benefits,Realised €0 €0 €0 €105,000 €111,500 €203,950 €251,135 €273,476 €302,518 €340,274 €389,356 €453,162

Benefits%Realised €0 €0 €0 €102,926 €6,340 €89,724 €45,566 €21,467 €27,768 €35,919 €46,462 €60,100

Cumulative,Benefits,Realised €0 €0 €0 €102,926 €109,266 €198,990 €244,556 €266,023 €293,791 €329,709 €376,171 €436,271

Net%Benefit%Flow T€49,500 T€49,500 T€49,500 €55,150 T€43,455 €42,079 €45,982 €20,777 €27,010 €35,113 €45,646 €59,340

Cumulative%Net%Benefit%Flow T€49,500 T€99,000 T€148,500 T€93,350 T€136,805 T€94,727 T€48,744 T€27,968 T€958 €34,154 €79,801 €139,141

Net%Benefit%Flow%(Discounted%Cash%Flow) T€49,254 T€49,009 T€48,765 €54,061 T€42,385 €40,838 €44,404 €19,964 €25,824 €33,404 €43,209 €55,893

Cumulative%Net%Benefit%Flow%(Rolling%NPV) T€49,254 T€98,262 T€147,027 T€92,967 T€135,351 T€94,513 T€50,109 T€30,145 T€4,321 €29,083 €72,293 €128,186

Max%Invested T€148,500

Rolling%RoI T100% T100% T100% T63% T92% T64% T33% T19% T1% 23% 54% 94%

10 11 12

Payback%Month 10

3%Year%RoI 0%

NPV €0

%Discounted

1

Not%Discounted

Discounted

Not%Discounted

Discounted

Not%Discounted

-‐€600,000

-‐€400,000

-‐€200,000

€0

€200,000

€400,000

€600,000

€800,000

€1,000,000

€1,200,000

1 7 13 19 25 31

Single Release

Sample Project -‐ the Business Case


Self-‐Funding Point

Break-‐Even Point

Max Cash Invested

19

Max Cash Invested

Pay-‐back Month

RoI 3 yrs

NPV

Plan-‐Driven 440K 20 95% 347K

FP/FS Single Delivery a^er 6 months


Earlier Benefit Accumula4on

REDUCE COST

INCREASE REVENUE

Improved Quality

Improved Business Agility

More Mo4va4on

Reduced Risk

More Innova4on

Less Management Overhead

Less ‘Just In Case’ Demand

ECONOMIES OF SPEED

€ Earlier Benefit Accumula4on €

€ Improved Quality €

Reduced Risk

€ Less ‘Just In Case’ Demand €

0

10000

20000

30000

40000

50000

60000

1 7 13 19 25 31

Extra Sales Original Xac4on Revenue

Advantage of Early Delivery 14 month Product Growth Phase


Geeng to Market 2 months

Earlier ≈ +€0.7M (87%)

€ Earlier Benefit Accumula4on €

Sample Project


€ Earlier Benefit Accumula4on € Max Cash Invested

Pay-‐back Month

RoI 3 yrs

NPV


Increased Sales

307K 17 286% 753K

-‐€600,000

-‐€400,000

-‐€200,000

€0

€200,000

€400,000

€600,000

€800,000

€1,000,000

€1,200,000

1 7 13 19 25 31

Single Delivery Extra Sales

Earlier Delivery to Market –Months 4, 5 and 6; Stage

Payments & Increased Transac4on Revenue

Sample Project


Max Cash Invested

Pay-‐back Month

RoI 3 yrs

NPV


Increased Sales

307K 17 286% 753K

Less Demand 182K 13 609% 977K

-‐€600,000

-‐€400,000

-‐€200,000

€0

€200,000

€400,000

€600,000

€800,000

€1,000,000

€1,200,000

1 7 13 19 25 31

Single Delivery Less Demand Previous

Fewer Features than Planned were built as they weren’t really necessary

-‐ saves Dev Team 30% costs € Less ‘Just In Case’ Demand €

Sample Project


€ Improved Quality € Max Cash Invested

Pay-‐back Month

RoI 3 yrs

NPV


Increased Sales

307K 17 286% 753K


Improved Quality

148K 12 851% 1.1M

-‐€600,000

-‐€400,000

-‐€200,000

€0

€200,000

€400,000

€600,000

€800,000

€1,000,000

€1,200,000

1 7 13 19 25 31

Single Delivery Improved Quality Previous

10% Less Development & 50% Less Support Costs finding/

tracking/fixing bugs and reworking features

Sample Project


Summary Max Cash Invested

Pay-‐back Month

RoI 3 yrs

NPV


Increased Sales

307K 17 286% 753K


Improved Quality

148K 12 851% 1.1M

Increased InnovaNon

-‐ -‐ -‐ -‐

Improved MoNvaNon

-‐ -‐ -‐ -‐

Less Risk -‐ -‐ -‐ -‐

…. -‐ -‐ -‐ -‐ -‐€600,000

-‐€400,000

-‐€200,000

€0

€200,000

€400,000

€600,000

€800,000

€1,000,000

€1,200,000

1 7 13 19 25 31

Single Delivery Improved Quality

•  Payback Period reduces from 20 to 12 months

•  Max Cash Funding from 404K to 148K •  Year 3 RoI improves from 95% to 851%

•  è NPV from 347K to 1118K§ §(Assumed Discount Rate 6%)

Some Benefits hard to quantify…

Total Cost of a Process

Cost of Process Capacity

Cost of Delay in the Process

Cost of Capacity vs. Cost of Delay

Its Easy to Measure

this

We are Usually

Blind to this


MOVING TO AGILE Agile – AdopEon

Good Judgment comes from Experience. Experience comes from Bad Judgment.

• Ri – discarding the kata


•  Shu – embracing the kata

•  Ha – diverging from the kata

AdopNon

TransformaNon

•  Agile is an IT thing – Senior Mgt don’t need to be involved •  Our Technology/Customer Base/EcoSystem are too Complex

for Agile •  We Work in a Fixed Price/Scope/Date Environment •  FuncEonally demarcated organizaEon structure •  Fear of Transparency (criEcism, micro-‐management) •  Mistrust/Fear of Self-‐OrganisaEon (they’ll ease-‐off, run amok) •  A lot of ‘Legacy’ and ‘Technical Debt’ •  Agile can’t work in a Highly Regulated Context •  Regular Access to Customers or Users impossible •  We’re rewarded as Individuals, not as a Team

30

FricEon Points – Plan-‐Driven vs. Agile


These are barriers to

be worked through

(Con4nuous Improvement).

Organiza4ons are tack

ling and surmoun4ng th

em

every day

BBC Worldwide -‐ Kanban The evidence shows that over the 12-‐month period:

-‐ Middleton, Joyce 2010

•  lead Nme to deliver sooware improved by 37%

•  consistency of delivery rose by 47%

•  defects reported by customers fell 24%


32

Lightweight, Emergent Methods

“Simple, clear purpose and principles give rise to complex and intelligent behavior. Complex rules and regulaNons give rise to simple and stupid behavior.” Dee Hock, CEO Emeritus VISA Interna4onal


Copyright © 2012 AgileInnova4on & InspireQS

Colm O’hEocha AgileInnova4on Limited

www.agileinnova4on.ie [email protected]

Training & Coaching

Lean Compe44veness Fund Enterprise Ireland

Up to 50% Funding Support

for SMEs Training, Consul4ng, Coaching in Lean

Q&A Agile/Lean for Execs (½d) Agile/Scrum for Teams (2d)

Gewng Lean with Kanban (2d) Bringing Agile to the Next Level – Op4mising and Scaling (2d)

Professional ScrumMaster (2d) (cer4fied)

PMI – Agile Cer4fied Prac4toner (2d) (cer4fied)

Product Owner (1d or 2d)

User Stories and Es4ma4on (1d) Effec4ve Agile Tes4ng (2d)

This material is Copyright Protected under the following Crea4ve Commons License: AGribu4on-‐ShareAlike 3.0 Please use this material freely and derive further work from it. BUT, aGribu4on must be given to the original author, and these same rights must govern all derived works. Please use the following aGribu4on: “Colm O’hEocha, AgileInnova4on Ltd. 2013: www.agileinnova4on.eu”