Business Value of

Agile Methods& Its Leadership Considerations

Dr. David F. Rico, PMP, ACP, CSM

Twitter: @dr_david_f_ricoWebsite: http://www.davidfrico.com

LinkedIn: http://www.linkedin.com/in/davidfricoFacebook: http://www.facebook.com/profile.php?id=1540017424

Dave’s Agile Articles: http://davidfrico.com/agile-message.doc

Author Background DoD contractor with 30+ years of IT experience B.S. Comp. Sci., M.S. Soft. Eng., & D.M. Info. Sys. Large gov’t projects in U.S., Far/Mid-East, & Europe

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Published six books & numerous journal articlesAdjunct at George Wash, UMBC, UMUC, ArgosyAgile Program Management & Lean DevelopmentSpecializes in metrics, models, & cost engineeringSix Sigma, CMMI, ISO 9001, DoDAF, & DoD 5000Cloud Computing, SOA, Web Services, FOSS, etc.

Today’s Whirlwind Environment

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OverrunsAttritionEscalationRunawaysCancellation

GlobalCompetition

DemandingCustomers

OrganizationDownsizing

SystemComplexity

TechnologyChange

VagueRequirements

Work LifeImbalance

InefficiencyHigh O&MLower DoQVulnerableN-M Breach

ReducedIT Budgets

81 MonthCycle Times

RedundantData Centers

Lack ofInteroperability

PoorIT Security

OverburdeningLegacy Systems

ObsoleteTechnology & Skills

Pine, B. J. (1993). Mass customization: The new frontier in business competition. Boston, MA: Harvard Business School Press. Pontius, R. W. (2012). Acquisition of IT: Improving efficiency and effectiveness in IT acquisition in the DoD. Second Annual AFEI/NDIA Conference on Agile in DoD, Springfield, VA, USA.

Traditional Projects

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Big projects result in poor quality and scope changes Productivity declines with long queues/wait times Large projects are unsuccessful or canceled

Jones, C. (1991). Applied software measurement: Assuring productivity and quality. New York, NY: McGraw-Hill.

Size vs. Quality

Def

ect

Den

sity

0.00

3.20

6.40

9.60

12.80

16.00

0 2 6 25 100 400

Lines of Code (Thousands)

Size vs. Productivity

Cod

e P

rodu

ctio

n R

ate

0.00

1.00

2.00

3.00

4.00

5.00

0 2 6 25 100 400

Lines of Code (Thousands)

Size vs. Requirements Growth

Per

cent

age

0%

8%

16%

24%

32%

40%

0 2 6 25 100 400

Lines of Code (Thousands)

Size vs. SuccessP

erce

ntag

e

0%

12%

24%

36%

48%

60%

0 2 6 25 100 400

Lines of Code (Thousands)

Global Project Failures

5Standish Group. (2010). Chaos summary 2010. Boston, MA: Author.Sessions, R. (2009). The IT complexity crisis: Danger and opportunity. Houston, TX: Object Watch.

Challenged and failed projects hover at 67% Big projects fail more often, which is 5% to 10% Of $1.7T spent on IT projects, over $858B were lost

16% 53% 31%

27% 33% 40%

26% 46% 28%

28% 49% 23%

34% 51% 15%

29% 53% 18%

35% 46% 19%

32% 44% 24%

33% 41% 26%

0% 20% 40% 60% 80% 100%

1994

1996

1998

2000

2002

2004

2006

2008

2010

Year

Successful Challenged Failed

$0.0

$0.4

$0.7

$1.1

$1.4

$1.8

2002 2003 2004 2005 2006 2007 2008 2009 2010

Trill

ions

(US

Dolla

rs)

Expenditures Failed Investments

Requirements Defects & Waste

6Sheldon, F. T. et al. (1992). Reliability measurement: From theory to practice. IEEE Software, 9(4), 13-20Johnson, J. (2002). ROI: It's your job. Extreme Programming 2002 Conference, Alghero, Sardinia, Italy.

Requirements defects are #1 reason projects fail Traditional projects specify too many requirements More than 65% of requirements are never used at all

Other 7%

Requirements47%

Design28%

Implementation18%

Defects

Always 7%

Often 13%

Sometimes16%

Rarely19%

Never45%

Waste

What is Agility? A-gil-i-ty (ə-'ji-lə-tē) Property consisting of quickness,

lightness, and ease of movement; To be very nimble The ability to create and respond to change in order to

profit in a turbulent global business environment The ability to quickly reprioritize use of resources when

requirements, technology, and knowledge shift A very fast response to sudden market changes and

emerging threats by intensive customer interaction Use of evolutionary, incremental, and iterative delivery

to converge on an optimal customer solution Maximizing BUSINESS VALUE with right sized, just-

enough, and just-in-time processes and documentationHighsmith, J. A. (2002). Agile software development ecosystems. Boston, MA: Addison-Wesley.

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What are Agile Methods?

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People-centric way to create innovative solutions Product-centric alternative to documents/process Market-centric model to maximize business value

Agile Manifesto. (2001). Manifesto for agile software development. Retrieved September 3, 2008, from http://www.agilemanifesto.orgRico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile software methods. Ft. Lauderdale, FL: J. Ross Publishing.Rico, D. F. (2012). Agile conceptual model. Retrieved February 6, 2012, from http://davidfrico.com/agile-concept-model-1.pdf

Customer Collaboration

Working Software

Individuals & Interactions

Responding to Change

valuedmore than

valuedmore than

valuedmore than

valuedmore than

Contracts

Documentation

Processes

Project Plans

Frequent comm. Close proximity Regular meetings

Multiple comm. channels Frequent feedback Relationship strength

Leadership Boundaries Empowerment

Competence Structure Manageability/Motivation

Clear objectives Small/feasible scope Acceptance criteria

Timeboxed iterations Valid operational results Regular cadence/intervals

Org. flexibility Mgt. flexibility Process flexibility

System flexibility Technology flexibility Infrastructure flexibility

Contract compliance Contract deliverables Contract change orders

Lifecycle compliance Process Maturity Level Regulatory compliance

Document deliveries Document comments Document compliance

Cost Compliance Scope Compliance Schedule Compliance

NetworkComputer

Operating SystemMiddlewareApplications

APIsGUI

How Agile Works Agile requirements implemented in slices vs. layers User needs with higher business value are done first Reduces cost & risk while increasing business success

9Shore, J. (2011). Evolutionary design illustrated. Norwegian Developers Conference, Oslo, Norway.

Agile Traditional1 2 3 Faster

Early ROI

Lower Costs

Fewer Defects

Manageable Risk

Better Performance

Smaller Attack Surface

Late

No Value

Cost Overruns

Very Poor Quality

Uncontrollable Risk

Slowest Performance

More Security Incidents Seven Wastes1.Rework2.Motion3.Waiting4.Inventory5 .Transportation6.Overprocessing7 .Overproduction

MINIMIZES MAXIMIZES

JIT, Just-enough architecture Early, in-process system V&V Fast continuous improvement Scalable to systems of systems Maximizes successful outcomes

Myth of perfect architecture Late big-bang integration tests Year long improvement cycles Breaks down on large projects Undermines business success

Thousands of TestsContinuously Executed

No More Late BigBang Integration

Agile Development Model User needs designed & developed one-at-a-time Changes automatically detected, built, and tested System fully tested and deployed as changes occur

10Humble, J., & Farley, D. (2011). Continuous delivery. Boston, MA: Pearson Education.Duvall, P., Matyas, S., & Glover, A. (2006). Continuous integration. Boston, MA: Addison-Wesley.

BuildIntegration

Server

VersionControlServer

BuildScripts

UsesWatches

BuildStatus

ProvidesDeveloper A

Developer B

Developer C

CommitsChanges

CommitsChanges

CommitsChanges

Builds

Database

Analysis

Testing

Reporting

Documentation

Deployment

Early, Automated, Fast,Efficient, & Repeatable

Constant ReadinessState & CM Control

Lean, Waste Free, Low WIP,No Deadlocked Test Queues

Rapidly & SuccessfullyDev. Complex Systems

Agile Cost of Quality (CoQ) Agile testing is 10x better than code inspections Agile testing is 100x better than traditional testing Agile testing is done earlier “and” 1,000x more often

11Rico, D. F. (2012). The Cost of Quality (CoQ) for Agile vs. Traditional Project Management. Fairfax, VA: Gantthead.Com.

Agile Cost & Benefit Analysis Costs based on avg. productivity and quality Productivity ranged from 4.7 to 5.9 LOC an hour Costs were $588,202 and benefits were $3,930,631

12Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile software methods: Maximizing ROI with just-in-time processes and documentation. Ft. Lauderdale, FL: J. Ross Publishing.

d1 = [ln(Benefits Costs) + (Rate + 0.5 Risk2) Years] Risk Years, d2 = d1 Risk Years

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1i

Studies of Agile Methods Dozens of surveys of agile methods since 2003 100s of Agile and CMMI case studies documented Agile productivity, quality, and cost better than CMMI

13Rico, D. F. (2008). What is the return-on-investment of agile methods? Retrieved February 3, 2009, from http://davidfrico.com/rico08a.pdf Rico, D. F. (2008). What is the ROI of agile vs. traditional methods? TickIT International, 10(4), 9-18.

Benefits of Agile Methods Analysis of 23 agile vs. 7,500 traditional projects Agile projects are 54% better than traditional ones Agile has lower costs (61%) and fewer defects (93%)

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

Project Cost in Millions $

0.75

1.50

2.25

3.00

2.8

1.1

Before Agile

After Agile

61%LowerCost

Total Staffing

18

11

Before Agile

After Agile

39%LessStaff

5

10

15

20

Delivery Time in Months

5

10

15

20

18

13.5

Before Agile

After Agile

24%Faster

Cumulative Defects

625

1250

1875

2500

2270

381

Before Agile

After Agile

93%Less

Defects

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Agile vs. Traditional Success Traditional projects succeed at 50% industry avg. Traditional projects are challenged 20% more often Agile projects succeed 3x more and fail 3x less often

Standish Group. (2012). Chaos manifesto. Boston, MA: Author.

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Agile Traditional

Success42%

Failed9%

Challenged49%

Success14%

Failed29%

Challenged57%

Hoque, F., et al. (2007). Business technology convergence. The role of business technology convergence in innovation and adaptability and its effect on financial performance. Stamford, CT: BTM Institute. 16

Study of 15 agile vs. non-agile Fortune 500 firms Based on models to measure organizational agility Agile firms out perform non agile firms by up to 36%

Benefits of Organizational Agility

Agile Enterprise Delivery Model

Beck, K., & Fowler, M. (2001). Planning extreme programming. Upper Saddle River, NJ: Addison-Wesley.Highsmith, J. A. (2010). Agile project management: Creating innovative products. Boston, MA: Pearson Education.Larman, C., & Vodde, B. (2010). Practices for scaling lean and agile development. Boston, MA: Addison-Wesley.Leffingwell, D. (2011). Agile software requirements: Lean requirements practices for teams, programs, and the enterprise. Boston, MA: Pearson Education.

Begins with a high-level product vision/architecture Continues with needs development/release planning Includes agile delivery teams to realize business value

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Agile Adoption

18House, D. (2012). Sixth annual state of agile survey: State of agile development. Atlanta, GA: VersionOne.

VersionOne found 80% using agile methods today Most are using Scrum with several key XP practices Lean-Kanban is a rising practice with a 24% adoption

ContinuousIntegration

●●

●

●●

●

●●●

●

●●

Agile Proliferation

Scrum Alliance. (2012). Scrum certification statistics. Retrieved February 6, 2013, from http://www.scrumalliance.org/resource_download/2505Taft, D. K. (2012). Agile developers needed: Demand outpaces supply. Foster City, CA: eWeek. 19

Number of CSMs have doubled to 200,000 in 2 years 558,918 agile jobs for only 121,876 qualified people 4.59 jobs available for every agile candidate (5:1)

Agile Industry Case Studies 80% of worldwide IT projects use agile methods Includes regulated industries, i.e., DoD, FDA, etc. Agile now used for safety critical systems, FBI, etc.

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Industry

ShrinkWrapped

ElectronicCommerce

HealthCare

LawEnforcement

Org 20 teams 140 people 5 countries

Size

15 teams 90 people Collocated 4 teams 20 people Collocated 10 teams 50 people Collocated 3 teams 12 people Collocated

U.S.DoD

Primavera

Google

Stratcom

FBI

FDA

Project

Primavera

Adwords

SKIweb

Sentinel

m2000

Purpose

ProjectManagement

Advertising

KnowledgeManagement

Case FileWorkflow

BloodAnalysis

1,838 User Stories 6,250 Function Points 500,000 Lines of Code

Metrics

26,809 User Stories 91,146 Function Points 7,291,666 Lines of Code 1,659 User Stories 5,640 Function Points 451,235 Lines of Code 3,947 User Stories 13,419 Function Points 1,073,529 Lines of Code 390 User Stories 1,324 Function Points 105,958 Lines of Code

Rico, D. F. (2010). Lean and agile project management: For large programs and projects. Proceedings of the First International Conference on Lean Enterprise Software and Systems, Helsinki, Finland, 37-43.

Structure, reward, decision, staffing, leadership, etc. Top-down, individualism, regulation, compliance, etc. Focus on reforming acquisition & procurement system

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Type/Kind Common DoD Agile Perceptions

Discipline

Reality with Respect to Agile Methods

Scalability

Domain

Management

Requirements

Architecture

Quality

Inspections

Security

Undisciplined Cowboy Coding

Only Applies Small Projects

Only for Protoperational Systems

Flexible Scope/Can't Use EVM

Doesn't Use Requirements

Spaghetti Code from Iterations

No Documents/Unmaintainable

High CoQ from No Inspections

Vulnerabilities from Hacking

Rigorous process, plans, requirements, QA, CM, testing, documents etc.

Used by 100, 500, 1,000, 10,000+ person person projects & organizations

Used in DoD, medical devices, avionics, autos, electronics, etc.

Lightweight EVM model is used with its release planning methodology

Always begins with valuable, well-defined, & prioritized requirements

Begins with lean architecture or create waste-free emergent design

Electronic plans, requirements, designs, tests, manuals, documents, etc.

One or two orders of magnitude more inspections & tests performed

Security practices result in smaller attack surface & fewer vulnerabilities

Rico, D. F., Sayani, H. H., & Sone, S. (2009). The business value of agile software methods: Maximizing ROI with just-in-time processes and documentation. Ft. Lauderdale, FL: J. Ross Publishing.

Perceptions of Agile Methods

Agile Recap Agile methods DON’T mean deliver it now & fix it later Lightweight, yet disciplined approach to development Reduced cost, risk, & waste while improving quality

22Rico, D. F. (2012). What’s really happening in agile methods: Its principles revisited? Retrieved June 6, 2012, from http://davidfrico.com/agile-principles.pdfRico, D. F. (2012). The promises and pitfalls of agile methods. Retrieved February 6, 2013 from, http://davidfrico.com/agile-pros-cons.pdfRico, D. F. (2012). How do lean & agile intersect? Retrieved February 6, 2013, from http://davidfrico.com/agile-concept-model-3.pdf

What How ResultFlexibility Use lightweight, yet disciplined processes and artifacts Low work-in-process

Customer Involve customers early and often throughout development Early feedback

Prioritize Identify highest-priority, value-adding business needs Focus resources

Descope Descope complex programs by an order of magnitude Simplify problem

Decompose Divide the remaining scope into smaller batches Manageable pieces

Iterate Implement pieces one at a time over long periods of time Diffuse risk

Leanness Architect and design the system one iteration at a time JIT waste-free design

Swarm Implement each component in small cross-functional teams Knowledge transfer

Collaborate Use frequent informal communications as often as possible Efficient data transfer

Test Early Incrementally test each component as it is developed Early verification

Test Often Perform system-level regression testing every few minutes Early validation

Adapt Frequently identify optimal process and product solutions Improve performance

Conclusion

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Agility is the evolution of management thought Confluence of traditional and non-traditional ideas Improve performance by over an order of magnitude

“The world of traditional methods belongs to yesterday”“Don’t waste your time using traditional methods on 21st century projects”

Agile methods are …

Systems development approachesNew product development approachesExpertly designed to be fast and efficientIntentionally lean and free of waste (muda) Systematic highly-disciplined approachesCapable of producing high quality systemsRight-sized, just-enough, and just-in-time tools

Scalable to large, complex mission-critical systems Designed to maximize business value for customers

Wysocki, R.F. (2010). Adaptive project framework: Managing complexity in the face of uncertainty. Boston, MA: Pearson Education.

Books on ROI of SW Methods Guides to software methods for business leaders Communicates business value of software methods Rosetta stones to unlocking ROI of software methods

http://davidfrico.com/agile-book.htm (Description) http://davidfrico.com/roi-book.htm (Description)

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LeadershipConsiderations

Agile World View “Agility” has many dimensions other than IT It ranges from leadership to technological agility The focus of this brief is program management agility

Agile Leaders

Agile Organization Change

Agile Acquisition & Contracting

Agile Strategic Planning

Agile Capability Analysis

Agile Program Management

Agile Tech.

Agile Information Systems

Agile Tools

Agile Processes & Practices

Agile Systems Development

Agile Project Management

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Leadership Theory

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Van Seters, D. A., & Field, R. H. (1990). The evolution of leadership theory. Journal of Organizational Change Management, 3(3), 29–45.Daft, R. L. (2011). The leadership experience. Mason, OH: Thomson Higher Education.Day, D. V., & Anbtonakis, J. (2012). The nature of leadership. Thousand Oaks, CA: Sage Publications.Northouse, P. G. (2013). Leadership: Theory and practice. Thousand Oaks, CA: Sage Publications.

Many leadership theories emerged in last 100 years Many believe there is no unified theory of leadership Truth is somewhere in the midst of old and new ideas

Agile Leadership Theories

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Numerous theories of agile leadership have emerged Many have to do with delegation and empowerment Leaders have major roles in visioning and enabling

Augustine(2005)

Pink(2009)

Denning(2010)

Poppendieck(2010)

Appelo(2011)

Organic Teams

Guiding Vision

Transparency

Light Touch

Simple Rules

Improvement

Autonomy

Alignment

Transparency

Purpose

Mastery

Improvement

Self Organizing

Communication

Transparency

Iterative Value

Delight Clients

Improvement

Talented Teams

Alignment

Systems View

Reliability

Excellence

Improvement

Empowerment

Alignment

Motivation

Scaling

Competency

Improvement

Augustine, S. (2005). Managing agile projects. Upper Saddle River, NJ: Pearson Education.Pink, D. H. (2009). Drive: The surprising truth about what motivates us. New York, NY: Penguin Books.Poppendieck, M, & Poppendieck, T. (2010). Leading lean software development: Results are not the point. Boston, MA: Pearson Education.Anderson, D. J. (2010). Kanban: Successful evolutionary change for your technology business. Sequim, WA: Blue Hole Press.Appelo, J. (2011). Management 3.0: Leading agile developers and developing agile leaders. Boston, MA: Pearson Education.

Agile Project Leadership

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Agile management is delegated to the lowest level There remain key leadership roles & responsibilities Communication, coaching, and facilitation key ones

Customer Communication

Product Visioning

Distribution Strategy

Team Development

Standards & Practices

Telecom Infrastructure

Development Tools

High Context Meetings

Coordination Meetings

F2F Communications

Performance Management

Facilitate selection of methods for obtaining and maintaining executive commitment, project resources, corporate communications, and customer interactionFacilitate selection of methods for communicating product purpose, goals, objectives, mission, vision, business value, scope, performance, budget, assumptions, constraints, etc.

Facilitate selection of virtual team distribution strategy to satisfy project goals and objectives

Facilitate selection of methods for training, coaching, mentoring, and other team building approachesFacilitate selection of project management and technical practices, conventions, roles, responsibilities, and performance measures

Facilitate selection of high bandwidth telecommunication products and services

Facilitate selection of agile project management tools and interactive development environment

Facilitate selection of high context agile project management and development meetings

Facilitate selection of meetings and forums for regular communications between site coordinatorsFacilitate selection of methods for maximizing periodic face to face interactions and collaborationFacilities selection of methods for process improvement, problem resolution, conflict management, team recognition, product performance, and customer satisfaction

Maholtra, A., Majchrzak, A., & Rosen, B. (2007). Leading virtual teams. Academy of Management Perspectives, 21(1), 60-70.Hunsaker, P. L., & Hunsaker, P. L. (2008). Virtual teams: A leadership guide. Team Performance Management, 14(1/2), 86-101.Fisher, K., & Fisher, M. D. (2001). The distance manager: A hands on guide to managing off site employees and virtual teams. New York, NY: McGraw-Hill.

Agile Leadership Coaching

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Executive coaching considered latest development 100s of books on executive coaching and mentoring Well coached teams & individuals perform 10x better

Davies, R., & Sedley (2009). Agile coaching. Raleigh, NC: Pragmatic Bookshelf.Adkins, L. (2010). Coaching agile teams: A companion for scrummasters, agile coaches, and project managers in transition. Boston, MA: Addison-Wesley.

Respect. Always treat people with respect and dignity Peaceful. Be slow to speak, anger, and overreact Composed. Walk away from a situation when in doubt Space. Give space, don't crowd, and don't be pushy Patience. Be calm, cool, rational, and even-tempered Objective. Keep focus and don't escalate or exacerbate Maturity. Strive be a role model of maturity at all times Listen. Observe and wait for subtle cues to add value Guide. Gently and respectfully guide, correct, and lead

BE OPEN OBSERVE LISTEN LEARN CONNECT RESPECT PRIVACY

Traditional Organizational Change

Satir, V., Banmen, J., Gerber, J., & Gomori, M. (1991). The satir model: Family therapy and beyond. Palo Alto, CA: Science and Behavior Books.

Humans can’t cope with large technological change Changes may be resisted for a long time (years) Big changes plunge organizations into chaos

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Agile Organizational Change

Sidky, A. (2008). Becoming agile in an imperfect world. Washington, DC: Agile Project Leadership Network (APLN).

Enable us to cross-the-chasm sooner or earlier Reduce chaos associated with large-scale change Reduce or divide the risk of change into small pieces

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Organizational Change Models

Heath, C., & Heath, D. (2010). Switch: How to change things when change is hard. New York, NY: Random House.Patterson, K., et al. (2008). Influencer: The power to change anything: New York, NY: McGraw-Hill.

Change, no matter how small or large, is difficult Smaller focused changes help to cross the chasm Shrinking, simplifying, and motivation key factors

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Switch - How to Change Things When Change is Hard Influencer - The Power to Change Anything

Direct the Rider

Follow the bright spots - Clone what works Script the critical moves - Use prescriptive behaviors

Point to the destination - Focus on the end game

Motivate the Elephant

Find the feeling - Appeal to emotion

Shrink the change - Use incremental change

Grow your people - Invest in training and education

Shape the Path

Tweak the environment - Simplify the change

Build habits - Create simple recipes for action

Rally the herd - Get everyone involved

Make the Undesirable Desirable Create new experiences - Make it interesting Create new motives - Appeal to sensibility

Surpass your Limits Perfect complex skills - Establish milestones Build emotional skills - Build maturity and people skills

Harness Peer Pressure Recruit public personalities - Involve public figures Recruit influential leaders - Involve recognized figures

Find Strength in Numbers Utilize teamwork - Enlist others to help out Enlist the power of social capital - Scale up and out

Design Rewards and Demand Accountability Use incentives wisely - Reward vital behaviors Use punishment sparingly - Warn before taking action

Change the Environment Make it easy - Simplify the change Make it unavoidable - Build change into daily routine