@Scale the AgileCraft Blog

Connecting the Dots - The ROI of your Agile Investment

Posted by Scott Blacker on Mar 30, 2017 11:28:00 AM


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We hear this question often - does Agile really improve cost, schedule, productivity, quality and customer satisfaction compared to traditional methods? The short answer is yes. There can be a measurable ROI by adopting Agile across the enterprise. But where to start? It’s important to understand the top Agile key business value drivers when starting your journey and some of the ways you can track your transformation.

#1 – Reduce the cycle time. It’s simple, a reduction in overall cycle time, drives profitability and speeds time to market. IT organizations and customers benefit from the ability to Plan, Do, Check, Act[1], repeat and then learn from that repeating cycle as they go. By building more frequently, your enterprise becomes more efficient. The more frequent you do this, the faster you see benefits and as you scale up the organization, the benefits scale as well.

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                        Cycle Time Report

#2 – Focus on Minimum Viable Increments (MVI) – In the past, organizations funded projects one time. The funding was based on initiatives and not capacity of the teams. Since everyone knew it was a one or done, they would over request and under commit to ensure everything they wanted was covered. This approach killed the strategic planning cycles and ultimately created longer project timelines. With Agile, teams are collaborative. So by shifting focus away from the old way of doing things towards planning based on capacity of teams and MVI, you now enable your enterprise to deliver a positive ROI faster and receive customer feedback sooner. 

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                     Track Value Delivery

#3 – Reduce Work in Progress (WIP) – When unplanned or unpredicted demand is placed upon an organization, it’s common practice to share subject matter experts or hire contractors to fill the gaps. In an Agile organization, you prioritize and match demand to capacity. New projects are fed to the highest preforming teams in a continuing cycle. When the organization shifts the focus on capacity to their highest producing team, you eliminate unnecessary expense and wasted time allowing you to better utilize the teams you have in place.

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                  Reduce Work in Progress

#4 – Align Strategy to Execution – When your business strategy is disconnected from your technical execution you create unnecessary waste and overall inefficiency within your enterprise. By driving the alignment between strategy and execution your enterprise creates the ability to validate progress in real time creating visibility, control and ultimately building trust with your CFO. Your enterprise is no longer over-investing in projects where MVP has already been met.

 

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                Match Investment to Spend

#5 – Align Governance – From Sarbanes Oxley to HIPAA to PCI DSS, every organization is subject to some sort of regulation and you need to ensure your enterprise is compliant. By operationalizing the financial reporting with a system driven approach, you create the ability to easily track and trace all the work components. A scaled Agile approach, connecting strategy to execution, in a highly traceable format, tracks all the work items and rolls them up to ensure spending is in line with organizational objectives.

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                  Audit and Trace Work

 To find out more about key business drives and how to on how to justify your Agile investment to your CFO, watch our latest webinar, co-sponsored by Eliassen Group.

 

[1] The PDCA cycle was in fact originally developed by Walter A, Shewhart, a Bell Laboratories scientist who was Deming's friend and mentor, and the developer of Statistical Process Control (SPC) in the late 1920s.  So sometimes this is referred to as the "Shewhart Cycle".  There are also several recent variations on this concept.   See The Man Who Discovered Quality by A. Gabor, Penguin Books, 1990.

 

Topics: Scaled Agile, Digital transformation, Waterfall, Agile, ROI