Costs & Benefits
Agile development pays off
by Ronny Wenzel
Software is the infrastructure of the 21st century, developers are one of the most important tech professions. In a benchmarking study with Kearney, we found: Agile methods can help increase the efficiency of processes and developers.
The statistician John W. Tukey introduced the terms ‘bit’ (1940s) and ‘software’ (1958) a long time ago, and much has changed since then: From an add-on for IBM hardware, an independent industry has emerged that, according to Statista, will turn over almost 650 billion dollars worldwide in 2023. Add to this the countless internal IT development and operating units - software is shaping the infrastructure of the 21st century.
Together with the strategy consultancy Kearney, we investigated the question of what differentiates companies in software development and how processes and procedures can be decisively improved. In our part of the analysis, we at Metrics examined how efficient and effective organisations are in the development and operation of software solutions. To do this, we put operational value drivers to the test, including time-to-market and the stability of business-critical systems. In addition, we looked at costs, pricing, services and general conditions, including:
- Scope of activity
- Volume of activity
- Quality benchmarks and service level
- Degree of complexity
- Operating environment, such as company structure, geographic scope as well as legal and regulatory frameworks
Agilität drives efficiency and speed
Agility has emerged as a key driver for greater effectiveness (doing the right thing) and efficiency (doing it right) in software development. For example, agile operations can be 15 to 20 per cent more efficient than classic approaches. The advantages also include a quick time-to-market. That can be shortened by up to 40 per cent when companies apply agile principles as opposed to the traditional waterfall model. However, according to our findings, there is a significant correlation between the agile maturity level within a company and its operational efficiency.
Agile advantages are not a given
Benefits from agility are therefore not automatic: agility is a prerequisite for high project efficiency with less stable requirements, but it is not a guarantee for high efficiency; it can also be an expenditure driver. Other parameters, such as stability of requirements and project members, have a significant influence on the calculation. Similarly with time-to-market: even the goal of delivering software quickly to the (end) customer is not necessarily reflected in actually productive deployments. Here, the quality of requirements management, the degree of automation and capacity planning play a major role.
What agile projects fail at
While agile methods have become a clear requirement for projects with variable requirements, traditional approaches are far from out of the running, for example in the case of stable requirements. Moreover, some agile projects fail because the expected benefits do not materialise, the costs are too high and there is friction within the team. Here, we recommend considering a number of factors when introducing agile principles - such as the team's readiness, motivation and retention rate, as well as the total number of projects running at any given time.
Nevertheless, IT managers will hardly be able to ignore agile methods if they want to make their software development more efficient. Agile lip service, however, falls short of this. With a comprehensive approach, IT departments can lay the foundation to be better perceived as an internal business partner and to assert themselves in the market. In view of the increasing relevance of software, optimisation initiatives for the development unit strengthen the future viability of your entire organisation.
An English article about our report can be found at Kearney
His passion for software has made Ronny Wenzel the head of the Application Management Practice at Metrics. Whether it is the billing of applications, the benchmark of an application landscape or the development of a service catalogue, he is on the spot with many years of expertise and a hands-on mentality.