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Agile What? Agile Software + Agile Process = Superior Business Value

February 9, 2014

Agile Software is software structured so that it takes relatively less time to change.

Hmmm…  This means rather than structuring the software solely to produce the required features and functionality, that instead we purposefully create software whose structure results in changes to the software taking significantly less time, while of course providing the required Features and Functionality.   Agile Software might take 10% or 40% or ?% less time to change to produce the same new features as Non-Agile Software takes.  Exactly how much less time it takes to change Agile Software depends on the state of the code base it’s being compared with. For the potential time savings Agile Software offers over the life of a code base please see my blog article “Software Structure Can Reduce Costs and Time-to-Market”.  This article is based on empirical data.  And yes, you can get double digit improvements in this area, and maybe more.

In order to see where Agile Software fits in to the entire picture, here are the general kinds of Business Value created by a Software Product.  And by Software Product I mean a software system that is either sold in the market, or used internally by a business or other organization.  This includes desktop software, web apps, web sites, and other kinds of software as well.

Kinds of Business Value Created by a Software Product

  1. A Software Product itself provides Features and Functionality valued by a business, either for sale or internal-use.
  2. The code base of a Software Product is modifiable over time, i.e. software is soft.  This facilities the production of additional Features and Functionality from an existing code base that are of value to a business in the future.  Therefore, a code base which has a significantly lower time cost of changing code to add new features and fix bugs, has a significantly higher Business Value.

The Agile Process that arose around 2001 primarily addresses the first kind of Business Value.  The overriding goal of the original Agile Manifesto, and the bulk of the Agile literature since, is to produce software that satisfies user wants and needs now.  This is opposed to the typical Waterfall result where the software produced satisfied the requirements written 1,2, 3, or more years earlier, at the start of the development process.  This goal is stated over and over in Agile literature, and is considered to be primary Business Value produced by Agile Processes.  However, the term Business Value it is not well defined in Agile literature as Scott Ambler points out in his excellent  article “Agile at 10:  What we Believe”.  Please see the summary section at the end of this article titled “The Elephants in the Room”.

As such, the Agile Movement and Agile Processes have not yet focused upon the second kind of Business Value – A significant relatively lower cost of changing code to add new features and fix bugs.  This is the realm of Agile Software, a truly amazing source of superior Business Value.

In order to get a better understanding of exactly what Business Value is created by Agile Software, let’s examine this in more depth while also looking at some basic measures of Business Value.

Details of the Business Value Created by a Software Product and Measures of It

  1. The Revenue a software product generates over its life creates Business Value.  Or, for an internal-use software product Business Value is created by enabling a business to carry out its operations (often a source of cost savings, although these days it may be an absolute requirement do get something done that could not be done without software).  This is essentially created by the Features and Functionality of the software.  It creates significant short term, long term, and future Business Value.  Higher Revenues or higher Cost Savings create higher Business Value.
  2. The Time-To-Market (TTM) of a Software Product creates significant future Business Value.  A lower TTM creates higher Business Value.  Delivering 4 new software releases per year will probably generate a lot more sales than delivering a single new release each year.
  3. The Total-Cost-of-Ownership (TCO) of a Software Product creates short and long term Business Value.  A lower TCO creates higher Business Value.  It’s kind of like not having to pay for servicing your car so often.
  4. The Return-on-Investment (ROI) of a Software Product creates short and long term Business Value.  A higher ROI creates higher Business Value.  It’s kind of like getting a higher rate of return from your financial investments.
  5. Business Agility and Competitive Agility are possibly the most important Business Value created by a Software Product — They are critical to a business’s survival and success in a highly competitive environment.  And they are heavily dependent on Time-to-Market to deliver a winning set of Features and Functionality at the right time.  Unfortunately they are not as easily measurable as the above items.  Being more competitive creates a higher Business Value.

Please notice that Agile Software creates Business Value in each of the above 5 areas!   TTM decreases, which in turn has the potential to increase Revenue since there can be more new versions released each year AND at the same time increase Business and Competitive Agility.  Since it takes less time to produce a release, the cost of producing a release will likely decline and thus decrease TCO.  ROI increases with increased Revenue or decreased TOC, or both.  And, besides all this goodness that one gets with Agile Software + an Agile Process (keeping the feature set focused on the current wants and needs of customers), the business has an excellent chance to become a true niche leader.  And niche leadership is worth a whole lot, in part by further increasing Revenue and ROI, and also by not getting driven out of business by the competition.  Agile Software sets off a virtuous set of interactions, indeed!

I’ll not bore you with tallying up the detailed Business Value produced by a sole focus on Agile Processes, disregarding the role that software structure plays.  Clearly agility in the software development process is a necessary, but not sufficient, condition for sustained software business success.  I encourage you to consider how you and your organization can begin to reap the notably superior value created by Agile Software.

Please stay tuned for more articles on this topic.

George Stevens
Creative Commons License

dotnetsilverlightprism blog by George Stevens is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License. Based on a work at dotnetsilverlightprism.wordpress.com.

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