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Calculating the cost of Agile seems simple, since we are working with steady teams. The risk of that simplicity is that cost becomes the focus of attention. And quite often cost reduction is the next topic. The discussion should not be about cost, but on the financial return, which is the balance of cost and benefit. Maximizing the financial return means focusing on maximizing benefits rather than cutting cost. The biggest benefit of going Agile for all involved parties is trust. That seems to contradict the desire to express results in numbers or fit it into contracts. Trust and financial return can be combined when trust is built up smart and contracts evolve in an Agile manner
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The ƒinancial Return of AgileFrank VogelezangManager Pricing Office
2Who is Frank Vogelezang
Manager Pricing Office OrdinaWhat IT services may cost in order to be competitiveWhat IT services should cost with a healthy financial return
President COSMICMeasurement Practices CommitteeFunctional Size of Software
Counting Practices Committee NesmaFunctional Size of Software
IWSM Mensura conference Conference ChairSoftware Measurement @IWSMMensura6-8 October in Rotterdam www.iwsm-mensura.org
How to reach the drinks
COST
MISTAKE
shift
RETURN
DRINKS
Calculating the Cost of Agile4
Cost
Calculating the Cost of Agile is simple5
Cost
47
6The Cost of (Agile) Software Development
TSP XP Scrum PP Waterfall€ 0
€ 500,000
€ 1,000,000
€ 1,500,000
€ 2,000,000
€ 2,500,000
MaintenanceDevelopment
Capers JonesEvaluating Agile and Scrum with Other Software Methodologies
1.000 Function Points5 years of maintenance
7The Impact of introducing Agile
Cost
Productivity
Agile Waterfall
+34%
-27%
8Proof for good Agile practices
Hennie HuijgensHow to build a goodsoftware portfolio
Steady heartbeat
Fixed team
Single application
Mistake of the Century
COST
MISTAKE
shift
RETURN
DRINKS
10It’s not about Cost
ƒinancial
Return
Benefit Cost
11Cost pressure
Cost
Cost
DocumentContractProcessControl
Plan
Sin #1
Benefit
?
12Whose Benefit?
Benefit
?
Purchasing
IT department
Business
User
Customer
13Benefit for everyone?
14What about ƒinancial Return?
ƒinancialReturn
Purchasing
IT department
Business
User
Customer
15
Cost
Benefit
ƒinancial Return is maximizing Benefit
MoreBenefit
16Cost pressure and Benefit
ƒinancial
ReturnBenefit
Cost
Paradigm shift
COST
MISTAKE
shift
RETURN
DRINKS
18Change the picture
ƒinancial
Return
Benefit Costƒinancial
Return
BenefitCost
19What Benefit?
Benefit
?
Purchasing
IT department
Business
User
Customer
Business Value
Teamwork &Responsibility
PartnershipElaboration
Embrace
Change
! TRUST
20MoreAgile Manifesto 2.1
We encounter possibilities to focus more on effectiveness by working Agile and learning from that. Based upon our experience we value:
Teamwork & responsibilityover Individuals and Interaction over processes and tools
Deliver Valueover Working software over comprehensive documentation
Partnership elaborationover Customer collaboration over contract negotiation
Embrace changeover Respond to Change over following a plan
21Truly Rely on Utilizing STrenghts
Benefit
?
Purchasing
IT department
Business
User
Customer
Business Value
Teamwork &Responsibility
PartnershipElaboration
Embrace
Change
! TRUST
The ƒinancial Return of Trust
COST
MISTAKE
shift
RETURN
DRINKS
23In God we trust
24The ƒinancial Return of Trust
SMARTTRUST
BLINDFAITH
DISTRUST
25Smart Trust
Team Lease
Storypoints per sprint
Productivity
Business value
Virtue #1
26Smart Trust ► Agile contracting
Period/Conditions/Non-disclosure
Definition of Done/Right
Incentive on Customer satisfaction
Incentive on Business KPI’s
27Focus on ƒinancial return, the Agile wayIf your biggest value is cost reduction
Cost
Cost Cost
More Benefit
Don’t go Agile
If your biggest value is cost reduction
Time for a drink
COST
MISTAKE
shift
RETURN
DRINKS
29
WatKostIT.blogspot.nl
ThePriceofIT.blogspot.com
@FrankVogelezang
FrankVogelezang
www.linkedin.com/in/frankvogelezang
