Governance of agile Software projectsby an automated KPI Cockpit in the Cloud Presentation of Dr. Udo Wilski, CTO and Member of Board at the Swiss IT Sourcing Forum in Zuerich, 2012 Support of project by pliXos

1. Governance of agile Software projects
by an automated KPI Cockpit in the Cloud
Dr. Udo Wilski, CTO and Member of Board
Zürich, 8. March 2012

2. LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“
Key Messages
• Important steps of “continuous journey”
– Upfront cleanup of processes (“CMMI”), agility (SCRUM), i.e. for team transparency
– e-2-e tool support (requirements mgmt., effort tracking, team communication, quality mgmt. etc.)
– Well thought selection of offshore provider (size, mgmt., engagement model & contract)
– Stringent project management and vendor governance (operational & strategic, ongoing)
• Successful large agile offshore Software project
– 10 – 20% increase of efficiency (“agile instead of waterfall”)
– > 30% cost reduction after less than 1 year (“offshoring”)
– Increased scalability and flexibility (“offshore”)
– Faster time to market (“agile”)
• Major challenges
– Transparency of project status and “early warning indicators”?
– How to measure and achieve insights into team performance (internal and external)?
• Solution
– Definition of fitting Key Performance Indicators (KPIs) by expert team prior to provider engagement
– Alignment of KPIs with development process, engagement model and incorporation in contract
– Implementation of automated KPI Cockpit for their measurement and continuous governance
– Building on KPIs to directly benchmark with experienced peers (internal & external)
2

3. LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“ 3
Europe's largest and most successful customer loyalty
programmes rely on the experience of Loyalty Partner Solutions
Example PAYBACK
LPS is responsible for the technical
realisation, development, and operation of
Europe's largest multipartner bonus
programme as well as the 2009 launched
PAYBACK Poland
• Technical design, development, and system implementation
• Operation of the IT system
• Integration of new services of numerous service providers
and partners
• Continuous development of the IT system to improve
customer service, cost efficiency, and time to market for
business innovations
Example Deutsche Bahn
LPS manages all CRM processes of
Germany's leading transport and logistics
service provider including BahnCard,
bahn.bonus and bahn.comfort
• Development and technical operation of a customised IT
solution
• Operational programme management as general contractor
• Handling of online and offline marketing campaigns
• Service provider controlling
• Technical support
• Data warehouse / reporting
and many more …

4. LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“ 4
LPS Heritage in Software Development
• Initial Situation
 Multiple projects
 Internal development + customer projects
 Internal staff + freelancers, since 2007 nearshore
 Internal investigations: effort estimations XX% to low
 Implementation of agile processes (SCRUM) in Spring 2008
• Requirements
 Faster time to market
 Reduced costs
 Increased flexibility
• Dedicated offshore initiative mid 2009
 Bangalore, India set due to a parallel investment in the Indian Loyalty market (i-mint acquisition)
 Agility (SCRUM) set, effort estimations in form of Story points based on User Stories
 Research and selection of news set of supporting tool environments according new set up
 Planning & implementation of offshore initiative by external expert advice (pliXos)
…

5. LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“
Strategic offshore initiative: Major steps
5
1. Fitting longlist (~15) of offshore service providers
– Bangalore, India as delivery location
– Tier 2 – 3 for “management attention”
– Suitable for a long term partnership (skills, mgmt. etc.)
2. Detailed Request for Information (RFI)
– 150 questions on all aspects, enforcing high quality responses
– Systematic evaluation
– 2 customer reference calls per provider
3. Preparation of LPS predefined frame agreement
(incl. KPIs, SLAs, job roles, skills, agile process descriptions etc.)
4. Offshore visits by LPS management, audits
5. Parallel sessions with 2 finalists
– Negotiation of LPS frame agreement
– Management sessions and technical workshops
6. Final selection by LPS management AND LPS team (“facts and perceptions”)
1 2

6. LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“ 6
Accout DirectorLPS Vendor Mgmt.
Focus KPI Cockpit:
Overview and insights for project and executive management
LPS Executive Mgmt.
LPS Project Mgmt.
Sub Project Mgmt.
Teams
SP Executive Mgmt.
SP Project Mgmt.
PMO/PDM/Scrum
Champions
Teams
= no unstructured communication
= structured and well documented
LPS Offshore SP
Use of development
tools „as is“
Extended reporting
with KPI Cockpit, e.g.
by new KPIs, trends etc.
 Full access for LPS
 Limited subset for SP
Value KPI Cockpit
 Automated data collection, KPI calculation and presentation across tools
 Manpower used for interpretation of reports and action NOT data preparation

7. LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“ 7
26 KPIs for agile offshore Software project
 9 Business Case (BC)
 4 Productivity (PR)
 5 Service Provider Relationship (SPR)
 8 Quality Assurance (QA)
Example: PR-2: Story Point per PD; PR-5: Velocity

8. LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“
Examples of further “in build” analysis
PR-2: Progression of productivity
BC-1: Spent vs. billed effort per month
Story Points / Efforts
per individual Sprint
offers transparency on
evolution of SP’s
productivity over time
(“learning curve”).
SP monthly costs calculated by
LPS on Efforts logged in system
vs. actual bills by SP.

9. LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“
Evaluation of Cost per Story Point after first steady state
• Only efforts for technical
tasks are considered
• Only closed and resolved
Story Points and the related
tasks are considered
• Blended rate as per internal
calculation and estimation in
which month the Sprint
occurred, including
freelancers deployed
• 80% of efforts by dedicated
onsite team allocated for
offshore support
In average offshore Cost per Story Point seems to reach 70%, including a share
of nearly 30% directly attributable to the onsite team supporting offshore

10. LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“
BM-1, Cost per Story Point
667 € 565 €
439 € 665 €
0 €
200 €
400 €
600 €
800 €
1.000 €
1.200 €
1.400 €
Project1 Project2
Offshore Costs Onsite Support for Offshore
Benchmarking of 2 “comparable” offshore projects
• Different offshore Service Providers
• Different customer Teams
• Same technology
• Only "technical tasks" are considered
(Development, QA, onsite team for
support/governance of offshore team)
• Offshore productivity is ~XX% of
respective Onsite baseline in
both cases
• The Onsite/Offshore cost ratio varies
(Project1 0,66 vs. Project2 1,18)
and suggests further investigation
1.106 €
1.230 €
The Cost per Story Point for the offshore delivery including onsite support &
governance lies within a ~10% variance

11. LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“
Work in progress & next steps
1. Benchmarking (“use only working group”)
2. Further e-2-e Tool Integration (“funded research project”)
3. Vendor Consolidation

12. LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“ 12
Lessons learnt
Stringent Preparation
- Clear Scope (Business Expectations)
- Processes
- Tools
- Supplier Selection
Detailed Knowledge Transfer
Internal Requirements Management
(Scope, Business Expectations)
Transparency on Project Status
- Fitting KPIs, accepted
- Trend Analysis & early Warnings
- Automated KPI Cockpit
Strict Project & Vendor Management
- Management Commitment
- Willingness to tough Actions
- Supporting Contract
Project Success

13. Thank You
Dr. Udo Wilski
Loyalty Partner Solutions GmbH
Theresienhöhe 12
80339 München
Germany
Tel +49 (0)89 96 16 09 – 2530
udo.wilski@lpsolutions.com
www.lpsolutions.com
Feedback?
Interested in joining our „user only“ working group Benchmarking?