1. 1
Selling Agile to Business
Comparative Business Value of Agile Vs.
Traditional Methods
Nisha Shoukath
COO, People10
think.done

2. Contents
2
The pain points while selling Agile to the business
Convincing with the relevance of agile in today’s business
scenario
Show how IT is evolving into a business enabler as
compared to a traditional bottleneck
Proving the value using data, numbers and ROI
Emphasizing the value with visuals - charts and graphs
How we do it : People10 Four Quadrants© agile framework
www.agiletour.org

3. the pain points while selling Agile to the
business
3
they say IT is a pain I have
they say this fad is not learnt to live with, there is
relevant to their business no hope!
needs!
the C’s are always
agile sounds either interested in “ROI”
too easy or too and savings, that stuff
complex to them. how is beyond me!!!
do I show them the
big picture?
I am not able to explain the
they don’t want to go big tracking & measurement of
bang and create chaos. how agile and they say agile is
do I let them choose what cowboy style with no control!
they want?
www.agiletour.org

4. not relevant for your business ?
4
business environment human behavior
our business is constantly
we misunderstand
changing, so our needs evolve requirements and only
continuously
discover the misunderstanding
new ideas emerges constantly, not after we have started building
just at the beginning
when we see working
opportunities and threats software, we also see
appear unexpectedly, improvements
we must respond quickly
software building
process
Agile delivers
what we build doesn’t always best in today’s
work as well as we expect, so “impatient
changes must be made world”!
www.agiletour.org

5. can you relate to this ?
5
high risk for customer
 Long requirement gathering phase low confidence on
 Tight contracts; rigidity in change outcome
 Possibility of significant re-work during testing
 Tunnel effect (low product visibility) between requirement and delivery
 Large volume of documentation
“tunnel effect” Project life cycle
Requirement
Design
Build
Testing
Deployment
Product life cycle
www.agiletour.org

6. how would you like to be here ?
6
low risk for customer
high confidence
 Short iterative cycles; features prioritized with client on outcome
 Regular product demos; welcoming feedbacks
 High focus on software quality and maintainability
 Flexible to change
Project life cycle
1 2 3 n
Product life cycle
www.agiletour.org

7. you don’t always have to live with the pain…
7
visibility business adaptability reduced
value risk
high degree of customer &
developer interaction gives features prioritized directly adaptability to changing frequent visibility and
maximum visibility by customers and market/customer needs feedback mechanism
delivered in iterations give ensures reduced risk
better time-to-market and
improved business value teamwork product
communication high sustainability
highly skilled
customer professionals quality
transparency satisfaction better co-operation maintainability
problem solving
customer collaboration automated testing
strong relationships
more trust lightweight
traditional development processes and
agile development documentation
Source : VersionOne LLC
www.agiletour.org

8. rest of the world says…
8
Data from 5183 respondents worldwide suggests consensus on
67% more productivity, 65% more Quality
and 49% better on cost compared with traditional
methods. Survey also suggests :
Number of world-wide developers using agile is rising
Agile is not just confined to small organizations; size of organizations using agile is getting larger
Productivity Quality Cost
Year Organization Author # Respondents
increase increase reduction
2003 Shine Johnson 131 93% 88% 49%
2006 Agile Journal Barnett 400 45% 43% 23%
2007 Microsoft Begel et al. 492 14% 32% 16%
2007 UMUC Reco et al. 250 81% 80% 75%
2008 AmbySoft Ambier 642 82% 72% 72%
2008 IT Agile Wolf, et al. 207 78% 74% 72%
2008 Version One Hanscom 3061 74% 68% 38%
Average 67% 65% 49%
Source : The Business Value of Agile Software Methods by Dr. F Rico, Dr. H Sayani, Dr. S Sone Page 89
www.agiletour.org

9. win your argument with numbers..
9
development maintenance
phase phase
LOWER COST OF LOWER COST OF
+ MAINTENANCE
DEVELOPMENT
= LOWER TOTAL COST OF OWNERSHIP (TCO)
but how do we prove that agile gives low TCO ?
© People10
www.agiletour.org

10. win your argument with numbers..
10
development maintenance
phase phase
high productivity high quality (no defects)
 
low development cost low maintenance cost
can we measure & prove high productivity and high quality ?
© People10
www.agiletour.org

11. numbers proven through many studies…
11
productivity (lines of code / hour) quality (defect density)
26 studies with 726 programmers show average 21 studies with 323 programmers give average
productivity of 21 LOC / hour defect density of 1.79 defects / KLOC
10 to 20 19 times
times higher higher
Agile proves to be highly productive (fast and efficient)
and of higher quality than traditional
10 Measures Traditional Agile
92
8 21.24 LOC / hour (7.9311
69 Productivity .85 LOC / hour
adjusted)
6
46 Defect density 33.33 defects / KLOC 1.797 defects / KLOC
4
Development 5,087.89 hrs ($508,789 ) /
471 hrs ($47,087) / KLOC
23
2 cost KLOC
Total Life cycle 18,751 hrs ($4,509,997) /
0 0 2268 hrs ($217,712) / KLOC
cost KLOC
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28
Productivity (LOC / hour) Quality( Defects / KLOC) Tangible benefits (Traditional – Agile) $4,292,285 / KLOC
assumption : $100 as cost of development / hour
www.agiletour.org Source : Benediktsson, O., & Dalcher, D. (2005).
Estimating size in incremental software development projects. Journal of Engineering Manufacture, 152(6), 253-259.

12. what it means to the bottom-line…
12
TCO advantage
~ $ 4 million savings
per 1000 lines of code
Agile increases economic benefits in two ways
increase revenue through collaboration, interaction, listening to
customers, capturing their needs as flexible stories, implement the stories
with highest business value first
reduce development and maintenance cost
through increased productivity (reduce development cost)and improved
quality (reducing maintenance cost ) thereby decreasing total cost of
ownership
www.agiletour.org Source : Benediktsson, O., & Dalcher, D. (2005).
Estimating size in incremental software development projects. Journal of Engineering Manufacture, 152(6), 253-259.

13. how do we quantify the business value ?
Metric Definition Agile context Formula
Total amount of money Total development cost (includes n
Costs spent (Life Cycle Cost) training, coaching, automated tools) ΣCosti
Sum of Costs i=1
Total amount of money Economic benefit from new system
Benefits n
Sum of Benefits
gained (includes maintenance, rework ΣBenefiti
savings) i=1
Ratio of benefits to Includes development, Benefits
B/CR costs maintenance and business
Benefit to Cost Ratio Cost
ROI Ratio of adjusted Benefits – Costs
benefits to costs
Return on Investment Cost
n
Discounted cash flows Time value considered. Preferred
NPV for Agile ΣCosti Benefitsi .- Costs
0
(1+Discount Rate) Years
Net Present Value i=1
Point when benefits New Costs .
BEP exceed costs
Breakeven Point Old Costs / New Costs − 1
Value gained from Considers ‘risk factor’ and N(d1 ) × Benefits − N(d2 ) × Costs X
ROA strategic delay reduction in possible loss due to
Real Options Analysis delays in investment
e−Rate × Years
d1 = [ln(Benefits ÷ Costs) + (Rate + 0.5 × Risk2) ×
Years] ÷ Risk × √ Years
d2 = d1 − Risk × √ Years
Source : The Business Value of Agile Software Methods by Dr. F Rico, Dr. H Sayani, Dr. S Sone
www.agiletour.org

14. make your CFO smile 
14
79 studies with quantitative
data proves average ROI of
2633% ($26 return for $1 Category Low% Median% High%
invested) for Agile Development Cost 10 26 70
Schedule 11 71 700
ROI is due to high Productivity 14 122 712
productivity and high Quality
Satisfaction
10
70
75
70
1000
70
quality; ROI 240 2633 8852
Total Cost Benefits B/CR ROI% NPV BEP ROA
ISO 9001 $1,73,000 $5,69,841 3:1 229% $3,20,423 $11,96,206 $5,03,345
CMMI® $11,08,233 $30,23,064 3:1 173% $15,09,424 $5,45,099 $26,33,052
SW-CMM® $3,11,433 $30,23,064 10:1 871% $23,06,224 $1,53,182 $28,28,802
Agile Methods $2,17,712 $42,92,285 20:1 1,872% $34,98,958 $11,043 $41,25,209
www.agiletour.org
Source : The Business Value of Agile Software Methods by Dr. F Rico, Dr. H Sayani, Dr. S Sone

15. …and your CEO too 
15
Cost Benefits (Million $ / KLOC) Cost Benefit Ratio ROI
(Million $ / KLOC)
5 2100%
Millions
25
1800%
4
20 1500%
3 1200%
15
2 900%
10
600%
1 5
300%
0 0 0%
Cost Benefits Cost / Benefit Ratio ROI
Agile CMMI® SW-CMM® ISO 9001 Agile CMMI® SW-CMM® ISO 9001 Agile CMMI® SW-CMM® ISO 9001
NPV BEP ROA
4 1.5 5
Millions
Millions
Millions
1.2 4
3
0.9 3
2
0.6 2
1
0.3 1
0 0 0
NPV Break Even Point Real Options Analysis
Agile CMMI® SW-CMM® ISO 9001 Agile CMMI® SW-CMM® ISO 9001 Agile CMMI® SW-CMM® ISO 9001
www.agiletour.org
Source : The Business Value of Agile Software Methods by Dr. F Rico, Dr. H Sayani, Dr. S Sone

16. to the skeptics….it is measurable and controllable !
16
Yes there is a great method to the madness!
Yes it is possible to measure and track easily !
© People10
www.agiletour.org

17. People10 Four Quadrants© framework
17
People10 Four-quadrants© methodology encompasses the spectrum of a successful project delivery. Each quadrant
uniquely highlights the importance of functional, technical, process and continuous improvement while emphasizing a
fine balance of all four elements for success.
selling in 3 easy steps (5 min)
• Make them relate to each of the
quadrants
• Have them identify own gaps
• Have them pick and choose what
to implement
© People10
www.agiletour.org

18. Get in Touch
18
www.people10.com
Twitter: @people_10
info@people10.com