My Keynote presentation from AgileTour Dublin Oct13

1. How
and
Why
Agile
Works:
Benefits,
Challenges
and
Strategies
for
Senior
Management
Colm
O’hEocha
–
AgileInnova4on
Slow
Down
to
Speed
Up
Copyright
©
2013
AgileInnova4on
1

2. This
material
is
Copyright
Protected
under
the
following
Crea4ve
Commons
License:
AGribu4on-­‐ShareAlike
3.0
Please
use
this
material
freely
and
derive
further
work
from
it.
BUT,
aGribu4on
must
be
given
to
the
original
author,
and
these
same
rights
must
govern
all
derived
works.
Please
use
the
following
aGribu4on:
“Colm
O’hEocha,
AgileInnova4on
Ltd.
2013:
www.agileinnova4on.eu”

3. Stacey
Complexity
Matrix
REQUIREMENTS
STABILITY
–
A
shared
understanding
of
what
we
need
to
build
SOLUTION
CLARITY
–
A
shared
understanding
of
how
to
build
it
Copyright
©
2013
AgileInnova4on

4.
Plan-­‐Driven
Project
Management
in
a
non-­‐simple
domain
Copyright
©
2013
AgileInnova4on

5. Process
Control
and
Complexity
OPEN-LOOP
Deterministic- Predictive
Set
Target
&
Plan
Execute
CLOSED-LOOP
Empirical - Adaptive
Set
Ini4al
Target
&
Plan
Adapt
Execute
Inspect
AIM
&
FIRE
FIRE
&
AIM
Copyright
©
2010
AgileInnova4on

6. 3
Perspec4ves
People
&
Mo4va4on
Systems
Thinking
Project
Economics
Lean/Agile
in
IT
Copyright
©
2013
AgileInnova4on

7. Theory
without
pracEce
is
useless.
PracEce
without
theory
is
expensive –
Ed
Deming
Copyright
©
2010
AgileInnova4on

8. Agile
PerspecEves
SYSTEMS
THINKING

9. So^ware
Development
as
a
System
Big
Projects,
Phases
Features
Look
for
Economies
of
Scale
Requirements
not
fully
understood
(Accepted)
Demand
Exceeds
Capacity
Unrealis4c
Plans
Keep
Costs
Down
Changing
Requirements
&
Scope
Creep
Late
Projects
Schedule
Pressure
Long
Hours
Debugging
(unpredictable
&
unplanned)
Lost
Business
Mistakes
Copyright
©
2011
AgileInnova4on
Missed
Customer
Expecta4ons
Testers
Busy
Poor
Quality
Delays
Tes4ng
Slow
Feedback

10. Sub-­‐OpNmizaNon
Principle:
“If
each
sub-­‐system,
regarded
separately,
is
made
to
operate
with
maximum
efficiency,
the
system
as
a
whole
will
not
operate
with
utmost
efficiency”
–
Lars
SkyGner,
General
Systems
Theory
• Converse:
Op4mizing
the
System
may
mean
sub-­‐op4mizing
sub-­‐systems
• Increasing
Capacity
at
the
BoGleneck
increases
System
Capacity
• Increasing
it
elsewhere
can
lead
to
longer
cycle
4mes
&
waste
• Op4mize
the
Whole
-­‐
Consider
the
Whole
Value
Stream
–
Concept
to
Cash
Copyright
©
2012
AgileInnova4on

11. Are
your
Development
Teams
Fully
UNlised?
60%?
75%?
90%?
98%?
100%?
In
a
stochas4c
system,
maximising
u4lisa4on
does
not
maximise
throughput
Copyright
©
2012
AgileInnova4on
11

12. You
get
back
to
that
goddamn
cubicle
and
start
thinking
outside
the
box!
Agile
PerspecEves
AGILE
&
INNOVATION

13. Learning
in
Complex
Environments
The
ScienNfic
Method
• Plan
–
Small,
Single
Factor
Experiments
• Do
–
Run
the
Experiment
• Check
–
Look
at
the
Data,
What
Happened
• Act
–
Apply
what
you’ve
Learnt
Non
n
op t
an
ot
a s
no
n
e
is
Non
i
ailur ova
If
f
inn
then n
pNo
o
Copyright
©
2010
AgileInnova4on

14. Experimenta4on
Design
for
Maximum
Learning
• IteraNons:
Buy
High-­‐Value
Knowledge,
Early,
at
Low
Cost
• Make
it
‘Safe
to
Fail’
Informa4on
Genera4on
100%
Chance
of
Success
Copyright
©
2011
AgileInnova4on
100%
Chance
of
Failure

15. Crea4vity
&
Innova4on
are
maximised
when:
• We
work
in
Small
Groups
– Self-­‐Contained,
Self-­‐Organising,
Common
Objec4ve
• We
can
Focus
– Low
Distrac4on
Level,
Low
Churn
in
Objec4ves
– Specific,
Closed
Problems
to
Solve
• We
are
Mo4vated
By
Importance
of
the
Work
– Feedback:
Fast,
High
Fidelity,
Rich
Derived
from
Amibile
et
al,
1996
Copyright
©
2013
AgileInnova4on

16. Agile
PerspecEves
ECONOMIES
OF
SPEED

17. Investment
Curve
Investment
Period
Payback
Period
Profit
Period
Cash
Cumulated
Profits
Max.
Cash
Consumed
Break-­‐Even
Point
Self-­‐Funding
Point
Time
NPV:
Net
Present
Value
–
amount
we
would
gain/loose
(in
todays
money)
by
invesEng
in
the
project
Copyright
©
2012
AgileInnova4on
17

18. Sample
Project
Max
Cash
Invest
ed
Pay-­‐
back
Month
RoI
3
yrs
NPV
Single
Release
Team%Size
Average%Fully%Loaded%Salary
Annual%Cost%of%Capital
Monthly%rate%of%transaction%growth%(8%months)
Maintenance%Costs%%%of%Transaction%Revenue
Year
Month
Not%Discounted
Discounted
Not%Discounted
Discounted
Not%Discounted
%Discounted
9
110000
6%
30%
10%
1
1
5
6
7
8
9
€82,500
€0
€82,500
€500
€82,500
€650
€82,500
€1,245
€1,719
€2,234
€2,904
€3,776
€4,908
€6,381
T€24,750
T€24,900
T€24,945
T€516
T€670
T€871
T€1,133
T€1,472
T€1,914
T€8,250
T€8,250
T€8,250
T€25,124
€0
T€8,250
€49,850 €49,955
€198,350 €248,305
€48,865 €48,725
€195,893 €244,617
€50,372
€298,677
€48,886
€293,504
€1,203
€299,879
€1,162
€294,665
€1,564
€301,443
€1,503
€296,168
€2,033
€303,476
€1,944
€298,112
€2,643
€306,119
€2,514
€300,626
€3,436
€309,555
€3,252
€303,878
€4,466
€314,021
€4,207
€308,085
€6,500
€80,000
€12,450
€30,000
€17,185
€22,341
€29,043
€37,755
€49,082
€63,807
€0
€0
€0
€0
€105,000
€6,500
€105,000 €111,500
€102,926
€6,340
€102,926 €109,266
€92,450
€203,950
€89,724
€198,990
€47,185
€251,135
€45,566
€244,556
€22,341
€273,476
€21,467
€266,023
€29,043
€302,518
€27,768
€293,791
€37,755
€340,274
€35,919
€329,709
€49,082
€389,356
€46,462
€376,171
€63,807
€453,162
€60,100
€436,271
T€49,500 T€49,500
T€99,000 T€148,500
T€49,009 T€48,765
T€98,262 T€147,027
€55,150 T€43,455
T€93,350 T€136,805
€54,061 T€42,385
T€92,967 T€135,351
€42,079
T€94,727
€40,838
T€94,513
€45,982
T€48,744
€44,404
T€50,109
€20,777
T€27,968
€19,964
T€30,145
€27,010
T€958
€25,824
T€4,321
€35,113
€34,154
€33,404
€29,083
€45,646
€79,801
€43,209
€72,293
€59,340
€139,141
€55,893
€128,186
T64%
T33%
T19%
T1%
23%
10
54%
11
94%
12
T€8,250
T€8,250
€49,500
€49,500
€49,254
€49,254
€49,500 €49,500
€99,000 €148,500
€49,009 €48,765
€98,262 €147,027
€100,000
€5,000
€0
€0
€0
€0
Net%Benefit%Flow
Cumulative%Net%Benefit%Flow
Net%Benefit%Flow%(Discounted%Cash%Flow)
Cumulative%Net%Benefit%Flow%(Rolling%NPV)
Payback%Month
3%Year%RoI
NPV
4
T€24,750 T€24,750
Benefits
Revenue%on%Feature%Delivery
Revenue%on%Transaction%fees
Adjustment%for%Prioritised%Delivery
Adjustment%for%Innovation%10%%more%Benefit
Adjustment%for%Motivation%T%10%%more%Value%by%the%Team
Benefits%Realised
Cumulative,Benefits,Realised
Benefits%Realised
Cumulative,Benefits,Realised
Max%Invested
Rolling%RoI
3
€82,500 €82,500
€0
€0
Costs
Development%Costs
Maintenance/Support%Costs
Adjustment%for%Reduced%Variability%T%50%%Less%Change%Mgt
Adjt%for%Reduced%Demand%T%30%%Dev%and%Maintenance%Costs
Adjustment%for%Reduced%Risk%T%50%%Chance%Technology%Failure
Adjustment%for%Better%Quality%T%10%%less%development%cost
Adjustment%for%Less%Overhead%T%5%%Development%Costs%Saved
Costs%Incurred
Cumulative,Costs,Incurred
Costs%Incurred
Cumulative,Costs,Incurred
2
T€49,500
T€49,500
T€49,254
T€49,254
€0
€0
€0
€0
10
11
12
T€148,500
T100%
T100%
T100%
T63%
T92%
10
0%
€0
18
Copyright
©
2012
AgileInnova4on

19. Sample
Project
-­‐
the
Business
Case
Max
Cash
Invest
ed
Plan-­‐Driven
Pay-­‐
back
Month
440K
20
RoI
3
yrs
FP/FS
Single
Delivery
a^er
6
months
NPV
Single
Release
95%
347K
€1,200,000
€1,000,000
€800,000
€600,000
€400,000
Max
Cash
Invested
€200,000
€0
-­‐€200,000
1
7
13
19
25
31
-­‐€400,000
-­‐€600,000
Self-­‐Funding
Point
Break-­‐Even
Point
19
Copyright
©
2012
AgileInnova4on

20. ECONOMIES
OF SPEED
€
Earlier
Benefit
Accumula4on
€
Earlier
€
Less
‘Just
In
Case’
Demand
€
Less
€
Improved
Quality
€
Improved
REDUCE
COST
Reduced
Risk
INCREASE
REVENUE
More
Innova4on
Less
Management
Overhead
More
Mo4va4on
Improved
Business
Agility
Copyright
©
2012
AgileInnova4on
20

21. Advantage
of
Early
Delivery
14
month
Product
Growth
Phase
€
Earlier
Benefit
Accumula4on
€
Geeng
to
Market
2
months
Earlier
≈
+€0.7M
(87%)
60000
Extra
Sales
Original
Xac4on
Revenue
50000
40000
30000
20000
10000
0
1
7
13
19
25
31
Copyright
©
2012
AgileInnova4on

22. Sample
Project
Earlier
Delivery
to
Market
–
Months
4,
5
and
6;
Stage
Payments
&
Increased
Transac4on
Revenue
€
Earlier
Benefit
Accumula4on
€
Max
Cash
Invest
ed
Pay-­‐
back
Month
RoI
3
yrs
NPV
Plan-­‐Driven
440K
20
95%
347K
Increased
Sales
307K
17
286%
753K
Single
Delivery
Extra
Sales
€1,200,000
€1,000,000
€800,000
€600,000
€400,000
€200,000
€0
1
7
13
19
25
31
-­‐€200,000
-­‐€400,000
-­‐€600,000
22
Copyright
©
2012
AgileInnova4on

23. Sample
Project
Fewer
Features
than
Planned
were
built
as
they
weren’t
really
necessary
-­‐
saves
Dev
Team
30%
costs
€
Less
‘Just
In
Case’
Demand
€
Max
Cash
Invest
ed
Pay-­‐
back
Month
RoI
3
yrs
NPV
Plan-­‐Driven
440K
20
95%
347K
€1,200,000
Increased
Sales
307K
17
286%
753K
€1,000,000
Less
Demand
182K
13
609%
977K
Single
Delivery
Less
Demand
Previous
€800,000
€600,000
€400,000
€200,000
€0
1
7
13
19
25
31
-­‐€200,000
-­‐€400,000
-­‐€600,000
Copyright
©
2012
AgileInnova4on
23

24. Sample
Project
10% Less Development & 50%
Less Support Costs finding/
tracking/fixing bugs and
reworking features
€
Improved
Quality
€
Max
Cash
Invest
ed
Pay-­‐
back
Month
RoI
3
yrs
NPV
Plan-­‐Driven
440K
20
95%
347K
€1,200,000
Increased
Sales
307K
17
286%
753K
€1,000,000
Less
Demand
182K
13
609%
977K
Improved
Quality
148K
12
851%
1.1M
Single
Delivery
Improved
Quality
Previous
€800,000
€600,000
€400,000
€200,000
€0
1
7
13
19
25
31
-­‐€200,000
-­‐€400,000
-­‐€600,000
Copyright
©
2012
AgileInnova4on
24

25. Sample
Project
Some Benefits hard to
quantify…
Summary
Max
Cash
Invest
ed
Pay-­‐
back
Month
RoI
3
yrs
NPV
Plan-­‐Driven
440K
20
95%
347K
€1,200,000
Increased
Sales
307K
17
286%
753K
€1,000,000
Less
Demand
182K
13
609%
977K
Improved
Quality
148K
12
851%
1.1M
Increased
InnovaNon
-­‐
-­‐
-­‐
-­‐
Improved
MoNvaNon
-­‐
Less
Risk
-­‐
-­‐
-­‐
-­‐
….
-­‐
-­‐
-­‐
-­‐
Single
Delivery
Improved
Quality
€800,000
-­‐
-­‐
-­‐
€600,000
€400,000
€200,000
€0
-­‐€200,000
-­‐€400,000
• Payback
Period
reduces
from
20
to
12
months
13
1
7
19
25
31
• Max
Cash
Funding
from
404K
to
148K
• Year
3
RoI
improves
from
95%
to
851%
-­‐€600,000
• è
NPV
from
347K
to
1118K§
§(Assumed
Discount
Rate
6%)
Copyright
©
2012
AgileInnova4on
25

26. Cost
of
Capacity
vs.
Cost
of
Delay
Its
Easy
to
Measure
this
Total
Cost
of
a
Process
Cost
of
Process
Capacity
We
are
Usually
Blind
to
this
Cost
of
Delay
in
the
Process
Copyright
©
2013
AgileInnova4on

27. Agile
–
AdopEon
MOVING
TO
AGILE
Good
Judgment
comes
from
Experience.
Experience
comes
from
Bad
Judgment.

28. Copyright
©
2013
AgileInnova4on

29. AdopNon
• Shu – embracing the kata
• Ha – diverging from the kata
• Ri – discarding the kata
TransformaNon
Copyright
©
2010
AgileInnova4on

30. FricEon
Points
–
Plan-­‐Driven
vs.
Agile
• Agile
is
an
IT
thing
–
Senior
Mgt
don’t
need
to
be
involved
• Our
Technology/Customer
Base/EcoSystem
are
too
Complex
for
Agile
through
• We
Work
in
a
Fixed
Price/Scope/Date
ed
be
workEnvironment
to
barriers
rganizaEon
snt).
e
• FuncEonally
demarcated
os
Improveme tructure
them
These
ar 4nuou
g
moun4n
ur
(Co n
• Fear
of
Transparency
(criEcism,
anicro-­‐management)
ng
md
s
kli
s
are
tac y
day
n
• Mistrust/Fear
4o Self-­‐OrganisaEon
(they’ll
ease-­‐off,
run
amok)
rganiza of
ever
O
• A
lot
of
‘Legacy’
and
‘Technical
Debt’
• Agile
can’t
work
in
a
Highly
Regulated
Context
• Regular
Access
to
Customers
or
Users
impossible
• We’re
rewarded
as
Individuals,
not
as
a
Team
Copyright
©
2013
AgileInnova4on
30

31. BBC
Worldwide
-­‐
Kanban
The
evidence
shows
that
over
the
12-­‐month
period:
• lead
Nme
to
deliver
sooware
improved
by
37%
• consistency
of
delivery
rose
by
47%
• defects
reported
by
customers
fell
24%
Copyright
©
2012
AgileInnova4on
-­‐
Middleton,
Joyce
2010

32. Lightweight,
Emergent
Methods
“Simple,
clear
purpose
and
principles
give
rise
to
complex
and
intelligent
behavior.
Complex
rules
and
regulaNons
give
rise
to
simple
and
stupid
behavior.”
Dee
Hock,
CEO
Emeritus
VISA
Interna4onal
Copyright
©
2012
AgileInnova4on
32

33. Lean
Compe44veness
Fund
Enterprise
Ireland
Up
to
50%
Funding
Support
for
SMEs
Training,
Consul4ng,
Coaching
in
Lean
Colm
O’hEocha
AgileInnova4on
Limited
www.agileinnova4on.ie
Colm@agileinnova4on.ie
Q&A
Training
&
Coaching
Agile/Lean
for
Execs
(½d)
Agile/Scrum
for
Teams
(2d)
Gewng
Lean
with
Kanban
(2d)
Bringing
Agile
to
the
Next
Level
–
Op4mising
and
Scaling
(2d)
Professional
ScrumMaster
(2d)
(cer4fied)
PMI
–
Agile
Cer4fied
Prac4toner
(2d)
(cer4fied)
Product
Owner
(1d
or
2d)
User
Stories
and
Es4ma4on
(1d)
Effec4ve
Agile
Tes4ng
(2d)
Copyright
©
2012
AgileInnova4on
&
InspireQS

34. This
material
is
Copyright
Protected
under
the
following
Crea4ve
Commons
License:
AGribu4on-­‐ShareAlike
3.0
Please
use
this
material
freely
and
derive
further
work
from
it.
BUT,
aGribu4on
must
be
given
to
the
original
author,
and
these
same
rights
must
govern
all
derived
works.
Please
use
the
following
aGribu4on:
“Colm
O’hEocha,
AgileInnova4on
Ltd.
2013:
www.agileinnova4on.eu”