On her weekly podcast, Ryn Melberg defines the Return On Investment (ROI) companies and different organizations can expect from their switch to Agile, Safe and Scrum. Agile is a project management methodology that software writers adopted several years ago. But people who work in other industries are learning that the sensible, team centered, value producing and time saving methods prescribed in Agile are as useful to them as they are to software developers.
On the podcast, Melberg describes in detail the potential pitfalls and ways that people inside of companies and organizations can sabotage the Agile effort. Separating the unrealistic promises from the mathematically provable, Ryn Melberg labels the increases in quality, faster times to market, defect decreases and higher rates of employee engagement that will all have a very positive impact on the bottom line. She also explains how half measures, and internal office politics can de-rail Agile and deprive companies of those same positive outcomes.
Measuring ROI In Agile
There are plenty of different ways to measure ROI in Agile. One is cost reduction. “As Agile is adopted there is a 30% to 60% boost in quality for those who are doing real Agile and not an adulterated version like ‘Scrumafall’,” Melberg says. ‘Of course the actual amount will depend on the type of industry. But it is fair to say that reducing the cost of poor quality will also impact the costs in a favorable way.”
Time To Market
Melberg states that the average time to market with Agile is approximately 35% earlier than with traditional management tools. Thus Agile will greatly increase the speed at which a finished product enters the marketplace. The more quickly a new product is commercialized the sooner the company can start to pay itself back for its initial investment. Costs of delays to market are very expensive. “On a product that is $100.00, if the delay is 35% then the real cost of a product increases by that same amount,” Melberg says. “At the same time, if the cost of delay is reduced by 35%, the product pays $135.00 instead of $100.00.”
Transitioning The Company To Agile
During the podcast, Melberg described two different scenarios of companies she had worked for who each experienced far different outcomes for their Agile transformation. Both made the investments in infrastructure and employees but only one made the ‘emotional’ commitment to fully transform. The other took a ‘wait and see’ approach. “For the company that bought in completely they were able to transition in a little over three months,” she said. “For the company that was not willing to make the emotional and cultural commitment, the transition is ongoing after over three years. There is more to transitions than dollars. Employees also have to accept the changes and embrace them.”
One Scrum Team
Melberg recommends for those who are more conservative to take a smaller but incremental approach. “Let me have one scrum team fully engaged in a real world project so the decision makers can see what is possible. This approach is much easier for leaders to accept than it is to transition an entire organization all at once.” The payoff in terms of ROI extends from quality and defect reduction and time to market to include employee engagement. “We want employees to buy in for lots of reasons,” she says. “Employees who are more engaged will do better work, talk positively about the company to customers and other stakeholders and remain loyal. It is better business by far to retain employees than to replace them, which is very expensive.”
To learn more go to: www.rynmelberg.com.
To hear this podcast on iTunes go to: https://itunes.apple.com/us/podcast/agile-return-on investment/id977764101?i=354636256&mt=2.