Friday, May 25, 2007

Max Planck and the TCO

In "Pitching Agile to Senior Management" (DDJ June 2007), Scott Ambler presents tactics for introducing agile approaches to management. Besides the necessity of talking the right talk, Scott emphasizes the importance of avoiding an "us versus them" way of thinking and, for this, to recognize the virtues and values of management.

In this article, Scott presents how quickly agile software development starts to provide value and how this factor can help pitching the positive bottom line impact of agile. There is though a parameter that management will also consider in this board game: an agile team is significantly more expensive than a traditional one. Agile teams are usually staffed with seasoned developers who are generalizing specialists: these species are more expensive that the usual programmers and analysts traditionally managed projects are used to deal with. And this is without mentioning the folly of co-located teams when you can have cheap and qualified labor near or off management shores!

Hence the comparison graph of the total software project costs will probably look like this...
... with the green line showing the cost of agile approaches while the red one shows the cost of traditional ones. So this is good news: agile still beats traditional over time! Yes, but the big question is how far in the product life time line will management look when making their decision. It might sound obvious that the whole life time will be considered always but it is not.

There are situations where management will have a narrow sight on this:
  • Organizational reasons: Maintenance of the product will be handed-off to a different unit, unconnected with the current managers. This happens in large structures and the point in the hierarchical pyramid where development and maintenance management chains meet is so high that no-one will look into how decisions on one side affects the other.

  • Personal reasons: upcoming promotion or retirement can make a particular manager not inclined into looking too far in the future. Though this might sound unprofessional or rare, with the baby boomers now on the departure, this situation will occur more than you think.
In these situations, you might end-up hitting a wall harder than Planck's one. And if this wall happens to be before the point where agile starts to deliver its financial goodness, as shown here...
... your pitch might be very difficult! In that case, you will have to be agile and re-factor the pitch to focus it more on time to market or quality aspects rather than sticking to the money side.

2 comments:

Jean-Luc Ensch said...

David,

Agility aside, this summarizes 20 years of my life...

These notions of resistance to change and "satisfycing" (going for a good enough solution vs. the best) are really what most of business decisions are made of here.

As for TCO, the concept has been around for a while. It has one drawback though. It is a cross-organizational concept, i.e. not in the hands of the sole CIO, as it touches finance.

My humble experience is that cross-organizational concepts are difficult to sell and take time to percolate. Cf. workflow in the 90ies
Quite an interesting post, as usual. Keep them rolling and take care.

David Dossot said...

Thank you for sharing your experience!