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Scrum means business

April 12, 2013

Everything you hear about scrum will tell a story about better and faster software delivery, higher quality and more happy employees… But what does this mean for your business. Sure, quality is nice, faster delivery is good, and we all don’t mind working with motivated people. But from a business perspective you need more benefits.

Let’s invest

Software development is about investment. Building new functionality is an investment that needs to be paid back in sales. These investments are big. Imagine a modest 20 developers team building functionality during the course of half a year. Let’s take a simple approach to this case for BtoB environment. In many countries this means a 1 million USD investment. Doing this in a traditional waterfall way will have the following symptoms:

  1. Sales is very reluctant in selling during the development phase. History has proven that products are delivered late, so sales is careful.
  2. Tangible product only becomes visible close to the end of the development, and only then can be reviewed by customers.
  3. Finished product always require post release changes to make it really fit for the market.

The investment is invested as a single shot. You can aim once for your market and that shot has to be spot on. Any change requires additional development  investment after release to make it spot on.

Your investment according to scrum

Take the same scenario according to the scrum method. Developing based upon 2 weeks sprints, and based upon completed (manuals/tested/ training) functionality during these sprints. This will have the following symptoms:

  1. One month into the development of product the first functionality of the product can be demo-ed to customers, even a manual of the completed parts of the product can be shown.
  2. Feedback of customers can be fed back into development and adjust the development already after approx. 1 month into development.
  3. Due to the ability of showing tangible product, sales can start already after that first month
  4. Finished product has been widely exposed to customers and users, and is spot-on developed. Additional developments are extensions.

Product maturity

Let’s try to capture this. You could think of something that is called Product Maturity. Maturity is something that will grow as product changes are based upon exposure to users. The more a product is exposed and the more changes are resulting from that, the more mature the product becomes. Source of the change can be misalignment of product functionality but also evolution of users and markets (competition) or later discovered opportunities.  And, of course, a more matured product has a better chance on higher turnover.

Let’s try to capture this is some extremely simplified graphs (and even that is an understatement).

waterfall

First the waterfall one. Maturity grows in steps and sales starts at the end of the first development step, so close to 6 months into the process. The graph above already shows 2 releases. Typically in waterfal these are many months apart. The second release is in general used to correct failures in market alignment and quality.

Next have a look at the scrum version:scrum

Needless to say that the scrum method will provide a quicker return on the investment made. My guess that this will be at least 30% faster (very pessimistic estimation).

But there are a number of other advantages with regards to the investment made:

  1. Adjust product very early in the process to the market
  2. Ability to cancel a project in a very early phase based upon realistic customer feedback
  3. Respond during the development process to competition

Using waterfall you are always at least a year behind on your competition. This is valid even for small functional elements, since waterfall tend to result in one or maximum 2 releases a year. So you could say that you need Scrum to get agility in your business.

I know that in real live there are many variables that will change these graph, but there will be no situation where investments are earned back faster using waterfal. But if we simplify one situation, we also have to simplify the other.

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