Agile Benefits: Early Return on Investment

We wouldn’t do agile if we didn’t think it was better in some way. More and more, I am seeing the adoption of agile methods being driven by business management (rather then engineering). There is a clear reason for this: agile methods offer the possibility of early return on investment compared to other methods of working. This benefit is only one of five essential benefits of agile, but it is one of the most practical and easiest to measure. Therefore it is important to clearly understand how agile methods can deliver this benefit… and how they can fail to do so!

Early Return on Investment

The basic process structure of agile methods consists of the short cycles (iterations, Sprints) of delivery of valuable results. The key word there (aside from “short”) is “Valuable”. Now in software, “valuable” is relatively easy to define. One definition that works nicely is “Running Tested Features“. In other industries or types of work, valuable is defined in some other way.

An agile process delivers valuable results every single iteration. This provides the basis of early return on investment. The organization can then take those results and start to realize their benefits immediately after the very first iteration… ideally… (which we will come back to in a moment).

Here’s a graphical contrast between a traditional waterfall approach versus an agile approach that maps value delivered vs. time.

Agile Work - Value Delivery vs. Waterfall.png

The waterfall project delivers all its value at the end – the red spike. An agile project starts delivering value very early on, increases to a maximum rate of value delivery and then gradually tapers off. The reason for the shape is simple: at the start of the project there is often a fair amount of uncertainty, and some dead-ends are pursued before getting to the really valuable work, and then as that work is completed, the team starts working on lower and lower priority features.

The early delivery of value has an additional benefit. By delivering value early, the time value of that investment is increased. Revenue or cost savings can be realized sooner and therefore more funds are feed up for other investment.

Sounds great, what’s the catch?

Agile Pitfall: Not Getting Done

This benefit being realized rests completely on the assumption that the work delivered at the end of each iteration is actually valuable. If for some reason it’s not, then this benefit falls apart completely. Most organizations when starting with agile, cannot realize this value immediately because their teams do not deliver completed valuable results. Rather, most organizations are set up so that a team delivers an intermediate result which is useless on its own. Realizing this benefit of agile methods often requires substantial, strenuous, disciplined change in the way that people work, teams are set up, bureaucracy functions, and management supports it all. Perfecting agile is sometimes a lengthy process. Fortunately, the other benefits of agile do not depend so heavily on this assumption.


Agile Benefits: Rapid Learning
Agile Benefits: Early Return on Investment
Agile Benefits: Satisfied Stakeholders
Agile Benefits: Increased Control
Agile Benefits: Responsiveness to Change
Agile Benefits: Summary Article


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