Eli Rodrigues | Digital Experience Manager | everis

The ROI of Agile Methods

The difficulty in innovating

Innovation is a structured process that demands research, experimentation, mobilization and iteration. Companies must decide which technological trends it wants to follow, according to its perception of the market to fully complete this cycle.

Human beings have difficulty in processing large volumes of information and prefer to repeat decisions or to work with limited options (Ariely, 2008) and perhaps that is why we feel more comfortable working with fixed structures, annual planning and processes, instead of monitoring and adapting our strategies as disruptions arise.

Fixed Structures, either functional, projected or matrix (PMI, 2013), do not take into account that changing a business model requires grouping profiles of multiple departments, modifying the form of organization for producing new days for customers.

Annual planning, whether strategies, budgets or project roadmaps, is generally oriented around the objectives outlined in the previous year, lacking flexibility to react to market changes.

Task-oriented processes have been dominant since the days of Taylor and Fayol and require seeking ways of enabling business survival.

While remaining in the current modus operandi, the observation of client experience, competitors and alternative solutions become secondary causing discrepancy in the company.

Agile methods

Considering that a human being is incapable of foreseeing all the possible scenario changes that will occur in the following year, agile methods are focused on customer engagement, interactive development, self-organized teams and adaptation to changes (Agile Manifesto, 2009).

This type of work involves interactive and incremental scopes, delivering results that bring the largest business value. The projects focus on objectives, allow planning modifications, as many as necessary, until the desired result is achieved. Broader definitions and short-term, focused planning are used, after which an ascertainable delivery is expected.

Agile Methods Gains

The first gain obtained with agile methods is the construction of temporary organizations. Breaking the structural barrier and monitoring multidisciplinary teams is equating conventional companies to product and startup companies. This cultural change requires the capacity to defy the fixed structures to mobilize people and resources, no longer grouping by skill, but by the operations that have to be fulfilled.

The second gain is related to cyclical planning. Annual plans are based on estimates, with premises and restrictions identified during planning. It is well known that most of the premises are not met throughout the year, either because of market changes, employee turnover, lack of financial resources, etc. More comprehensive planning, executed in short cycles, allows better adaptation to direction changes in the face of internal and external fluctuations.

The third gain is the transformation of estimate culture into a results-oriented culture. Substituting estimates for results requires the understanding that time is an inaccurate measurement. Using proportional scales, such as the Fibonacci sequence to estimate work increases accuracy and reduces planning time, allowing the company to more easily adapt to changes.

What is the ROI of Agile Methods?

The ROI (return on investment) measures the effectiveness of an investment through the relationship between the return and the amount invested over time. According to Rico, it is necessary to consider the ratio of agile method projects versus traditional ones and to observe costs, deadlines, productivity, quality and client satisfaction. The study references gains between 38–100% for deadlines, 25–80% for productivity, 83% for client satisfaction and 74% for team moral.

Measuring ROI of agile methods is not trivial. In open scope projects, fixed time and cost (Rodrigues, 2016), ability to prioritize business value and make continuous deliveries are differentials that make project self-financing possible. Above all, it must reflect on how to react to technological disruptions. For a contemporary company, it is imperative to keep products and services up-to-date in the face of competitors and new technologies. An unused opportunity or a delayed entrance into a new market will only be noticed in the P&L, when losses are irreversible.

Instead of making accounts to measure the return on invested amounts, it is better to follow market share and look for potential disruptions that can boost or remodel the market of operation and most importantly, keep flexible structures, agile work models and focus on results.

Exponential intelligence for exponential companies

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store