2

Examine effects of using agile methods for creating Internet

products on customer satisfaction and firm performance Agile methods are informal, lightweight, and fast moving

management approaches for creating Internet products Characterized by early customer involvement, flexible

processes, iterative releases, and self organizing teams Traditional methods are formal, heavyweight, and slow

moving approaches for creating mainframe software Characterized by formal project plans, rigid processes,

voluminous documentation, and firm requirements Survey 400 managers to examine the links between agile

methods, customer satisfaction, and firm performance Results may help managers better understand the

business effects of using agile methods

3

Top 500 U.S. firms spend $140 billion annually on

information technology Much of the annual $400 billion U.S. defense budget is also

spent on information technology There are 250,000 information technology projects each

year in the U.S. As many as 72% (e.g., 180,000) of U.S. information

technology projects fail or are failing each year Two-thirds of U.S. information technology projects use agile

methods to alleviate this high failure rate Managers need to know whether agile methods are linked

to customer satisfaction and firm performance

4

Is the use of early customer involvement for developing

Internet products linked to customer satisfaction and firm performance?

Are the use of flexible processes for developing Internet products linked to customer satisfaction and firm performance?

Are the use of iterative releases for developing Internet products linked to customer satisfaction and firm performance?

Are the use of self organizing teams for developing Internet products linked to customer satisfaction and firm performance?

5

Flowcharting

Structured Design

Formal Specification

Software Estimation

Software Reliability

Iterative/Incremental

Structured Analysis

Software Testing

Quality Assurance

Project Management

Object Oriented

Software Reuse

Process Improvement

Rapid Prototyping

Concurrent Lifecycle

Software Factory

Domain Analysis

Quality Management

Risk Management

Software Architecture

Synch-n-Stabilize

Personal Processes

Product Lines

Team Processes

Agile Methods

CASE Tools

Software Metrics

Buy versus Make

Configuration Control

Mainframe Era1960s

Midrange Era1970s

Microcomputer Era1980s

Internet Era1990s

Personalized Era2000s

Software Inspections

Defect Prevention

Six Sigma

32 major classes of software methods have emerged over the last 50 years (with hundreds of variations)

6

Phase System

Requirements Analysis

System Architectural

Design

Software Requirements

Analysis

Software Architectural

Design

Software Detailed Design

Software Coding

and Testing

Software Integration

Software Qualification

Testing

System Integration

System Qualification

Testing

Software Installation

Software Acceptance

Support

Product SRS SARAD SRD

SAD SIDD (t) DDD (t) UDD (p) TVPL (si)

SDD SIDD (d) DDD (d) UDD (u) TVPL (su) TVPL (siu)

Software TVPR (su) TVRR (su) UDD (u) TVPL (siu)

SOIP TVRR (si) UDD (u) TVPR (sq)

TVRR (sq) UDD (u) SIAR (sfc) SIAR (spc)

TVRR (yi) TVPR (yq)

TVRR (yq) SIAR (yfc) SIAR (ypc)

SIP TVRR (sa) Training

Evaluation Walkthru Inspection

Walkthru Inspection

Walkthru Inspection

Walkthru Inspection

Walkthru Inspection

Walkthru Inspection

Walkthru Inspection

Walkthru Inspection

Walkthru Inspection

Walkthru Inspection

Walkthru Inspection

Walkthru Inspection

Record SY RER SY AER SORER SOAER DDER EOCR SCTRER SCR

SIER DER SCR

SQTER SCR SER SQTARR

SIRR SCR

Audit PCA FCA

PCA FCA

Review System

Requirements Review

System Design Review

Software Specification

Review

Preliminary Design Review

Critical Design Review

Software Test

Readiness Review

Software Formal

Qualification Review

System Test

Readiness Review

System Formal

Qualification Review

Baseline Functional Baseline

Allocated Baseline

Developmental Configuration

Software Test

Baseline

Software Product Baseline

System Test

Baseline

System Product Baseline

12 phases, 35 documents, 62 evaluations, 17 records, 4 audits, 9 reviews, 9 baselines, and 28,978 hours

7

PerformanceWide VariationHigh CostLow ProductivityLow QualitySlow Cycle Time

Repeatable

Requirements ManagementSoftware Project PlanningSoftware Project Tracking and OversightSoftware Subcontract ManagementSoftware Quality AssuranceSoftware Configuration ManagementInitial

None

Defined

Organization Process FocusOrganization Process DefinitionTraining ProgramIntegrated Software ManagementSoftware Product EngineeringIntergroup CoordinationPeer Reviews

Managed

Quantitative Process ManagementSoftware Quality Management

Optimizing

Defect PreventionTechnology Change ManagementProcess Change Management

PerformanceLow VariationLow CostHigh ProductivityHigh QualityFast Cycle Time

20 policies, 52 procedures, 39 documents, 45 task orders, 81 records, 79 reports, 46 meetings, and 2,420 hours

8

PerformanceWide VariationHigh CostLow ProductivityLow QualitySlow Cycle Time

Managed

Requirements ManagementProject PlanningProject Monitoring and ControlSupplier Agreement ManagementMeasurement and AnalysisProcess and Product Quality AssuranceConfiguration Management

Initial

None

Defined

Requirements DevelopmentTechnical SolutionProduct IntegrationVerificationValidationOrganizational Process FocusOrganizational Process DefinitionOrganizational TrainingIntegrated Project ManagementRisk ManagementIntegrated Supplier ManagementDecision Analysis and ResolutionOrganizational Environment for Integration

QuantitativelyManaged

Organizational Process PerformanceQuantitative Project Management

Optimizing

Organizational Innovation and DeploymentCausal Analysis and Resolution

PerformanceLow VariationLow CostHigh ProductivityHigh QualityFast Cycle Time

25 policies, 489 procedures, 478 work products, and 21,579 hours

9

PerformanceInability to ExportInconsistencyLow QualityHigh CostLow Satisfaction

ManagementResponsibility

Management CommitmentCustomer FocusQuality PolicyPlanningResponsibility, Authority, and CommunicationManagement Review

ResourceManagement

Provision of ResourcesHuman ResourcesInfrastructureWork Environment

Product Realization

Planning of Product RealizationCustomer Related ProcessesDesign and DevelopmentPurchasingProduction and Service ProvisionControl of Monitoring and Measuring Devices

Measurement,Analysis,

and Improvement

GeneralMonitoring and MeasurementControl of Nonconforming ProductAnalysis of DataImprovement

PerformanceAbility to ExportConsistencyHigh QualityLow CostHigh Satisfaction

Quality Management System

General RequirementsDocumentation Requirements

144 policy statements, 144 manual paragraphs, 51 procedures, 51 plans, 144 records, and 1,896 hours

10

Small, lightweight, closed-loop development processes Ideal for creating Internet products and services Consist of

Soliciting informal customer needs Quickly translating needs into working Internet products Releasing beta versions of products to customers Soliciting early customer feedback Repeating the cycle as often as necessary

Created to combat the spread of traditional methods Ideal for powerful rapid prototyping languages such as

HTML and Java

11

Early customer involvement

Business people and developers must work together daily throughout the project

Flexible processes Changing requirements welcome late in development to

harness change for the customer's advantage Agile processes promote sustainable development,

because everyone can maintain a constant pace The highest priority is to satisfy the customer through

early and continuous delivery of valuable software Iterative releases

Deliver working software frequently, from a couple of weeks to a couple of months (the faster the better)

Working software is the primary measure of progress

12

Iterative releases

Continuous attention to technical excellence and good design enhances agility

Simplicity is the art of maximizing the amount of work not done and it is essential

Self organizing teams Build projects around motivated individuals, provide the

needed resources, and trust them to get the job done The most efficient and effective method of conveying

information to the team is face-to-face conversation The best architectures, requirements, and designs

emerge from self organizing teams At regular intervals, teams reflect on how to become

more effective and then tune and adjust their behavior

13

Extreme programming (XP) Scrum Dynamic systems development method (DSDM) Crystal methods Feature driven development (FDD) Lean development (LD) Adaptive software development (ASD) Rational unified process (RUP) Open source software development (OSSD) Agile modeling (AM) Pragmatic programming

14

MIT study of software methods from 1991 to 1995 Characterized Microsoft’s synch-n-stabilize approach

Product development and testing done in parallel Vision statement and evolving specification Features prioritized and built in 3 or 4 milestones Frequent synchronizations (daily operational builds) Fixed release and ship dates and multiple releases Continuous customer feedback in development process Processes made large teams work like small teams

Elements of early customer involvement, flexible processes, iterative releases, and self organizing teams

Linked to customer satisfaction and firm performance

15

MIT study of software methods from 1995 to 1998 Characterized Netscape’s Internet-time approach

Create a compelling vision of products and markets Hire and acquire the best technical experts Design products for multiple concurrent markets Design modular architectures for teams to share Design new products in parallel development Adapt priorities to meet market and customer needs Use internal and external beta testing to improve quality

Elements of early customer involvement, flexible processes, iterative releases, and self organizing teams

Linked to customer satisfaction and firm performance

16

Harvard study of 15 Internet firms from 1995 to 1998 Characterized a flexible model of product development

Use of concurrent and parallel development stages Design of product architectures resilient to change Use of prototyping to solicit early market feedback Use of early market feedback in beta releases Use of beta releases to solicit more market feedback Use of beta release feedback in product releases Use of highly experienced Internet developers

Elements of early customer involvement, flexible processes, iterative releases, and self organizing teams

Linked to customer satisfaction and product reliability

17

Is the use of agile methods for developing Internet products

linked to customer satisfaction and firm performance?

FirmSize

FirmPerformance

TechnologyAcceptance

FlexibleProcesses

IterativeReleases

WebSatisfaction

Early CustomerInvolvement

Self OrganizingTeams

OnlineTrust

AgileMethods

CustomerSatisfaction

H 2 (+)

H 3 (+)

FirmPerformance

H 4 (+)

H 1 (+)

H13 (+)

H14 (+)

H15 (+)

H16 (+)

H 5 (+)

H 6 (+)

H 8 (+)

H 9 (+)

H10 (+)

H 7 (+)

H11 (+)

H12 (+)

18

Self Organizing Teams

Technology Acceptance

Customer Satisfaction

Early Customer Involvement

Flexible Processes

Iterative Releases

Trust

1950s 1960s 1970s 1980s 1990s 2000s

Herbst (1962)Hackman (1976)

Manz & Sims (1987)

Fishbein & Ajzen (1975)Davis (1986)

Mathieson (1991)

Pickle & Rungeling (1973)Churchill & Surprenant (1982)

Rust & Zaborik (1993)

Royce (1970)Kling (1977)

Von Hippel (1978)

Ahituv, Hadass, & Neumann (1984)Athey & Schmutzler (1995)

King & Sivaloganathan (1998)

Basili & Turner (1975)Madden & Rone (1984)

Sulack, Lindner, & Dietz (1989)

Kee and Knox (1970)Deustsch (1958)

Zand (1972)

2010s

Antecedents of agile methods go back 50 years (e.g., trust, self organizing teams, early customer involvement, etc.)

19

Examine links between agile methods for creating Internet

products, customer satisfaction, and firm performance Design. Quantitative survey research of 400 software

managers Measures. A nine construct survey instrument with 36

items (using a five point Likert scale) Analysis. Confirmatory factor analysis (CFA) for internal

reliability and convergent validity Results. Testing of the 16 hypotheses and construction

of the final structural path model Timeline. 12 month study to develop final proposal,

collect data, and defend dissertation

20

Findings. Links between use of agile methods, customer

satisfaction, and firm performance Contributions. One of the first comprehensive empirical

studies of the use of agile methods Implications. Empirical confirmation or disconfirmation of

validity of using agile methods Limitations. May not be generalizable to all industry,

organization, product, and service types Threats to validity. Reliability and validity of research

instrument, sample size, and response rate Future research. Effects of other factors such as virtual

teams, tools, groupware, culture, etc. Recommendations. Whether or not to use or study agile

methods for developing Internet products