ROI with AgileConverting risks to returns

Presented by

Ravichandran JvGroup Manager/Agile Trainer

Email: ravichandran.jv@jktech.com

About JK Technosoft Ltd

• JK Technosoft (JKT) Ltd. is a global software & solutions company that is driven by the simple yet powerful tenet of providing ‘total customer satisfaction’.

• A valuable asset of the JK Organization, one of India's largest industrial groups with an annual turnover exceeding US$ 4 billion, JKT is at the leading edge of comprehensive IT services & solutions.

Acknowledgements

1. Ravinder Rawat, JKT Agile Group, JKT

2. Sanjeev Kaushik, IT, JKT

3. Mohit Gautam, PS, JKT

4. Saif Rizvi, PS, JKT

5. Rashmi Dhingra, Projects, JKT

6. Geetanjali Pokhriyal, Quality Department, JKT

7. Mohammed Ahmed, Quality Dept., JKT

8. JKT Agile Group

Assumptions

1. The audience is already aware of the Agile Manifesto, Principles, Values and Practices.

2. That the organization is not an Agile organization but is looking to transform itself into one.

3. Audience is aware of the artifacts of Software Development.

Constraints

• Timebox

• Elaboration can lead to an explosion of opinions

• Experience is unique on each project

• Vast topic and always lots of scope for improvement

Agenda of this presentation

• What is ROI?

• Primer

• Definitions

• Perspective

• Solution

• Summary

Growth Sales

Profit

Net Profi

t

Net profit after taxes / Value of Assets

What is ROI?

A Primer to the “R” of “ROI”

Why have I interpreted “R” as “Risk” as well as “Return”, in “ROI”?

Answer:

a. There is substantial risk in adopting or adhering to Agile practices/recommendations if care is not taken to abide by them religiously!

b. Risk and Return are as related to each other as cause and consequences.

What is Risk?

“…because the work is unique, it involves a level of risk.”

• The Royal Society view risk as the probability “..that a particular adverse event occurs during a stated period of time, or results from a particular challenge.”

• Any definition of risk is likely to carry an element of subjectivity, depending upon the nature of the risk and to what it is applied!

Traditional Project Agile Project

In an Agile context, the risk is that all the three components – Scope, Time and Cost - can change!

Enumeration of Risks in Agile

Enumeration of Risks in Agile

• Infrastructure Cost is high!

• Pair working on a single PC = Additional Resource Cost

• A dinner table like seating structure needs additional investment.

• Why are these factors risks?

Enumeration of Risks in Agile

Why are these factors risks?

1. Unless customer is committed and knows the benefits of Agile practices, all these factors can become risks. How?

2. The contracts and their nature contribute to make them so.

What is Return?

• Return is the gain or loss from an investment.

• Return consists of the income generated and the capital gains on investment.

• It is also known as Rate Of Return (RoR) or Return On Investment (ROI).

Risk-Return TradeOff

•Taking on some risk is the price of achieving returns; therefore, if you want to make money, you can't cut out all risk.

•The goal instead is to find an appropriate balance - one that generates some profit, but still allows you to sleep at night.

• Source: investopedia.com

How are Risks & Returns related?

• Greater the risks, lower the probability of good returns.

• But, without greater risks you cannot expect greater returns !

• Greater the duration, higher the risk probability rate.

• So, managing risks is of utmost importance for greater returns in any type of project.

Traditional Risk

Risk Probability

Risk Impact

Traditional Tracking

• Static View

• No clarity on actual status thereby increasing risk.

• Looks presentable, though!

Enter Agile

So, how does Agile help ?

Using Agile,

1. you have more visibility leading to better clarity in tracking risks.

2. there is greater communication between all stakeholders leading to better view of status of risks.

3. there is less risk of incurring high cost at final stages of the project because of the iterative nature of Agile.

Defect Addressal - Agile Vs Waterfall

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AR1 AR2 AR3 AR4 AR5 AR6 AR7 AR8

Agile Releases

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Waterfall Releases

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Agile Project Tracking

Greater visibility and Control

Greater visibility and Control

Less Control Less Control

Benefits of Agile

Quality

To maintain high quality, Agile uses rapid feedback, simplicity as a design goal and rigorous automated testing.

Ensures ROI

Benefits of Agile – Value for money

Power Consumption Cost (per month) – Rs. 80,000

Per person cost – Rs. 2,667.

• A dinner table-like seating, a recommended infrastructure for Agile, caters to 60 or more!• A cubicle-like seating caters to 30 employees.

Power Consumption Cost (per month) – Rs. 80,000

Per person cost – Rs. 1,334.

Ensures ROI

Benefits of Agile - Clarity of progress

• Economical

• Enables a higher degree of transparency

• Increase in visibility

• Better communication

• Faster feedback.

Ensures ROI

Benefits of Agile

With Agile,

• Resources cost less to the project

• The probability of success is higher

• Better visibility of risks

• More value for customer due to frequent delivery

• Whole Team with more synergy

Summary

1. Agile shows you what you need and what you don’t need.

2. Agile does not prescribe that you need this or that.

3. Faster the feedback, lower the probability rate of unforeseen or untracked risks.

4. Better communication + Faster feedback = better Return On Investment.

Summary

Contract

Infrastructure

Fast

Fee

dbac

k

Follow Agile Practices

Visi

bilit

y

Communication

The Last Responsible Moment

Q & A

References for more reading

• http://www.agilekiwi.com

• http://www.martinfowler.com

• http://www.agilekiwi.com/risks_and_rewards.htm

Thank you!