Selling Agile to the CFO and Funding Agile Projects

A couple of articles came across my desk that I thought were worth distilling for easier consumption. They both revolve around selling Agile and subsequently funding Agile projects.

In terms of monitoring the costs associated with an Agile project, one should consider:

By capturing task effort associated with completed stories, we can start to correlate story points with cost. Burndown charts can be annotated with the loaded cost of completed user stories (remember a story is either done or not done, nothing in between). Having developed a correlation with story points and delivery cost we are better placed to forecast the cost of delivering the remaining backlog at any given time.

Effective agile development depends on effectively monitoring changes in the business environment. What processes and methods should companies put in place to effectively monitor dynamic changes? How do you know if you are getting it right?

Agile development is a closed feedback-loop system, and the single most important part of that loop is business feedback. To formalise this we can use John Boyd’s Observe, Orient, Decide and Act Loop (OODA) cycle, below:

When selecting a project for David Norton from Gartner says to ask the following:

  1. Is there a business driver to use agile – time to market, risk of change etc.
  2. Is there active senior sponsorship to use agile on the project?
  3. Will the business stay the course? The No. 1 fail mode for agile is business walking away.
  4. Is the organisation culture a good fit for agile and, if not, can we change it?
  5. Will we have a strong and committed product owner?
  6. Do the teams have or can we train them on the agile principles and practices?

In terms of selling Agile to the CFO, Lisa Crispin tells us to consider the following:

  1. Consider the CFO – Learn about the CFO’s roles and responsibilities, be prepared to show how Agile provides an ability to quantify software development where traditional methodologies don’t.
  2. Prepare to Be a Change Agent – Learn good ways to introduce new ideas, be ready to address the costs and benefits of your idea but don’t overwhelm [the executive] with data.
  3. Quantify Agile Development Advantages - CFOs need benchmarks, tracking, and financial measurements. Explain how Agile delivers value frequently, in small increments. Incremental development aids in gathering metrics that help CFOs analyze return on investments and plan future budgets.
  4. Quantify Technical Debt - Managing technical debt is a compelling justification for adopting Agile. In The Financial Implications of Technical Debt, Jim Highsmith points out that technical debt’s impact is often slow-growing and hidden. CFOs understand the concept that technical debt increases the cost of change over time, so be prepared to explain how an investment in reducing technical debt pays off with consistent, predictable delivery of value.
  5. Transparency - The many sources of immediate feedback on an Agile project provide CFOs with much more certainty and predictability. Demonstrate Agile’s many “big visible charts” to your CFO. Show how the project’s current status is visible in many ways: release and sprint burndown charts, task or Kanban boards showing what’s done, what’s in progress and what’s blocked, results from continuous integration.
  6. An Additional Sales Pitch - Just as CFOs are aware of incentives to attract and retain salespeople, they want to hire the best developers as well. The chance to recruit the most talented developers is another good selling point: People will want to work here!
  7. Long-Term Success - For the CFO, that means measuring progress and return on investment (ROI). Look back over the first year of using Agile development to gauge ROI. Your Agile transition won’t always be smooth sailing. Even as the years pass, new challenges will arise. By this time, you’ll have built trust with your CFO and business experts so that they will continue their support. Don’t take anything for granted. Keep using appropriate measurements and quick, visible feedback to guide your continual improvement.

[HT: ComputingUK, Software Quality Connection]

6 Responses to “Selling Agile to the CFO and Funding Agile Projects”

  1. Mark Simchock
    July 25, 2011 at 9:15 am #

    I’d like to add one to the David Norton list.

    A.5 – Is there agreement on the business driver?

    As it is said…Why, then what, then how.

    • peter
      July 25, 2011 at 1:56 pm #

      Nice add. Thanks!

  2. Rich Stone
    July 26, 2011 at 9:01 am #

    I think this is a great start. Consider adding to Lisa Crispin’s List:

    H. Risk Mitigation – Because the most significant software development risks often emanate from the customer (changes in market, funding, strategy), agile focus on early and continuous delivery reduces the cost when these changes occur.

    • peter
      July 26, 2011 at 9:35 am #

      Nice! Thanks for the pointer

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