5 Realities about Agile Cost Savings

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Guest blog by Ricky Raisinghani and Catherine Wright.


Agile is a widely accepted software development methodology that enables organizations to gain a better understanding of their packaged or custom software projects and reduce the overall risk of software development. Those new to agile often assume it means you will finish the project with fewer resources, but agile isn’t a direct money saver in that respect. Agile cost-benefit savings are realized through significant stakeholder engagement and early software delivery.

Every project has to juggle scope, resource costs, and schedule. If your scope is constant then you need a certain amount of resources and type of resource to achieve your goals. If you use fewer resources to complete your project, you will need more time in the schedule to complete all your scope. Ultimately, you need to strike the right balance between resources and time to achieve the scope. Either way, the cost will be the same for the most part.

Here are five of our observations regarding agile’s impact on project costs:

  1. Agile is not an approach geared to reduce direct project-related costs, however, savings can come through increased project delivery speed. The savings are realized through delivering the product faster and reaping the benefits quicker.
  2. Since agile uses a platform to demo development results more frequently, feedback is constantly incorporated from the stakeholders, allowing for a better chance to complete delivery on-time so cost savings occur due to the schedule/time not resources.
  3. Agile may require more resources as it doesn’t lend itself to resources wearing multiple hats or sharing resources in the project. It’s likely more resources will be needed in a compressed timeline to complete all the tasks played by different roles. One of the biggest missteps is trying to implement agile and use resources to do 50% testing and 50% requirements gathering. The reality is the plan calls for a full-time requirements resource. Over committing resources only leads to failed delivery or delays in the timeline.
  4. Agile requires more people to be fully committed to reach decisions quickly. This may actually cause a smaller organization to increase FTE’s (Full-Time Equivalents) to maintain dedicated project resources, while still meeting the ongoing daily needs of the organization.
  5. Just because agile completes development in incremental cycles doesn’t mean testing and infrastructure resources are less needed. Actually, deployment and testing resources will spend more time during development on an Agile project as requirements continue to mature throughout the development phase resulting in more testing cycles, some re-work and frequent builds to accommodate development.

In conclusion, agile methodology in software development does not necessarily reduce costs due to resource allocation, but the benefits — a quick and efficient process — are worth it. Employing a solid combination of resources in relation to scope and schedule is what will ultimately lead to cost savings.

Image shared by Chris Potter

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