budgeting in the era of agile
TRANSCRIPT
Budgeting in the Era of AgileGerrit Beine, MBA Managing Consultant
11th China - Europe International Symposium on Software Engineering Education (CEISEE 2015), Zwickau
Who is Gerrit?
‣ Managing Consultant at adesso ‣ Software philosopher, never-tiring optimizer ‣ Main topics
‣ Agile ‣ Software Architecture ‣ Antifragility & Black Swans ‣ Technical Debt & Legacy Code ‣ Software Engineering Economics ‣ Intercultural aspects of Software Engineering
‣ iSAQB e.V. Board Member, openSUSE Member, Agile Saxony Organiser
Manifesto for Agile Software Development
Individuals and interactions over processes and tools Working software over comprehensive documentation
Customer collaboration over contract negotiation Responding to change over following a plan
We are uncovering better ways of developingsoftware by doing it and helping others do it.
Through this work we have come to value:
That is, while there is value in the items onthe right, we value the items on the left more.
Principles behind the Agile Manifesto
Our highest priority is to satisfy the customerthrough early and continuous delivery
of valuable software.
Principles behind the Agile Manifesto
Welcome changing requirements, even late in development. Agile processes harness change for
the customer's competitive advantage.
Principles behind the Agile Manifesto
Deliver working software frequently, from a couple of weeks to a couple of months, with a
preference to the shorter timescale.
Principles behind the Agile Manifesto
Business people and developers must work together daily throughout the project.
Principles behind the Agile Manifesto
Build projects around motivated individuals. Give them the environment and support they need,
and trust them to get the job done.
Principles behind the Agile Manifesto
The most efficient and effective method of conveying information to and within a development
team is face-to-face conversation.
Principles behind the Agile Manifesto
Working software is the primary measure of progress.
Principles behind the Agile Manifesto
Agile processes promote sustainable development. The sponsors, developers, and users should be able
to maintain a constant pace indefinitely.
Principles behind the Agile Manifesto
Continuous attention to technical excellence and good design enhances agility.
Principles behind the Agile Manifesto
Simplicity--the art of maximizing the amount of work not done--is essential.
Principles behind the Agile Manifesto
The best architectures, requirements, and designs emerge from self-organizing teams.
Principles behind the Agile Manifesto
At regular intervals, the team reflects on how to become more effective, then tunes and adjusts
its behavior accordingly.
Simple
Complicated
Predictable Uncertain
Lean Agile
Just do it Trial & error
When agile is worth the effort?
Time Budget
Scope
How do we deal with budgets in agile projects?
‣ The goal is to maximize the customer value.
‣ 1st principle behind the Agile Manifesto„Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.“
‣ We know ‣ when we will deliver the software ‣ how much this will cost
‣ We guarantee that it will be the most valuable piece of software that is possible within time and budget
The product owner’s tool chain
NPV = −investment + cashflow(1+ interest)tt=1
N
∑
priority = NPVsize
size = f (E,R,U)
Weighted shortest job first
time
cost of delay
A
B
C
Feature DurationCost
of Delay
Weight
A 1 10 10
B 3 3 1
C 10 1 0,1
weight = cost of delaydurationcod = 1 x 3
cod = (1+3) x 1
time
cost of delay
A
B
C
cod = (10+3) x 10
cod = 10 x 3
So, we have a complex system, simple rules…
… and no money.
The intrapreneur’s main problem: How do I gather money?
The answer is:Go Beyond Budgeting
Traditional budgeting philosophy
Vision
Strategy
Budget
Target/Performance
„Be on budget!“
Bonuses
Department hierarchyBudget
requestBudget
assignment
Beyond Budgeting
‣ Organizations are complex systems
‣ Agile organizations are innovation-driven
‣ Allocation of financial resources based on annual plans does not scale anymore
‣ Agile organizations need project funding based on value/cost analysis
Beyond Budgeting - the principles
‣ Few and simple values ‣ Responsibility of employees ‣ Autonomy of teams ‣ Organization based on small teams ‣ Focus on customers ‣ Transparency of information
‣ Relative goals ‣ Rewards based on team success ‣ Continuous planning ‣ Allocate ressources on request ‣ Dynamic coordination ‣ Measure trends
Leadership principles Performance management principles
A perfect match
‣ Beyond Budgeting & the Agile Manifesto
‣ Embrace change, don’t overvalue plans ‣ Plan continuously, not once a year ‣ Focus on customer value, measure outcomes
instead of drift from plans ‣ Self-organized, autonomous and responsible
teams, no micro-management ‣ Work with sustainable pace and honor team
successes ‣ Use retrospectives to improve, measure trends
Beyond Budgeting - Beyond Agile
‣ Innovation is the key to success in the 21st century
‣ Agility supports innovation processes
‣ Agile organizations need agile budgeting
‣ The principles of the Beta Codex are a perfect match to the Agile Manifesto
Literature & Links
‣ http://www.betacodex.com ‣ http://agilemanifesto.org ‣ https://hbr.org/product/beyond-budgeting-how-managers-can-break-free-from-/
an/8660-HBK-ENG ‣ Bogsnes, Bjarte; Implementing Beyond Budgeting; Wiley Publishing ‣ Hope, Jeremy & Fraser, Robin; Beyond Budgeting; Hardvard Business Review
Press ‣ Pfläging, Niels; Beyond Budgeting, Better Budgeting
Bildquellen
‣ http://www.clipartpanda.com ‣ http://www.clipartbest.com ‣ http://www.betacodex.com ‣ http://www.scrumalliance.org ‣ http://www.mountaingoatsoftware.com