Governance of agile Software projects

by an automated KPI Cockpit in the Cloud

Dr. Udo Wilski, CTO and Member of Board

Zürich, 8. March 2012

LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“

Key Messages

• Important steps of “continuous journey” – Upfront cleanup of processes (“CMMI”), agility (SCRUM), i.e. for team transparency

– e-2-e tool support (requirements mgmt., effort tracking, team communication, quality mgmt. etc.)

– Well thought selection of offshore provider (size, mgmt., engagement model & contract)

– Stringent project management and vendor governance (operational & strategic, ongoing)

• Successful large agile offshore Software project – 10 – 20% increase of efficiency (“agile instead of waterfall”)

– > 30% cost reduction after less than 1 year (“offshoring”)

– Increased scalability and flexibility (“offshore”)

– Faster time to market (“agile”)

• Major challenges – Transparency of project status and “early warning indicators”?

– How to measure and achieve insights into team performance (internal and external)?

• Solution – Definition of fitting Key Performance Indicators (KPIs) by expert team prior to provider engagement

– Alignment of KPIs with development process, engagement model and incorporation in contract

– Implementation of automated KPI Cockpit for their measurement and continuous governance

– Building on KPIs to directly benchmark with experienced peers (internal & external)

2

LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“ 3

Europe's largest and most successful customer loyalty

programmes rely on the experience of Loyalty Partner Solutions

Example PAYBACK

LPS is responsible for the technical

realisation, development, and operation of

Europe's largest multipartner bonus

programme as well as the 2009 launched

PAYBACK Poland

• Technical design, development, and system implementation

• Operation of the IT system

• Integration of new services of numerous service providers

and partners

• Continuous development of the IT system to improve

customer service, cost efficiency, and time to market for

business innovations

Example Deutsche Bahn

LPS manages all CRM processes of

Germany's leading transport and logistics

service provider including BahnCard,

bahn.bonus and bahn.comfort

• Development and technical operation of a customised IT

solution

• Operational programme management as general contractor

• Handling of online and offline marketing campaigns

• Service provider controlling

• Technical support

• Data warehouse / reporting

and many more …

LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“ 4

LPS Heritage in Software Development

• Initial Situation

Multiple projects

Internal development + customer projects

Internal staff + freelancers, since 2007 nearshore

Internal investigations: effort estimations XX% to low

Implementation of agile processes (SCRUM) in Spring 2008

• Requirements

Faster time to market

Reduced costs

Increased flexibility

• Dedicated offshore initiative mid 2009

Bangalore, India set due to a parallel investment in the Indian Loyalty market (i-mint acquisition)

Agility (SCRUM) set, effort estimations in form of Story points based on User Stories

Research and selection of news set of supporting tool environments according new set up

Planning & implementation of offshore initiative by external expert advice (pliXos)

…

LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“

Strategic offshore initiative: Major steps

5

1. Fitting longlist (~15) of offshore service providers – Bangalore, India as delivery location

– Tier 2 – 3 for “management attention”

– Suitable for a long term partnership (skills, mgmt. etc.)

2. Detailed Request for Information (RFI) – 150 questions on all aspects, enforcing high quality responses

– Systematic evaluation

– 2 customer reference calls per provider

3. Preparation of LPS predefined frame agreement (incl. KPIs, SLAs, job roles, skills, agile process descriptions etc.)

4. Offshore visits by LPS management, audits

5. Parallel sessions with 2 finalists – Negotiation of LPS frame agreement

– Management sessions and technical workshops

6. Final selection by LPS management AND LPS team (“facts and perceptions”)

1 2

LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“ 6

Accout Director LPS Vendor Mgmt.

Focus KPI Cockpit:

Overview and insights for project and executive management

LPS Executive Mgmt.

LPS Project Mgmt.

Sub Project Mgmt.

Teams

SP Executive Mgmt.

SP Project Mgmt.

PMO/PDM/Scrum

Champions

Teams

= no unstructured communication

= structured and well documented

LPS Offshore SP

Use of development

tools „as is“

Extended reporting

with KPI Cockpit, e.g.

by new KPIs, trends etc.

Full access for LPS

Limited subset for SP

Value KPI Cockpit

Automated data collection, KPI calculation and presentation across tools

Manpower used for interpretation of reports and action NOT data preparation

LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“ 7

26 KPIs for agile offshore Software project

9 Business Case (BC)

4 Productivity (PR)

5 Service Provider Relationship (SPR)

8 Quality Assurance (QA)

Example: PR-2: Story Point per PD; PR-5: Velocity

LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“

Examples of further “in build” analysis

PR-2: Progression of productivity

BC-1: Spent vs. billed effort per month

Story Points / Efforts

per individual Sprint

offers transparency on

evolution of SP’s

productivity over time

(“learning curve”).

SP monthly costs calculated by

LPS on Efforts logged in system

vs. actual bills by SP.

LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“

Evaluation of Cost per Story Point after first steady state

• Only efforts for technical

tasks are considered

• Only closed and resolved

Story Points and the related

tasks are considered

• Blended rate as per internal

calculation and estimation in

which month the Sprint

occurred, including

freelancers deployed

• 80% of efforts by dedicated

onsite team allocated for

offshore support

In average offshore Cost per Story Point seems to reach 70%, including a share

of nearly 30% directly attributable to the onsite team supporting offshore

LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“

BM-1, Cost per Story Point

667 €565 €

439 € 665 €

0 €

200 €

400 €

600 €

800 €

1.000 €

1.200 €

1.400 €

Project1 Project2

Offshore Costs Onsite Support for Offshore

Benchmarking of 2 “comparable” offshore projects

• Different offshore Service Providers

• Different customer Teams

• Same technology

• Only "technical tasks" are considered

(Development, QA, onsite team for

support/governance of offshore team)

• Offshore productivity is ~XX% of

respective Onsite baseline in

both cases

• The Onsite/Offshore cost ratio varies

(Project1 0,66 vs. Project2 1,18)

and suggests further investigation

1.106 €

1.230 €

The Cost per Story Point for the offshore delivery including onsite support &

governance lies within a ~10% variance

LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“

Work in progress & next steps

1. Benchmarking (“use only working group”)

2. Further e-2-e Tool Integration (“funded research project”)

3. Vendor Consolidation

LOYALTY PARTNER SOLUTIONS Udo Wilski – „Automated KPI Cockpit for agile offshore Projects“ 12

Lessons learnt

Stringent Preparation

- Clear Scope (Business Expectations)

- Processes

- Tools

- Supplier Selection

Detailed Knowledge Transfer

Internal Requirements Management

(Scope, Business Expectations)

Transparency on Project Status

- Fitting KPIs, accepted

- Trend Analysis & early Warnings

- Automated KPI Cockpit

Strict Project & Vendor Management

- Management Commitment

- Willingness to tough Actions

- Supporting Contract

Project Success

Thank You

Dr. Udo Wilski

Loyalty Partner Solutions GmbH

Theresienhöhe 12

80339 München

Germany

Tel +49 (0)89 96 16 09 – 2530

udo.wilski@lpsolutions.com

www.lpsolutions.com

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