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How Agile Leads to Increased Revenue

If you like money and like delivering valuable solutions to your users, Agility helps you achieve both. One of the biggest organizational costs is employee salaries. According to www.paycor.com, labor can account for as much as 70% of total business costs. In basic economics, lower costs lead to higher profits. Employees working on salary generally […]

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June 09, 2022

If you like money and like delivering valuable solutions to your users, Agility helps you achieve both.

One of the biggest organizational costs is employee salaries. According to www.paycor.com, labor can account for as much as 70% of total business costs. In basic economics, lower costs lead to higher profits. Employees working on salary generally make the same amount of money day-to-day, sprint-to-sprint, release-to-release. These costs are fixed. So, if you have a fixed team working on a three-month release and you add their pay together for that period, you know the major cost of that release.

Agile Promotes Greater Task Efficiency

Time equals money. When you develop a feature, the longer it takes to develop, the higher the cost will be. Additionally, the longer one feature takes to complete, the longer those features waiting in the queue behind it will take to implement. Agile done well strips away time spent on those things that take time but don’t add value.

For example: writing large, detailed, requirement documents upfront that will change the moment implementation begins is a waste. This includes the wasted time spent writing the documents, wasted time reading and understanding them, and wasted time maintaining them. In Agile, you still document requirements, but the documentation is minimal. The requirement details are fleshed out through conversations between the feature requesters and the implementers. Talking together, asking questions, and clarifying new work items is quick compared to exchanging written documents. There is also less risk of misunderstandings that lead to developing the wrong thing thanks to these transparent conversations. Then, when truly Agile, you have daily conversations between the business owner and the development team to ensure that as the feature is being developed, it meets the business need.

Agile Methods Use Short Feedback Loops

The longer you wait to confirm your assumptions, the larger your risk grows. Agile methods promote fast learning cycles. In Agile, we plan -> do -> check and finally -> adjust what we are building in short time cycles.

Reduce the risk of developing the thing wrong

 

Teams that split work by the types of work required risk time-over runs due to integration problems. For example, suppose a team divides all the new features in a three-month release into these three parts: database tasks, backend tasks, and UI tasks. Then, the team spends two months completing each of these three parts. Then, during the last month, the team integrates all the technical layers and discovers that their original technical assumptions were wrong. Now the team has spent a significant amount of time refactoring each of the technical layers individually. Then they integrate everything again and hope that this time it works. This increases the cost of the feature. They also risk not being able to deliver anything by the delivery date.

 

If instead the team divided the feature by business value (so that each chunk of work had part of the database, the backend, and the UI integrated), they would know in a few days or less if their technical assumptions were correct and can pivot quickly and less expensively.

 

Reduce the Risk of Building the Wrong Thing

 

If you spend three months developing new functionality, then release it to market only to discover that your customers don’t want it or can’t use it, you increase costs on that functionality due to significant re-work. You also risk losing customers and future business opportunities.

 

By dividing work by business value, you create small units of functionality that you can quickly share with stakeholders to confirm whether what you are creating aligns with your customer’s business requirements.

Agile is designed to decrease the cost of change. It is designed to lessen the amount of unnecessary overhead which frees up teams to focus their time on building increments of value. Following Agile practices will increase cost-savings and, as a result, increase profit. Learn more through our Agile training. See upcoming classes.

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