Academic journal article Informatica Economica

Analysis of Return on Investment in Different Types of Agile Software Development Project Teams

Academic journal article Informatica Economica

Analysis of Return on Investment in Different Types of Agile Software Development Project Teams

Article excerpt

This exploratory study of IT project teams in Serbia investigates how the choice of agile methods in different development project teams affects the return-on-investment (ROI). In this paper different types of software project teams are analyzed in order to examine and identify the business-value of using agile methods. In various software development project teams, the ROI of agile methods is yet to be fully explored, while the ROI of traditional methods is wellunderstood. Since ROI is important indicator of the projects success, in this paper we examine the factors that influence the ROI both from software solution customer point of view, and different agile project teams.

Keywords: Agile Methodology, Scrum, Return on Investment, Project Teams, Software Development

(ProQuest: ... denotes formulae omitted.)

1 Introduction

The literature dealing with agile methodologies often states the faster return on investment (ROI) as an advantage over the traditional methodologies. As confirmation of this claim, it is stated that the return on investment becomes greater than zero immediately after the first sprint [1]. The ideal return on investment would be a delivered product which, after the first Scrum sprint possesses functionalities that can start repaying the investment [2] [3]. However, the product that results from the first sprint is very difficult to have a sufficient set of functionalities so that the client could immediately have a return on investment. For example, it is difficult for a bank to have the return on investment after the first sprint in which the functionality of client data entry was implemented but not the functionality which enables the bank to provide consumer loans to customers. Therefore, the key issue is how to determine the critical mass of functionalities [4] which defines a set of required functionalities whose implementation starts the return on investment for the client.

The critical mass of functionalities can be defined by the client only; that is, only the software solution purchaser who defines required functionalities, features and quality of the specific software solution can estimate which minimum set of functionalities and features of the software solution in what moment on the market can lead to the beginning of the return on investment. This setting is possible in systems:

* which can be introduced in phases

* in which a certain set of functionalities is launched on the market in order to retain the interest of the market for a specific product or set of services.

On the other hand, many systems due to their functional demands or the marketing strategy cannot be introduced in phases but have to be fully implemented before production. A recent systematic literature review conducted by Rico [5] identified the ROI of agile and traditional methods, in so far a very few empirical studies have focused on a different types of project teams. In the focus of any software development project are project teams therefore examination of the main impacts on ROI on different types of development teams are examined in this paper.

2 Literature Review

2.1 Agile Methodologies

Agile development software methods are often referred to as "lightweight" approaches to IT project management, as they are in direct contrast to the traditional long-term, plan-driven, documentheavy, bureaucratic approach to managing software development [6]. According to the Agile Manifesto [7] agile is based on a set of principles that focus on customer value, iterative and incremental delivery, intense collaboration, small integrated teams, self-organization and small and continuous improvements [8]. Agile methodologies have been influenced largely by Lean Production techniques, which were introduced in the Toyota Production System (TPS) by TaiichiOhno[9]. The impact of lean thinking is only beginning to be felt in the software industry today. Lean software is based on a set of proven economic and mathematical principles that describe the flow of product information through larger business value chain, and include five elements such as [1]:

* Sustainably delivering value fast

* Respect for people

* Continuous improvement

* Management support

* Product development flow

There are many popular implementations of agile methodology, such as Scrum, XP (eXtreme Programming), DSDM (Dynamic Systems Development Model), Crystal, OUP (Open Unified Process), FDD (Feature Driven Development), MSF (MicrosoftSolution Framework) for Agile, Agile project management framework (APM), Lean development, Rapid Application Development (RAD) etc. …

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