The Agile Executive

Making Agile Work

Batten Down the Hatches

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“As you might expect, we are in a batten down the hatches mode.” These words, taken from an email an executive just sent, prefaced his decision not to go ahead with planned Agile projects due to the need to cut costs. His operating assumption is simple: His company must cut costs now and will somehow manage without  investing in Agile software and consulting.

Real $$ are hidden in your software

In Estimating Software Costs, author Capers Jones quantifies five year cost of software application ownership (for the vendor). He examines three  similar applications, each of nominal size of 1000 function points, as a function of the sophistication of the corresponding projects. The respective life cycle costs are as follows:

  • Lagging projects: $2,316,000
  • Average projects: $1,860,000
  • Leading projects: $1,312,000

Jones goes on to issue the following stern warning:

All known compound objects decay and become more complex with the passage of time unless effort is exerted to keep them repaired and updated. Software is no exception… Indeed, the economic value of lagging applications is questionable after about three to five years. The degradation of initial structure and the increasing difficulty of making updates without “bad fixes” tends towards negative returns on investment (ROI) within a few years.

Dwindling maintenance revenue streams complicate the situation

Revenues from maintenance services are subject to severe pressures these days as many customers are renegotiating service contracts. Igor Stenmark foresaw and foretold the phenomenon in November 2008.  To quote Igor:

…sacred cows like software maintenance can become hamburger meat if users feel enough of a budget pressure.

Net net, as they say, the exec mentioned above is likely to face rising maintenance costs due to software decay over time. At the same time, revenues from maintenance contracts are bound to fall short of projections due to customers renegotiating their contracts.

The shiny new toy is not a cure

Recognizing the software maintenance conundrum they are caught in, many executives are pushing hard to develop new software to increase sales in order to compensate for the decline in revenues from software maintenance services.

What is missing is a serious commitment to improve the underlying software process. Software developed today might indeed be sold as a shiny new toy tomorrow. But, unless the software process is improved, a little down the road the new software will have similar maintenance problems. The corrosive effect of software decay on the shiny new software will become more and more severe as a function of time. The current business environment, hopefully, will change in a few years. However, the underlying software development and maintenance laws will not. No getting around it.

No better time than now

The numbers from Capers Jones cited above are illustrative of the cost savings you could expect to attain by modest investments in improving software process and practices. You might perhaps have more attractive cost saving alternatives available to you. However, if you don’t, there is no better time to invest in software process and practices than now.

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Written by israelgat

February 16, 2009 at 4:09 pm

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