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Posts Tagged ‘Marketplace

A New Chasm is Forming

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Recently I had frustrating experiences with the bureaucracies of two companies: a company who is bringing me in to consult on continuous value delivery and another company who is interested in a seminar on the consumerization of enterprise software. While the two companies could not be more different, good-hearted engagement managers in both companies cautioned me in advance that their bureaucracies would drive me nuts. Based on my experience to date they were not kidding…

It is a striking contrast between the ease with which I can get precious data from my social network anytime I need it versus the unbelievable waste of time answering the very same question in two or three redundant forms used to screen me as a supplier. This contrast leads me to conclude we are witnessing the formation of a new chasm. It is between companies who stick to their old bureaucratic patterns with respect to suppliers versus those that realize that a supplier these days is a “prosumer.” He/she might provide services one day, consume (other) services the other day.

The business opportunity this chasm presents is providing efficient marketplace infrastructures. Anyone who can collect my data once and provide it as needed to multiple companies I interact with as a supplier will be doing me, and countless number of social networking aficionado, a huge service. Time is simply too precious to be wasted typing in the maiden name of my mother multiple times.

The distinguished economist Ronald Coase perceived reduction of transaction costs as the essence of the firm. His thoughts of more than 70 years ago are right on these days. The bar for transaction costs is “fill in the details only once”. Once in this context means “once in your lifetime.”

Recommendation: Examine the  way your company acquires new customers versus the way it brings aboard suppliers. Something is wrong if your company’s procurement folks routinely tell suppliers “we know you have already given this information, but ‘they’ would not accept it from ‘us’ if you don’t fill this extra form as well.” This being the case, you need to rethink your approach to composite value chains.

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Written by israelgat

October 13, 2010 at 7:40 am

How to Break the Vicious Cycle of Technical Debt

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The dire consequences of the pressure to quickly deliver more functions and features to the market have been described in detail in various posts in this blog (see, for example, Toxic Code). Relentless pressure forces the development team to take technical debt. The very same pressure stands in the way of paying back the debt in a timely manner. The accrued technical debt reduces the velocity of the development team. Reduced development velocity leads to increased pressure to deliver, which leads to taking additional technical debt, which… It is a vicious cycle that is extremely difficult to break.

Figure 1: The Vicious Cycle of Technical Debt

The post Using Credit Limits to Constrain “Development on Margin” proposed a way of coping with the vicious cycle of technical debt – placing a limit on the amount of technical debt a development team is allowed to accrue. Such a limit addresses the demand side of the software development process. Once a team reaches the pre-determined technical debt limit (such as $3 per line of code) it cannot continue piling on new functions and features. It must attend to reducing the technical debt.

A complementary measure can be applied to the supply side of the software development process. For example, one can dynamically augment the team by drawing upon on-demand testing. uTest‘s recent announcement about securing Series C financing explains the rationale for the on-demand paradigm:

“The whole ‘appification’ of software platforms, whether it’s for social platforms like Facebook or mobile platforms like the iPhone or Android or Palm, or even just Web apps, creates a dramatically more complex user-testing matrix for software publishers, which could mean media companies, retailers, enterprise software companies,” says Wienbar. “Anybody who has to interact with consumers needs a service to help with that testing. You can’t cover that whole matrix with your in-house test team.”

Likewise, on-demand development can augment the development team whenever the capacity of the in-house team is insufficient to satisfy demand. IMHO it is only a matter of little time till marketplaces for on-demand development will evolve. All the necessary ‘ingredients’ for so doing – Agile, Cloud, Mobile and Social – are readily available. It is merely a matter of putting them together to offer on-demand development as a commercial service.

Whether you do on-demand testing, on-demand development or both, you will soon be able to address the supply side of software development in a flexible and cost-effective manner. Between curtailing demand through technical debt limits and expanding supply through on-demand testing/development, you will be better able to cope with the relentless pressure to deliver more and quicker than the capacity of your team allows.