Tutorial on how to Calculate the ROI of Implementing Agile

[taraleewhitaker]

So, its’ no secret that one of the big benefits of ‘going agile’ is the ability/opportunity to track and optimise team performance.

The big questions from a programme management and business perspective is:

How do you measure the operational costs/savings associated with improved efficiency or increased disruption within an Agile Software Development team?

The answer – ‘easily’.

Here’s how:

1. Calculate the total weekly cost of your team (sum of all members of the Scrum team including employers costs)
2. Calculate the total cost per sprint
3. Calculate the total cost per velocity point for each sprint over time (cost per sprint/velocity point). Note the assumption will be that velocity increases over time thus reducing the cost per point over time.
4. Calculate the cost savings associated with the reduced cost per sprint i.e. how much would you have had to pay last sprint in order to achieve the current velocity?
5. Calculate the cumulative cost savings over time.

It’s important to note that although the vast majority of teams do take some time to achieve a stable velocity (3-4 sprints), some teams – particularly those that have worked together for a long time – gel so well together already that it’s hard to squeeze much more out of them.

The thing I like about tracking progress/change at this level is the fact that you’re offered a way to not only measure efficiency improvements over time but you can also measure the cost of disruption... Read on (Agile101.net)

[michaelmz]

It's important for PM's to be tracking things such as going agile and efficiency. Keeping track of these will allow you to make decisions based on the performance. If you aren't aware of these factors, then your decisions won't be able to take them into consideration.