Transforming Waste into Value: How to Boost ROI with Agile Metrics

Most organisations are blissfully unaware of the sheer amount of waste lurking within their systems. It’s staggering to think about the money they’re haemorrhaging simply because they lack a focus on engineering excellence. In the context of agile and business agility, we need to embrace a continuous mindset, continuous integration, continuous delivery, continuous feedback, and continuous testing. This dynamic nature of operations allows us to identify problems sooner, which means they’re smaller and easier to address. By doing so, we not only eliminate waste but also gather valuable data and telemetry that help us understand our processes better. This understanding is crucial for pinpointing problem areas and taking action before costs spiral out of control.

In my work with various customers, I’ve seen an alarming amount of waste. To illustrate this, I often refer to DORA metrics, which provide a clear picture of how organisations can improve their performance. Let’s break down a few key metrics that can help us understand the return on investment (ROI) for our efforts:

• Innovation Rate: This metric measures the percentage of time your team spends on innovating versus maintaining existing functionality. On average, organisations see an innovation rate of around 39%. This means that only 29% of the budget is allocated to net new functionality, essentially, new capabilities that can attract new customers or open new markets. This is a dismal figure, highlighting the need for a shift in focus.

• Product Index: This metric looks at how much time your engineers spend working directly on the product versus other tasks. Typically, about 80% of their time should be dedicated to product development. If we assume this holds true, we’re left with just 23 cents on the dollar in terms of potential ROI.

• Usage Index: This is a critical metric that reveals what percentage of the features you build are actually used by your customers. The industry average sits at around 35%. This means that a significant portion of your development efforts may be wasted on features that users don’t engage with. It’s essential to ask your engineering teams about their usage index, understanding this can lead to more informed decisions about where to invest resources.

• Version Adoption: For applications that require installation, it’s vital to know what percentage of your user base is on the latest version. The industry average is about 70%, meaning 30% of users are still on older versions. In many cases, I’ve encountered organisations where this figure is much lower, further diminishing the ROI.

When we piece these metrics together, the picture becomes quite grim. Starting with a dollar, we see that only 29 cents are spent on new functionality, which drops to 23 cents when we factor in the product index. The usage index further reduces this to a mere 8 cents on the dollar. Finally, if we consider version adoption, we might find ourselves with just 6 cents in return for every dollar spent. Is that a good investment? I think not.

So, what can we do about this? The first step is to understand your innovation rate. How much time is your team dedicating to innovation versus maintenance? Next, assess your usage index. Are you collecting the necessary telemetry to understand which features are actually being used? This data is vital for making informed decisions about where to allocate your resources.

Agility plays a crucial role in this narrative. By closing feedback loops and iterating faster, we can improve our cost-to-value ratio. While it may seem like we’re not reducing costs, since the same people are doing the same amount of work, the goal is to deliver more value for the money we’re investing.

In conclusion, it’s imperative that we take a hard look at these metrics and understand the underlying reasons for our low ROI. By focusing on innovation, understanding usage, and embracing agility, we can turn the tide and ensure that our investments yield meaningful returns. Let’s not allow waste to become the norm; instead, let’s strive for excellence in everything we do.