Agile Leadership Requires A Different Kind of Business Case

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Agile Leadership
Requires A Different
Kind Of Business
Case
Business Case: The Agile Software Leadership

Playbook
September 4, 2020
By Margo Visitacion with Chris Gardner, Jeffrey Hammond, Andrew Dobak, Kara Hartig
Summary
Business leaders want the speed of Agile to meet pressing requirements for new
software. But they are reluctant to transition from the false comfort of traditional, written
business cases to iterative funding and value measurement. To scale Agile to the
enterprise, business cases must evolve from making investment bets to consistently
measuring feedback and gauging future investments. This report shows how application
development and delivery (AD&D) pros can work with finance and other executives to
build effective methods for assessing and prioritizing software investments. This is an
update to a previously published report.
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DIGITAL TRANSFORMATION REQUIRES AGILE AT SCALE, BUT

ARE WE READY?
Companies succeeding with Agile on a small scale are comfortable tackling additional
initiatives at the team level. But we find they're often reluctant to take on the significant
organizational challenge of scaling Agile to the enterprise level. Organizations need to
fundamentally transition their strategic product and program management planning to
support continuous development and delivery practices that better respond to
customers' demands. Strategies such as automating processes and focusing on
customer experience (CX) require organizations to speed up software delivery — not
just for customer-facing digital products but also for transactional systems of record.
The demand for speed is pushing software leaders from traditional methods to Agile-at-
scale approaches for prioritizing investments and planning work.
Current Practices Don't Support The Transformative Practices That Agile
Requires
Delivering on digital initiatives challenges software organizations that already struggle
to balance developing new technologies and supporting legacy systems. Customer-
facing systems are no longer independent applications; they're tightly interconnected
with the back end. These dependencies change AD&D leaders' priorities and
challenges. This is because:
• Leaders prioritize improvements and new products but lack a way to measure
them. Companies' current technology and products aren't adequate for supporting
digital strategies. Forty-three percent of global purchase influencers recognize that
they need to improve current IT systems to support digital channels; 38% state they
need to improve their IT organization's ability to rapidly deliver digital solutions; 27%
say that creating more smart connected products or services is a priority; and while
investments are the top priority, concrete measures for demonstrating value and
success follow at 25%.
• Leaders face planning and technology issues as they try to transform. In meeting
those priorities, business and software leaders face significant challenges: 33% of
global software decision makers cite budget and 30% cite security as the leading
challenges in forming software strategies. And 24% state that the inflexibility of
existing applications blocks them from orchestrating their strategy.
• Traditional ROI-based business cases prioritize cost savings over innovation.

Traditional ROI calculations easily incorporate hard numbers like cost savings. But
attaching soft benefit measures like customer satisfaction to a specific investment can

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be difficult. And while setting budgets and timelines using a model of estimated
activities and output may be familiar, it doesn't provide insight into the impact that
managing change may have on a final outcome. It also doesn't cover all of the
benefits that are important to digital transformation — like improved customer
engagement or digital product adoption.
Figure 1: Priorities And Challenges In Digital And Software

Strategies

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RETHINK THE BUSINESS CASE FOR AGILE AT SCALE

Companies like ADP and USAA that have successfully scaled Agile practices to the
portfolio level have realized that scale comes from linking specific business objectives
or customer experiences with defined outcomes, creating environments that empower
teams to work creatively, and — importantly — holding those teams accountable for the
outcomes they deliver.

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Agile At Scale Requires Balancing Culture, Experimentation, And

Networks
Scaling Agile horizontally by adding development teams may speed up software
delivery, but the real payoff comes when organizations fundamentally transform the
way they do strategic financial and portfolio planning. By transitioning from project
portfolio management to product and program portfolio management, companies shift
to 12- to 18-month rolling budgets — and they empower teams to make product funding
decisions that better support continuous planning and delivery. But sustaining Agile at
scale requires more than financial change. AD&D pros also need to:
• Build a culture of empowerment from the top down — and the bottom up. Making
the leap to Agile at scale requires a combination of direction from established
practices and adaptation. While constructs like the scaled Agile framework (SAFe)
may help, AD&D teams must adapt them to fit their corporate culture. At the same
time, they need to demonstrate the value of such initiatives to maintain executive buy-
in. Samsung, for example, embedded product designers on its software teams who
introduced persona-based development and testing, which the developers adopted.
In parallel, it maintained executive support by communicating continuous
improvements in strategy, process, and measurement.
"Agile makes people nervous, but we know if we don't do this Agile journey, we'll die
out. SAFe gives us a framework that allows us to talk to the business. Features on the
backlog have to contain compliance changes. The train concept allows the business
to see how features are bundled, and our design team can make these changes
become intuitive customer-oriented features." (Design manager at a North American
insurance company)
• Foster experimentation and use frequent feedback to drive adoption. Customer-

oriented companies use software to innovate with their clients. Thirty-five percent of
global software decision makers state that they build their own business applications
to create unique CX and improve engagement. Experimentation platforms that
support activities like feature flagging, A/B testing, and direct user testing allow teams
at companies like Harry's Razors to make strategic bets without making product
investments more risky.
• Create networks that break down traditional command-and-control models. It's rare
to see huge firms that have successfully scaled Agile across the enterprise, shifting
from giving teams top-down guidance to empowering them to make delivery
decisions. But companies like Qantas Airways are scaling by adapting techniques
from the Spotify model to manage dependencies, create skilled communities, and

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drive better collaboration. The head of Agile transformation at Fidelity Personal

Investing noted that his teams use scaling approaches like Spotify and SAFe to refine
backlogs and manage day-to-day dependencies — and ceremonies like big-room
planning to manage dependencies across tribes.
Focus Business Cases On Outcomes That Empowered, Accountable

Teams Deliver
Companies turn to Agile software development for reasons of speed, quality, and
project success. Small successes feed the urge to scale. But current processes for
organizational and financial planning prevent a linear approach for scaling horizontally
by adding more Agile product teams to deliver new products faster. Furthermore, they
won't translate cleanly to vertical scaling that includes strategic product and capacity
planning. Organizations must develop an outcome-focused approach that's clearly
based on strategic business objectives. Emphasizing this lets them:
• Categorize delivery opportunities based on business objectives. To create

alignment, start with the desired end state. Using business objectives to categorize
digital investments helps business leaders identify every potential investment
opportunity. It provides insight into how a project will affect customers and
operations, its total cost, and its cumulative benefit.
• Prioritize investments based on customer lifecycles and value streams. Value

streams help companies in several ways. From a process perspective, they help
identify and eliminate waste. From a product development perspective, they help
deliver the greatest value within commitment dates. Strategically, they help leaders
identify how CX investments throughout the customer lifecycle will affect key
capabilities within business value streams. This gives leaders a complete view of how
investments will affect team capacity and technical dependencies.
• Use fast feedback in Agile delivery to provide iterative validation in business cases.
Organizations that don't prioritize delivery best practices in process and culture are
far less successful than peers that do. Innovator organizations waste just 8.5% of their
project investments, compared with the 16.3% wasted by those that lag behind them.
Clear methods for communicating performance, such as OKRs, put everyone on the
same page when identifying measurable outcomes. For instance, a continuous
cadence of demos and releases of working software helped give Samsung's
transformation the buy-in it needed.
• Recognize how operational modernization efforts support transformation. To

successfully scale Agile, AD&D leaders need to overcome the perception that Agile is
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only applicable to new development efforts. Insight from data about how legacy
applications are performing is essential for helping teams better understand what to
modernize — and where moving apps to the cloud and employing Agile techniques
will have the most benefit.
"We see a lot of companies struggling to get the facts to decide on rebuilding versus
[scrapping and building new]. These companies need to know whether to keep
investing or recognize that they're throwing good money away and are missing
opportunities to deliver newer flexible solutions faster." (Lev Lesokhin, executive VP,
software intelligence, CAST)
Figure 2: Business-Led Objectives Drive The Business Case For

Scaling Agile Vertically

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Figure 3: Scale Investment In Agile Based On Value Chain ROI

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Figure 4: Agile Teams Provide Iterative Business Case Validation
RECOMMENDATIONS
Build Agile Business Cases Through Communication And Validation
Traditional ROI-focused business cases don't account for the hard and soft benefits that
Agile at scale offers. To demonstrate the benefits of organizational, cultural, and
process changes, AD&D pros building a business case for the Agile enterprise must:
• Establish a clear framework for gauging adoption and satisfaction. Performance

frameworks such as OKRs give business leadership and software teams a unified

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outcome to work toward. Everyone knows their part in making the transformation
work and what they're accountable for.
• Establish a standard cadence for business case feedback. Traditional best practices
for project funding start measuring value realized only after deployment. But for some
projects, that could take years. Identifying measurable outcomes for each release
iteration helps teams build trust with their business partners.
• Set priorities based on CX and value chains. Using CX as the basis for prioritization
sets the stage for alignment. Using value chains provides end-to-end insight into the
total cost of investment and helps reduce waste in the prioritization process.
• Ensure they address modernization requirements when building an Agile portfolio.

Effectively funded value chains tie together the total cost and effort of building
products that affect systems of engagement and systems of record. Data about how
current application portfolios are performing provides insight into what it will take to
deliver successful CX from an operational perspective.
SUPPLEMENTAL MATERIAL
Survey Methodology
The Forrester Analytics Business Technographics® Priorities And Journey Survey,
2020, was fielded between December 2019 and January 2020. This online survey
included 19,739 respondents in Australia, Canada, China, France, Germany, India, the
UK, and the US from companies with two or more employees.
The Forrester Analytics Global Business Technographics Software Survey, 2019, was
fielded between August and October 2019. This online survey included 3,598
respondents in Australia, Canada, China, France, Germany, India, the UK, and the US
from companies with two or more employees.
Forrester Analytics' Business Technographics ensures that the final survey population
contains only those with significant involvement in the planning, funding, and
purchasing of business and technology products and services. Dynata fielded these
surveys on behalf of Forrester. Survey respondent incentives include points
redeemable for gift certificates.
Please note that the brand questions included in these surveys should not be used to
measure market share. The purpose of Forrester Analytics' Business Technographics
brand questions is to show usage of a brand by a specific target audience at one point
in time.
Companies Interviewed For This Report

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We would like to thank the individuals from the following companies who generously
gave their time during the research for this report.
• CAST
• Hyland Software
• Scaled Agile
• WorkBoard
Related Research Documents
• The Agile Enterprise Emphasizes Practice Over Process
• Digital Business Requires Agile Financial Planning
• Use Objectives And Key Results To Build A Better Strategic Product

Portfolio
Endnotes
1. Businesses must be able to calculate the ROI of digital investments. But achieving
precision at the group level is nearly impossible. Developing a framework for ROI
calculations based on usage scenarios can help leaders effectively construct
measurable business cases. See the Forrester report "Build The Business Case For
Your Digital Investments."
2. Shifts to Agile development practices are forcing organizations to adopt more flexible
budgeting and funding practices. See the Forrester report "Digital Business Requires
Agile Financial Planning."
3. Source: Ben Linders, "Samsung's Agile & Lean UX Journey," InfoQ, April 11, 2019
(https://www.infoq.com/news/2019/04/samsung-agile-lean-ux).
4. Technology leaders must sustainably innovate customer-focused processes to beat

the competition. Customer-focused automated design and development processes
enable teams to deliver high-impact products and services faster. See the Forrester
report "Create Sustainable Process Innovation."

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Source: Forrester Analytics Global Business Technographics Software Survey, 2019.
5. Experimentation platforms allow AD&D teams to stop guessing what their clients want
and get direct feedback that delivers better CX. See the Forrester report "AD&D Pros:
Stop Guessing And Start Experimenting."
6. Agile delivery practices are now mainstream, but real business differentiation is
driving companies to make fundamental organizational and process shifts to embrace
Agile techniques at the enterprise level. See the Forrester report "The Agile
Enterprise Emphasizes Practice Over Process."
7. Agile frameworks like the Spotify model can help mainstream companies manage
interdependencies and facilitate collaboration at speed. See the Forrester report
"Scaling Agile: What The Spotify Approach Can Do For You."
8. Adapting scaling frameworks enables teams to manage delivery dependencies and

identify potential strategic portfolio dependencies. See the Forrester report "Scaling
Agile: What The Spotify Approach Can Do For You."
9. See the Forrester report "Build The Business Case For Your Digital Investments."
10. The Project Management Institute (PMI) defines innovators as companies that place a
high priority on digital skills and knowledge and couple that with a commitment to a
strong project management culture. Source: "PMI's Pulse Of The Profession: Research
Highlights by Region and Industry," PMI, 2020 (https://www.pmi.org/-
/media/pmi/documents/public/pdf/learning/thought-leadership/pulse/pulse_all-
comparison-reports_final.pdf).
11. Customer-focused organizations continue to struggle with the impact of programs.

OKRs help them develop measurable outcomes and associated indicators that
provide clear measures for performance. See the Forrester report "Use Objectives
And Key Results To Build A Better Strategic Product Portfolio."

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Forrester Report Prepared For Da id ybels With CL echnologies Ltd

Business Case: The Agile Software Leadership

Not Licensed For Distribution.

DIGITAL TRANSFORMATION REQUIRES AGILE AT SCALE, BUT

• Traditional ROI-based business cases prioritize cost savings over innovation.

Not Licensed For Distribution.

Figure 1: Priorities And Challenges In Digital And Software

Not Licensed For Distribution.

RETHINK THE BUSINESS CASE FOR AGILE AT SCALE

Not Licensed For Distribution.

Agile At Scale Requires Balancing Culture, Experimentation, And

• Foster experimentation and use frequent feedback to drive adoption. Customer-

Not Licensed For Distribution.

drive better collaboration. The head of Agile transformation at Fidelity Personal

Focus Business Cases On Outcomes That Empowered, Accountable

• Categorize delivery opportunities based on business objectives. To create

• Prioritize investments based on customer lifecycles and value streams. Value

• Recognize how operational modernization efforts support transformation. To

Figure 2: Business-Led Objectives Drive The Business Case For

Not Licensed For Distribution.

Figure 3: Scale Investment In Agile Based On Value Chain ROI

Not Licensed For Distribution.

Figure 4: Agile Teams Provide Iterative Business Case Validation

• Establish a clear framework for gauging adoption and satisfaction. Performance

Not Licensed For Distribution.

• Ensure they address modernization requirements when building an Agile portfolio.

Not Licensed For Distribution.

Related Research Documents

• The Agile Enterprise Emphasizes Practice Over Process

• Digital Business Requires Agile Financial Planning

• Use Objectives And Key Results To Build A Better Strategic Product

4. Technology leaders must sustainably innovate customer-focused processes to beat

Not Licensed For Distribution.

Source: Forrester Analytics Global Business Technographics Software Survey, 2019.

8. Adapting scaling frameworks enables teams to manage delivery dependencies and

11. Customer-focused organizations continue to struggle with the impact of programs.

Not Licensed For Distribution.

We help business and technology leaders use

Obsessed With Customer Obsession

Research Consulting Events

Not Licensed For Distribution.

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