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Agile development empowers teams with many benefits but also presents challenges around managing and measuring its effectiveness. The way to resolve these is Function Point Analysis.

From business impediment to business enabler, IT development has come a long way since Agile has become the favored practice. Now empowered with speed and responsiveness, organizations have left the days of slow, cumbersome, inflexible, and unresponsive practices behind in the dust. Instead they’re able to support business needs and experience better alignment with changing business environments better than ever before. 

It’s easy to understand why Agile is experiencing a strong increase in adoption; as companies become more nimble to embrace the pressures they’re facing in digital transformation, IT development is able to respond aggressively to evolving competitors and exploit markets more easily. But these benefits rival the frustrations on the management side of Agile teams. The nature of Agile makes it so that IT has lost visibility and scope control while the business has lost predictability. While Agile might make teams fast and responsive, businesses don’t know when projects will be delivered, and quality of delivery is often poor. 

This is due to story points. Story points is a relative and subjective effort measurement that allows teams to estimate how much work of a certain item is required compared to a certain reference story with a fixed number of points. Story points can be used as an assessment method within a team. But how do these points happen? In an Agile Scrum environment, productivity is often associated with delivered story points, often expressed in Velocity as an estimation unit. The problem is that story points are not standardized, and productivity based on story points means nothing outside of a team itself. Even within a team, story point deflation is always lurking. 

Is it even possible to objectively measure productivity? This blog will show that using a ratio scale is the way to objectively measure productivity as proven by IDC Metri’s years of helping clients turn around this common challenge. Management information can be established through a ‘unit of measurement’, bringing answers to long-sought after questions such as which teams are performing well, which teams are not performing so well and when is which functionality ready at what cost? 

If you want to use productivity to compare teams, departments, organizations and/or suppliers, or the market, it’s a necessity to use a standard measure of output. Even when this data is about trends on your teams, this insight creates a unified and common view.  

For years IDC Metri has been offering function points to create this factual view to clients. Function point analysis was developed in the 1970s to determine the productivity of development teams when it was impossible to do this by counting lines of code. By making function point analysis independent of the technical implementation (programming language, architecture, etc.) and the development method (Waterfall, Agile, etc.), it’s also relevant today and fits into the solution that Agile teams and management need to resolve the challenges that story points create. In short function points are the de-facto standard to express the amount of functionality in a standardized size unit. 

Several manual standards are available and one international ISO standard is available for automated function point analysis: ‘Automated Function Points (AFP)’. IDC Metri prefers to use automated measuring of functional size but also employs certified analysts who can manually measure when automated measuring is not possible for whatever reason.  

To measure the size of the output of a team, it is also important to not only look at the added functionality but also at the changed and removed functionality. IDC Metri uses automated measuring of ‘Enhancement Function Points (EFP)’ to measure how much functionality has been added, changed and/or removed during a sprint, release or project. This gives the ‘Project Size’ in EFP, a standardized method to measure the output of a sprint or release. 

While Agile is hard to measure and manage for full value, the IDC Metri proven approach of using function points transforms a team-driven, fast-moving, rapid iteration process that evaluates progress on qualitative measures into something that can be quantified and predicted. 

Looking to learn more about Objective Measurement vs. Story Points? Download the IDC Metri eBook How to Measure Business Value for Agile Teams.

Webinar | On-Demand

IT teams that have adopted Agile are benefitting from faster delivery cycles and more flexible systems. Despite the improved capabilities that Agile brings enterprises, IDC Metri, the leader in helping organizations realize the full value of their IT functions, has found that most companies would see a significant jump in performance if they applied quantitative assessment techniques to manage Agile efforts.

Watch the webinar to learn more about these processes and how easy it is to implement them while receiving strategic guidance around:

• How to gain predictability, control and visibility into high-profile Agile projects
• How monitoring and assessing Agile teams can control budgets, increase delivery speed and quality and ensure a minimum viable product
• How building quantitative performance metrics into supplier contracts delivers improved cost, quality and performance from third-party development partners

When scaling and delivering Agile practices is vital to business success, you don’t want to miss IDC Metri’s insights on how to better impact your bottom line by realizing the full value of Agile development.

Agile development promises faster, more responsive development. This aligns better with the transformation of organizations, as they face heightened, more competitive environments. Driven by market and technology changes, organizations are re-structuring themselves and their products and services to be more Agile and opportunistic to market changes. Agile should be suited to delivering this responsiveness when building and supplying technology capabilities to transforming organizations.  

But, frequently, it isn’t.  

By its nature, Agile can and should be a major enabler supporting these changes, but many organizations find it difficult to manage and extract this value. This is due to the challenges in measuring productivity, quality, performance, and forecasting delivery. It’s hard to manage what can’t easily be measured.  

Why is Agile hard to measure and harvest value from?  

Waterfall and other goal- or milestone-focused development methodologies are structured with clear definitions of project phases (requirements gathering, sequential development, codified dev-test-QA-production flows) and milestones. Agile is more fluid. Agile measures productivity in terms of qualitative measurement, Story Points, that make cross-team productivity comparisons difficult. Agile value is based on individuals and interactions getting it done over process. It drives to create working code (moving quickly) while back-seating documentation. By working closely with the customer in the development process, it is more responsive and adaptable at the risk of increasing backlog, and expanding scope and requirements.  

While Agile is well suited for delivering capabilities in a modern, competitive landscape, getting that value is hard, but not impossible. Typically, organizations struggle in three areas of Agile value: 

1. Predictable delivery of capabilities (reliable productivity) 
2. Quality 
3. Cost to performance, including with service providers 

IDC Metri’s Agile Value Management product addresses these management challenges by assessing agile development efforts across team and product performance categories. Key team factors assessed are productivity, cost efficiency, delivery speed, and quality. For product quality, we evaluate robustness, efficiency, security, changeability, transferability, and technical debt. Future, it allows for benchmarking team performance against other teams within an organization and against market peers. These assessments filter up into management dashboards, to help identify trends, and engineering dashboards that drill into specific recommendations and remediation.  

Predictable delivery of capabilities 

With the Agile framework being structured around sprints (typically two-week cycles of refactoring, back-log attack, development, and just-in-time requirements gathering), Story Points for goals, and velocity (Story Point clearing) for progress, it’s hard for organizations to translate these measures to more traditional measures of progress. A lot of motion and momentum is demonstrated, but how this leads to predictable delivery of capabilities is elusive. To address this, IDC Metri uses a proven methodology for assessing progress and ensuring predictability—automated and enhanced function point analysis (FPA).   

The IDC Metri Agile Value Management (AVM) solution assess a development team’s progress using both enhance and automated function point analysis. FPA delivers a concrete assessment of size delivered (value) and enables comparison of productivity across teams and benchmarking against industry peers. AVM provides management with the progress measurement dashboards for productivity and delivery speed. To measure and assess these, IDC Metri uses the functional output a team has delivered in a certain timeframe, leveraging the NESMA standard of functional size added + changed + deleted. In the case of automatic measurement of functional size, IDC Metri measures according to the ISO 19515 standards of Automated Function Points (AFP), and Enhancement Function Points (EFP). This data is presented in a fashion that allows managers to understand progress to goals and transparency to understand and predict capability delivery.

Quality 

Ensuring predictable, or efficient development, only matters if the product being produced is of the quality (stability, security, efficiency, etc.) necessary to meet the business goals. For this reason, it is important to balance performance measures of the team with quality measures of the code. We don’t want measures and goals for performance to have the unintended consequence of driving down quality.  

AVM provides source code analysis. This analysis provides ongoing assessment and trends in team quality over time and highlighting key areas of deficit. With this analysis, an Engineering dashboard is created showing the (critical) violations found, why these are violations, where they are found and how to solve them. The most critical ones are put on an action plan. This data is also presented in easily digestible fashion for managers responsible for managing and ensuring product quality.  

The Engineering dashboards clearly identifies poor code and critical violations (CVEs) allowing the development team to better, and more rapidly, address quality issues. When adopting the guidance from the Engineering dashboard, overall development team practices improve. Quality and performance enhances, due to lower testing efforts, resulting from enhanced coding practices. Also, improving practices and identifying better practices reduces team stress and enables recently onboarded team members to become more rapidly productive.

Cost to performance 

Sourced Agile development projects are typically time and materials (T&M), which shifts budget risk from the sourcing vendor to the buyer. Previously, development projects were typically fixed prices where risk (especially financial) was weighted towards the sourcing vendor. Similarly, even with internal projects, budgeting and cost were more predictable, due to the structure and predictable nature of methodologies like Waterfall.  

AVM, by putting measurable, traceable and consistent metrics around development, helps make cost management and cost efficiency easier and transparent. Also, by providing benchmarking within an organization and against peers, a client has the context to understand the competitive meaning of these assessments (i.e., is my team underperforming in my industry in the cost/performance ratio for development?). Further, by assessing sourcing vendor current performance versus cost, goals can be set and measured consistently, over time, for assessment. AVM, with its combination of market benchmarking for services and concrete performance metrics, benchmarks the sourcing vendor performance against market peers. This enables buyers to determine whether the service capabilities they procured are delivered competitively to other vendors in the market. Furthermore, it gives leverage to the buyer in ensuring that a T&M development contract is performing at a minimum to market peers, i.e., that the buyer is not over-paying for the quality and productivity of the development they receive.  

Supplier Improvement Actions

A client example illustrates this. The client company nearshored application development and maintenance. They were concerned they were paying more than the value they received. IDC Metri performed an AVM assessment demonstrating gaps in value based on the hours (cost) put into the sprints. Productivity was 30% lower and cost 22% higher than market average. Maintenance cost four times the market average. This assessment culminated in supplier improvement actions to comply with performance and product health metrics (with ongoing verification by IDC Metri).  

To rephrase an earlier observation: if you can’t easily measure something, you can’t easily manage it. AVM allows organizations to clearly understand how their Agile development teams (staff or sourced or hybrid) perform and deliver value. It cleanly addresses three key organization struggles around Agile: predictability, quality, and cost. It makes it easy to measure and assess Agile development, which means it enables easier and effective management of Agile.  

Want a deeper example of an organization that overcame challenges in quantifying Agile value? Read “A Management Primer: How Agile Development Teams Can Deliver Value”