QUEST Boston Geography Matters: What Measurement Tells Us about Offshoring, Agile Methods, and the Flat World

Transcription

1 Thursday, April 7 th, :00 AM 12:00 PM QUEST Boston 2011 Geography Matters: What Measurement Tells Us about Offshoring, Agile Methods, and the Flat World PRESENTER: Michael Mah COMPANY: QSM Associates, Inc.

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3 Geography Matters: What Measurement Tells Us About Outsourcing, Agile Methods, and the Flat World Quality Engineered Software and Testing Conference Thursday April 7, Boston Michael Mah Managing Partner QSM Associates, Inc. 75 South Church Street Pittsfield, MA USA 01To net officer receivable with officer payable Fax michael.mah@qsma.com Website: Blog: (#2)

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7 The World is Spiky - Counterpoint But there is a powerful counterforce which Friedman overlooks... The force of concentration, or clustering of human creativity and talent the powerful economic gains that come when smart and talented people locate in close proximity to one another. It s what the Nobel Prize winning economist Robert Lucas called human capital externalities, the productivity and innovation gains that occur when human beings cluster together. (#9) Source: Richard Florida Flight of the Creative Class The World Is Spiky (#10)

8 The Migration to the Cities Year % live in urban areas, 30% in 1950, 50% in Today, there are: 5 Mega-cities with 20 million people 24 cities with 10 million people 60 cities with 5 million people 150 cities with 2.5 million people (#11) Robert Lucas Revisited The force of concentration, or clustering of human creativity and talent the powerful (economic) gains that come when smart and talented people (co-)locate in close proximity to one another (#12)

9 The Global Competition for Talent Powering America s economic growth engine: the open society and the attraction of talent. Examples: 1930s - Enrico Fermi, Albert Einstein. Others - David Sarnoff (RCA), Georges Doriat (DEC), Andy Grove (Intel). 1980s Sergey Brin (Google), Sabeer Bhatia (Hotmail), Jerry Yang (Yahoo), Pierre Omidyar (ebay), Linus Torvalds (Linux), Andreas von Bechtolsheim and Vinod Khosla (Sun Microsystems). Today, the creative class represents a larger percentage of the workforce in several other countries than in the U.S. (eleventh place). The creative class constitutes a third of the workforce in Ireland, Belgium, Australia, and the Netherlands. It accounts for roughly a quarter of the workforce in six other countries: New Zealand, Estonia, the U.K., Canada, Finland, and Iceland. - Richard Florida Flight of the Creative Class (#13) The Industrial Economy In manufacturing: We know what to do and how to do it. We automate the process. If we want to double the output or halve the time, we add another line or speed up the machines. (#14)

10 (#15) The Information Innovation Economy In development (knowledge work): To some extent we don t know what to do or how to do it. We spend most of our time, not building the system, but figuring out what to build and how to build it, by talking to one another. Adding more staff can have negative rather than positive consequences, because of communication chaos. (#16)

11 Two Categories of Work Types Expert Thinking: Requiring creativity and expert problem solving, design of new products. Complex Communication: High paying jobs in design, innovation, and management of others with face-to-face interaction. Routine Cognitive Tasks: Work that follows welldefined logical rules, such as call center and data processing. Some routing software coding. Routine manual tasks: Physical labor jobs such as blue-collar assembly line work. Nonroutine manual tasks: Physical labor jobs difficult to automate requiring optical recognition, fine motor control, including a range of factory jobs. (#17) (#18)

12 (#19) Cutter Survey Nature of Outsourcing 80% 77% 70% Percentage of respondents 60% 50% 40% 30% 20% 29% 44% 10% 0% Staff transition to outsourcing providers Staff augmentation Project work (#20)

13 Cutter Survey What Do You Outsource? 70% 60% 61% 58% Percentage of respondents 50% 40% 30% 20% 44% 33% 10% 0% New applications Maintenance Operations/ data center Business process outsourcing (e.g., call center/payroll) (#21) Industry Data from the QSM SLIM-Metrics Database Spans 20+ years Large, worldwide heterogeneous database contains 8,000+ projects Represents over 685+ million SLOC, 7+ million function points, over 600 languages, from 500+ organizations in 18 countries Adding projects/year (#22)

14 Partial List of Clients British Telecom SAP Microsoft Intel AT&T/BellSouth BMC Software Motorola VerizonWireless Roche Diagnostics Fiserv Corp IBM Global Misys Healthcare JPMorganChase Boeing Bank of New York Mellon Lockheed Martin Progressive Insurance DirecTV (#23) Example Outsourced Project Whiteboard Sketch (#24)

15 Input to SLIM Size Time Effort (#25) SLIM Replica Release 9.5 Staffing & Probability Analysis CD R&D C&T Avg Staff (people) <Single Goal - MBI 4.433> Milestones 0 - CSR 1 - SRR 2 - HLDR 3 - LLDR 4 - CUT 5 - IC 6 - STC 7 - UAT 8 - FCR 9-99R R Avg Staff (people) Jan ' Dec Feb May Aug Sep Nov Dec Feb Mar Apr May Jun Jul Aug Sep Oct Nov Jan Mar Apr Jun Jul Oct '07 SOLUTION PANEL <Single Goal - MBI 4.433> Duration Effort Cost Peak Staff MTTD Start Date C&T /4/2006 Life Cycle /1/2006 Months PM $ (K) people Days PI=21.3 MBI=4.4 Eff SLOC=686,000 CONTROL PANEL <Single Goal - MBI 4.433> PI Peak Staff Eff SLOC (K) (#26)

16 Trendline Assessment Main Build Staffing Main Build Phase Staff vs Size Planned staffing profiles (RED projects) are much more aggressive than history. Tight deadlines and time-to-market are the drivers. AB Rel 9.0 AB Rel 9.5 AB Rel 10 1, DC&T Peak Staff (People) ,000 10,000 Effective SLOC (thousands) 1 (#27) AB Medical All AB Medical Systems Special Project Misys Company - All Projects All Projects Avg. Line Style 1 Sigma Line Style Trendline Assessment Main Build Schedule Main Build Phase Schedule vs. Size Deadline target for Rel 9.0 is aggressive but consistent within the band of history. Rel 9.5 and Rel 10 scope/dates are off the chart. 1, AB Rel 9.0 AB Rel 9.5 AB Rel DC&T Duration (Months) ,000 10,000 Effective SLOC (thousands) (#28) AB Medical All AB Medical Systems Special Project Misys Company - All Projects All Projects Avg. Line Style 1 Sigma Line Style

17 Trendline Assessment Defects/Quality Defects During Test vs Size Ambitious scope, aggressive staffing, and tight deadlines result in (higher/lower) defects. (Fill in answer) [WATCH YOUR WARRANTEES] Errors (SysInt-Del) (thousands) ,000 10,000 Effective SLOC (thousands) (#29) AB Medical All AB Medical Sy stems Special Project Misy Company s - All Projects All Projects Av g. Line Sty le 1 Sigma Line Sty le Industry Average vs. Offshore Industry Average Offshore Average Difference Project Cost $3.5 Million $3.2 Million -$0.2M Schedule 12.3 months 9.6 months -2.7 mos Cumulative Defects 2,702 7, % Staffing (#30) * Using average project size of 150,000 lines of new and modified code

18 Staffing View Another Outsourced Project IN CEP ELAB CONST TRA N S 0 Avg Staff (people) <Overall September Baseline> Avg Staff (people) Apr ' Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb '04 '05 0 (#31) 0 Gantt Chart By Sub-Phase <July Baseline Plan> Inception Elaboration 1 Elaboration 2 Elaboration 3 Construction 1 - Pre-FIT Construction 2 - FIT Construction 3 - UAT 1 Sub-Phases Construction 4 - UAT 2 Construction 5 - Prod DataLoad Production Pilot Post Production (#32) Apr ' May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep '04

19 Defects vs. Industry Average 0 1 Defects Found Defects /17 ' /28 08/09 09/20 11/01 12/13 01/24 03/06 04/17 05/29 07/10 08/21 10/02 11/13 12/25 02/05 '04 '05 0 (#33) Current Plan Actuals Green Control Bound Yellow Control Bound Project: CEP Scaled Up Defect Curve Outsourced Project 0 1 Defects Found Defects /17 ' /28 08/09 09/20 11/01 12/13 01/24 03/06 04/17 05/29 07/10 08/21 10/02 11/13 12/25 02/05 '04 '05 0 (#34) Current Plan Actuals Green Control Bound Yellow Control Bound Project: CEP

20 Forecast to Complete (4 Month Delay) Nov 19 (#35) It s Not Easy to Blend Minds Across the Planet (#36)

21 Case Study - Co-located Teams (customers - developers) XP Says The customer is always available All phases of an XP project require communication with the customer The customer will also be needed to help with functional testing. How the company evolved or extended this rule Customers are external end-users Customer Proxy role Customer Advocate Trade-offs Customer advocate allows someone to always be available Potential for different interpretation of need (#37) (#38)

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25 Input to SLIM Size Defects Time Effort (#45) SLIM Replica Destiny 5.0 Staffing & Probability Analysis STORY BUILD Avg Staff (people) <Destiny Release 5.0> Milestones 0 - CSR 1 - SRR 2 - HLDR 3 - LLDR 4 - CUT 5 - IC 6 - STC 7 - UAT 8 - FCR 9-99R R Avg Staff (people) Oct ' Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep '04 0 SOLUTION PANEL - <Destiny Release 5.0> BUILD Life Cycle Duration Months Effort PM Cost $ (K) Peak Staff people MTTD Days Start Date 1/5/ /15/2003 PI=23.1 MBI=5.6 Eff SLOC=218,531 (#46) CONTROL PANEL - <Destiny Release 5.0> PI Peak Staff Eff SLOC (K)

26 Trendline Assessment Build Phase Staffing Main Build Peak Staff vs. Size 1, Rel 6.0 Rel 7.5 Rel 7.0 Rel 8.0 Rel 5.0 Rel Peak Staff (FTEs) 1 Normal Staffing ,000 Effective SLOC (thousands) (#47) Business Systems Av ionic Sy stems Command & Control Microcode Sy stems Process Control QSM 2005 Business Avg. Line Style 1 Sigma Line Style Trendline Assessment Build Phase Schedule Main Build Phase Duration vs Size 100 Rel 5.0 Rel 8.0 Rel Time (Months) Rel 6.0 Rel 7.5 Rel 7.0 Schedules are Half Industry ,000 Effective SLOC (thousands) (#48) Business Systems Av ionic Sy stems Command & Control Microcode Sy stems Process Control QSM 2005 Business Avg. Line Style 1 Sigma Line Style

27 Trendline Assessment Defects/Quality Defects During Test 10,000 1,000 Rel 6.0 Rel 7.5 Rel 7.0 Rel 8.0 Rel 6.5 Errors (SysInt-Del) Rel Far Fewer Defects: 50% - 66% Below Industry ,000 Effective SLOC (thousands) (#49) Business Systems Av ionic Sy stems Command & Control Microcode Sy stems Process Control QSM 2005 Business Avg. Line Style 1 Sigma Line Style Follett vs. Industry Average Industry Average Current Performance Delta Project Cost $3.5 Million $2.2 Million -$1.3M Schedule 12.6 months 7.8 months -4.8 mos QA Defects % Staffing n/a (#50)

28 Offshore vs. Industry Average Industry Average Offshore Average Delta Project Cost $3.5 Million $3.2 Million -$0.3M Schedule 12.6 months 9.6 months -3.0 mos QA Defects % Staffing (#51) * Normalized to same project size Robert Lucas Revisited The force of concentration, or clustering of human creativity and talent the powerful (economic) gains that come when smart and talented people (co-)locate in close proximity to one another (#52)

29 In Closing Outsourcing may be easy in an Industrial Economy. It is harder in an Information Economy. Cheaper labor rates make sense in an Industrial Economy. They are less relevant in an Information Economy. The world is not as flat as we think. In an Information Economy, it is spiky. This is what the DATA is telling us, when it comes to showing how difficult it is to INVENT things and solve difficult problems with people who are at far distances away. If a company chooses a strategy that involves outsourcing, then it must find the answer to the problem of mindsharing across large distances and time-zones. These are the ones who can make outsourcing successful. (#53) Why Are These Ideas Important? Cause SOFTWARE is so important It is TOO important to screw it up Software is difficult, because it is BIGGER than any one of us. It requires a collective of human minds to build today s modern software applications Some consider software to be the wiring of the Global Digital Nervous System of the Earth, part of wiring the Global Brain (#54)

30 For Additional Information Michael Mah website: blog: Tel: Andrea Gelli andrea.gelli@qsma.ch Website: Tel: (#55) Recommended Reading Mah, Michael, The Making of the Agile IT Executive Business IT Strategies Advisory Executive Report Vol 6 Number Cutter Information Corp. Mah, Michael, The Agile IT Executive and Outsourcing Business IT Strategies Advisory Executive Report Vol 6 Number Cutter Information Corp. Reassessing XP, Cutter Consortium Council Opinion, Business Technology Trends and Impacts, Volume 6, Number 8. Putnam, Lawrence H., and Myers, Ware, Five Core Metrics, The Intelligence Behind Successful Software Management 2003 Dorset House Publishers. (#56)

31 Recommended Reading Florida, Richard, The Flight of the Creative Class 2006 HarperCollins Publishers. Yourdon, Edward, Outsource; Competing in the Global Productivity Race, 2004 Prentice Hall (#57) (#58)

32 Who We Are: QSM maintains the world s largest benchmarking database of 8,000+ completed software projects collected worldwide. We put industry productivity statistics on the desktop. The QSM SLIM database contains projects in all industries, waterfall, Agile, offshore/outsourced, in-house, new development, and maintenance. SLIM tools enable managers to measure and estimate Agile and/or waterfall projects, and determine ROI. (#59) Partial List of Clients British Telecom SAP Microsoft Intel AT&T/BellSouth BMC Software Motorola VerizonWireless Roche Diagnostics Fiserv Corp IBM Global Misys Healthcare JPMorganChase Boeing Bank of New York Mellon Lockheed Martin Progressive Insurance DirecTV (#60)

33 SLIM- Estimate: Size, Schedule, Cost & Quality Estimating The SLIM-Suite SLIM- MasterPlan: Incremental Development & Project Aggregation SLIM-Control: Variance Analysis & Adaptive Forecasting The SLIM-Suite SLIM-Metrics: Industry Benchmarking & Process Improvement SLIM-DataManager Software Project Metrics Repository (#61) footer