Waterfall and agility: contradiction or mutual enhancement?

Success factors in the integration of agile methods

Agile methods are becoming more attractive in these times of accelerated delivery cycles, transformation of corporate cultures, increasing customer and product orientation. They can are readily integrated into existing waterfall organisations if some important keys to success are considered:

  • Get employees on board: coaching in support of agile leadership roles is essential to prepare employees for working in an agile organisation.
  • Introduce agile methods gradually. Innovative, product- and customer-orientated projects such as digital customer channels are available.
  • Introduce appropriate interfaces between waterfall and agile projects such as coordinated release management. Despite the short planning horizon in the agile part, don’t forget long-term planning in coordination with the dependent waterfall projects.
  • Design contracts that reflect agile approaches and stipulate how the project will proceed to motivate every contractors as a partner in the process.

S&N became familiar with agile processes as a part of its extensive experience with the telecommunications industry and, with its many years of project experience working with banking institutions, is the ideal partner to help you introduce agile process models into the financial sector.

Author: Frank Bewersdorff, Partner, S&N AG, and Specialist in Agile Methods.

AgilityThe Digital Customer as a New Challenge

As the period of major compliance actions wraps, up, financial service providers are now faced with new challenges. Their customers are using a variety of interaction channels and are demanding that they be used by the banks as well. The digitalisation of all channels has become absolutely necessary. The telecommunications industry found itself confronted with this challenge a few years ago already. The competitive environment has also changed. It’s now easier to compare deals and companies previously not involved in financial services are beginning to get involved with disruptive business models. Technology trends such as smart watches, car IT, data glasses and the internet of things are constantly giving consumers new opportunities for interaction and are raising expectations that have a direct impact on the banking business. Customers want to be able to communicate with the bank through the channel of their choice and receive support wherever they are in their lives. The transition to “banking that fits your life” has already begun.

This is resulting in new requirements for reaction speed, faster innovation and increased project risks due to rising cost pressures. What is needed is a customer-centric and product-orientated organisation that can respond flexibly to changes.

Modelling Agile Methods

In other sectors, such as telecommunications, agile process models, such as scrum, have taken hold. While the waterfall method sees change requests as an exceptional process, the agile approach sees change as an integral and even desirable component of day-to-day processes. The product is at the centre and is delivered in iterations within short sprints. The duration of a project should not exceed 6 months. It starts with a rough vision of the product that represents the current state of knowledge. The requirements are fleshed out in detail during the project. This approach allows changes to requirements as client feedback and the development team’s experiences flow in. Agile teams are manageable, self-organised and interdisciplinary. This minimalist approach quickly creates a deliverable product, the so-called “vertical slice”. Customer requirements are bundled by the product owner, co-managed, prioritised and detailed with the team, and then implemented autonomously by the development team. The scrum master supports this process by removing barriers and promoting a leadership-as-a-service to the agile process. Companies that use agile methods together with S&N observe higher productivity and motivation among all project participants.

But what does agility mean for waterfall organisations? Does scrum replace the waterfall approach? How does this fit with established processes? How does agility match the existing corporate culture?

Integration of agile process models in waterfall-oriented organisations

The waterfall-oriented enterprise is often hierarchical, process-oriented, usually has a long-term release plan, and prefers to commission work via fixed-price contracts. At the project start, detailed specifications are drawn up to describe the final product, often with the risk that costly change requests will blow the budget.

Did you know that the terms of reference for a two-year IT project changes on average by more than half? That’s what Flyvbjerg and Budzier report in the Harvard Business Review.

Agile approaches can compensate for many of the disadvantages of the waterfall approach and can be readily integrated into existing release plans. In early project phases, deliverable products are available in short cycles on a repeat basis. This facilitates integration and even allows the project to be stopped. The project risk in terms of cost and time is thus easier to control. The result should be a usable product at any time.

AgilityAgile projects are ideal for innovative and customer-centric projects such as the digitalisation of channels, while the already established waterfall approach can exploit its strengths when it comes to well-known, well-specified requirements and when the time frame can be well planned. This is the case, for example, with compliance projects. The high percentage of global non-functional requirements is well mapped within existing project management methodology. For disciplines such as program management with a long planning horizon and wider integration in the company, the waterfall approach remains appropriate. Sub-projects that meet the above criteria can, however, be delivered in scrum.

Indispensable for the integration of agile methods is coaching the team. The team’s self-organisation and the acceptance of change as a desirable circumstance are usually the first hurdles. That’s why the introduction of Scrum in business requires coaching skills in the key agile roles of the scrum master and product owner. It is also recommended that agile methods be integrated gradually into the company.

The introduction of agility is often accompanied by a transformation of the existing corporate culture that creates additional synergies. Agility supports employees accepting accountability and continuously confronts them with the latest customer and market requirements. The company and the employees put people and the product in the centre, with the processes and organisations being the requisite tools.

Contract Design in Agile Projects

Agile methods can significantly reduce the project risk in terms of cost and timeframes. But how can this be integrated in contracts? Procedures have already been established that allow fixed prices to be agreed despite the lack of functional, detailed specifications. S&N offers agile working packages and fixed prices with the assumption of the risks. The starting point for such contracts is a shared estimation of the partial features that is transparent for both sides which ends in a fixed price after a validation phase. By assuming the risks, the partners share the risk according to an agreed ratio. Such contracts motivate all stakeholders to achieve the goal and largely reduce the risks of classic contracts. They combine the flexibility of service contracts with the budget security of fixed-price contracts, while minimizing the risk of project delays.

Agility and S&N

S&N, in collaboration with consultants experienced in the field of agility, has gained much experience in the use of agile methods in its work with telecommunications providers, in particular, in transforming existing processes and corporate cultures. With a custom offer of contracted services, S&N is the ideal partner for introducing agility in banks that have to date followed the waterfall approach. S&N has the benefit of experience working with the telecommunications industry that can be used with its many years of experience working with banks to create significant synergies.

In summary:

the integration of agile methods can compensate for the known disadvantages of waterfall models and thus represents an excellent enrichment to the toolbox for meeting the increased demands on the financial services industry.

Contact: Horst Merschjohann; Turn on Javascript!