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New Metrics for Managing Turbulent Times

Point: Tough Times Demand New Metrics

The recession is forcing companies to make tough decisions. New metrics are needed to make the right decisions on getting through the downturn.

Counterpoint: Existing Metrics Are Good Enough

Organizations should resist the urge to concoct new measures when the existing ones, applied correctly, will do.

Opening Statement, by Michael Mah

The current economic downturn has cut a deep gash in the economies of virtually every country and industry, affecting the lives of perhaps every living person in many ways not seen in over 50 years. In a recent live appearance on CNBC, billionaire Warren Buffett said unemployment will likely climb higher and that the economy has basically “fallen off a cliff.” Fear is dominating Americans’ behavior and the economy has followed the worst-case scenario he envisioned. Moreover, in a global recession - fear goes global. It’s not limited to just Americans and U.S. companies. Economies around the world are more interdependent today than ever before. In work and in private life, no one seems immune from having to make tough decisions in the months ahead.

How do people make wise decisions in the face of such unrest? What information do they rely upon and how does that data come into play? When it comes to work life, if cutting costs are mandatory, should we simply make across-the-board cuts with a hatchet, or is it wise to find a more surgical approach? Or is this a time to make strategic decisions to invest, and thereby out-recover the competition when the recession ends? What information, what metrics, should we rely upon to decide?

We are firmly on the scarcity side of the abundance/scarcity continuum. For many (but not all), cost cutting is the order of the day. If you’re a bank or an auto company, it could be a question of survival. Meanwhile, others may find opportunity. For example, discount auto insurers and others are finding their market share increasing as households look for less expensive choices. Companies in these spheres might make a case for investment as their competitors shrink. In fact, during the last economic downturn, some like Intel and IBM famously invested in R&D as their competitors slashed investments. They generated record profits and dominated in technologies like Wi-Fi, once the economy recovered. While this downturn is certainly more severe than the last, the opportunities for those who capitalize may perhaps be even greater.

But let’s get back to the title of this issue, where we allude to metrics in turbulent times. Metrics, put simply, are a synonym for information. While the nature of information is something we want to address in this issue, we also question how people’s minds use or don’t use information during times of turbulence and fear. Joseph LeDoux, professor of neuroscience at New York University and author of The Emotional Brain, explains that the amygdala, an almond-sized clump of tissue above the brainstem, triggers fight-or-flight responses in the brain that actually inhibit cognitive thinking and the logical use of information by the cerebral cortex. In short, our primitive brain imagines that there’s a saber-toothed tiger about to eat us, and it tells us to not think: just run for your life. And in his book “Blink,” author Malcolm Gladwell describes that great decision makers aren’t those who process the most information or spend the most time deliberating, but are those who filter factors that matter from an overwhelming number of variables. Sometimes this happens in the blink of an eye. How should we make decisions while under duress, and what are metrics that matter?

In this issue of Cutter IT Journal, our authors offer you a variety of perspectives to help you address these challenges. We welcome their perspectives on whether new ways of thinking and new forms of information are in order as we confront the current dramatic swing in the business cycle. learn more...

Among the many outstanding speakers is QSM Associates’ Managing Partner, Michael Mah, who will be sharing his latest findings on the state of Agile development, taken directly from his “real world” work with innovative companies who depend on creating great software.

I'm pleased to kick off an editorial New Year at Cutter Consortium as guest editor for the March 2009 issue of the Cutter IT Journal. I'm posting the call for papers here in case any of you sports fans would like to make a submission for consideration. Let me know by emailing me :)
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CALL FOR PAPERS
Cutter IT Journal
Guest Editor: Michael Mah
Abstract Submission Date: 13 January 2009 Articles Due: 6 February 2009

New Metrics for Managing Turbulent Times

The current economic downturn has cut a deep gash in the economies of virtually every country and industry, affecting the lives of perhaps every living person in many ways not seen in over 50 years. It seems as though the fall of communism was, in hindsight, a prelude to an even larger shockwave that would come and strike the heart of capitalism, completing a shakeup to economies of nearly every nation across the globe.

In a previous issue of CITJ, Guest Editor Bob Charette talked about fingers pointing at risk (mis)management as a major cause of the current economic crisis, with quantitative models and processes used by banks, mortgage companies, and financial institutions as being a source of failure in judgment and poor decision making. He says that investor Warren Buffet summed up the skepticism about quantitative models this way: "All I can say is, beware of geeks ... bearing formulas."

There is no doubt that there is plenty of blame to go around. To point the finger solely at financial metrics as being the root cause of the current crisis may be unfair. In fact, we also know that companies also had access to reliable and accurate information, but in many cases senior executives ignored warnings in an effort to generate even higher profits. In short, we might say that the one rather powerful human emotion that trumped the information at hand - both good and bad - was simple greed. In the movie "Wall Street," the character of Gordon Gekko, played by Michael Douglas, said "Greed is good." Well, is it?

So now that we're suffering the consequences of poor macro-economic decision making, where do we go from here? How will IT managers make tough decisions in the face of the economic environments of the companies that they serve? There is no doubt that we are now firmly on the scarcity side of the abundance/scarcity continuum. For many (but not all), cost cutting is now the order of the day. Others may see opportunity. In the last economic downturn, a few companies like Intel and IBM famously invested in R&D as their competitors slashed investments, generating record profits in technologies like Wi-Fi, once the economy recovered. Who decides and how?

As to metrics, what information will companies rely upon to navigate through these times? What decisions might they make in the face of the scarcity/abundance dilemma? If organizations are driven by fear, will they make bad decisions or good ones while in that highly emotional state, regardless of whatever information is at hand? Will CFO's rule the day and attempt to slash labor costs and mandate more use of offshore resources? Or will this strategy result in a divesting of valuable in-house knowledge and potentially cripple a company's future as it undergoes an engineering lobotomy, leaving it unable to later recover? Will there be a return of more Death March projects as organizations are subjected to even more deadline pressure while simultaneously being hit with budget cuts and staffing limitations?

The March 2009 Cutter IT Journal invites useful debate and analyses on the new metrics being used by organizations to make critical decisions regarding their future in a time of enormous economic turbulence.

TOPICS OF INTEREST MAY INCLUDE (but are certainly not limited to) the following:

* What measures should organizations use if faced with a mandate to simply cut costs? Should these cuts be across the board and made with a hatchet, or will there be more deliberate, surgical cuts?

* How can IT managers make the opposite case if desired, to invest through the downturn? Are new ROI measures needed to argue the case for delivering value and business benefit rather than cutting expenditures?

* How should IT organizations measure themselves if cost cutting were to include offshoring? How should they measure vendors?

* Eric Schmidt, CEO of Google, said in a Meet the Press interview that America has the brain power and talent to "innovate itself out of this recession." How might one measure innovation and the resultant business benefit?

* How will organizations balance the reduction of costs with the need to still meet ever-important schedules while not sacrificing quality? What measures will they rely upon to achieve this balance?

* Forward looking firms will see this economic climate as an opportunity to enter markets vacated by weakened competitors. What indicators will companies use to identify when and how to move into these markets?

* Are Agile processes a no-brainer? When you consider that Agile espouses both incremental and earlier delivery of business value (instead of waiting until the end of a longer waterfall process/project), should organizations be looking at a different ROI model for Agile?

TO SUBMIT AN ARTICLE IDEA
Please respond to Michael Mah at michael[dot]mah[at]qsma[dot]com with a copy to itjournal[at]cutter[dot]com, no later than 6 January and include an extended abstract and a short article outline showing major discussion points.

ARTICLE DEADLINE
Articles are due on 6 February 2009.

EDITORIAL GUIDELINES
Most Cutter IT Journal articles are approximately 2,500-3,500 words long, plus whatever graphics are appropriate. If you have any other questions, please do not hesitate to contact CITJ's Group Publisher, Christine Generali at cgenerali[at]cutter[dot]com or the Guest Editor, Michael Mah at michael[dot]mah[at]qsma[dot]com. Editorial guidelines are available at http://www.cutter.com/content-and-analysis/journals-and-reports/cut
ter-it-journal/edguide.html.

AUDIENCE
Typical readers of Cutter IT Journal range from CIOs and vice presidents of software organizations to IT managers, directors, project leaders, and very senior technical staff. Most work in fairly large organizations: Fortune 500 IT shops, large computer vendors (IBM, HP, etc.), and government agencies. 48% of our readership is outside of the US (15% from Canada, 14% Europe, 5% Australia/NZ, 14% elsewhere). Please avoid introductory-level, tutorial coverage of a topic. Assume you're writing for someone who has been in the industry for 10 to 20 years, is very busy, and very impatient. Assume he or she will be asking, "What's the point? What do I do with this information?" Apply the "So what?" test to everything you write.

PROMOTIONAL OPPORTUNITIES
We are pleased to offer Journal authors a year's complimentary subscription and 10 copies of the issue in which they are published. In addition, we occasionally pull excerpts, along with the author's bio, to include in our weekly Cutter Edge e-mail bulletin, which reaches another 8,000 readers. We'd also be pleased to quote you, or passages from your article, in Cutter press releases. If you plan to be speaking at industry conferences, we can arrange to make copies of your article or the entire issue available for attendees of those speaking engagements -- furthering your own promotional efforts.

ABOUT CUTTER IT JOURNAL
No other journal brings together so many cutting-edge thinkers, and lets them speak so bluntly and frankly. We strive to maintain the Journal's reputation as the "Harvard Business Review of IT." Our goal is to present well-grounded opinion (based on real, accountable experiences), research, and animated debate about each topic the Journal explores.

As many are well aware, what's especially exciting to me is the blending of "QSM science" in the space of helping companies implement Agile methods, and the way SLIM portrays how agile software projects behave. I've had the pleasure of using the models at two of the highest performing companies implementing XP and SCRUM, namely Follett Software and BMC Software, and creating trends and analyses that have been the crux of recent keynote and main stage talks at conferences like Agile 2008, Better Software, and Agile Develelopment Practices (where I am today, teaching a full-day session on Agile Metrics :)

But as you can see in the press release below, quantifying ROI, predicting schedule outcomes, forecasting project scope within deadlines, creating reliable velocity trends and burndown charts for stories and bugs etc. isn't just for the few; it's available to anyone who wants to "just do it" themselves. Below are quotes from Kim Wheeler of Follett and how she's used SLIM to achieve just about the highest level of productivity and quality that I've personally measured, something especially vital in these economic times. Across 6 projects, they've delivered software 50% faster than industry with twice the quality, while saving over $7.8 million! As a result, they are the dominant player in their marketplace, winning industry awards and increasing their market share and profitability. Bravo!

Guess what? We teach this stuff! I'd welcome you to any of my future conference tutorials or SLIM workshops in McLean VA. However, both our last class in October and our next class in December - have quickly sold out. (Don't be dissuaded - come see us in January!) You can contact Sean Callaghan at sean.callaghan@qsma.com for more information about upcoming events.

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QSM Announces SLIM 7.0 Planning, Estimating Solution
For Complex Enterprise Software Development Scenarios

MCLEAN, VA -- -- QSM, Inc. announces a new version of the company’s flagship software lifecycle management solution, SLIM Suite 7.0, bringing a new level of sophistication to the planning and estimation strategies of software developers. QSM is a provider of software tools and consulting services that enable organizations to estimate, track, and benchmark their software development and maintenance projects.

Commercial and government enterprises worldwide use SLIM in three critical stages: to estimate the cost and schedule for new projects; to benchmark completed projects against others; and to measure and control “in-flight” projects to prevent overruns. Used for managing both internal and outsourced application development, SLIM is comprised of five elements, which can be used individually or in the integrated suite: SLIM-Control, SLIM-Estimate, SLIM-DataManager, SLIM-Metrics, and SLIM-MasterPlan.

"Until you measure and compare, you don't know how good you really are,” said Kim Wheeler, Director of Development Projects, Follett Software Company, the leader in school book and library automation technology. In conjunction with QSM Associates, Follett uses SLIM tools to more effectively estimate and manage their Agile projects. “SLIM is well suited to the fast-paced, iterative world we live in. SLIM measurements have enabled us to identify that our in-house Agile development saved more than $7.8 million compared to industry experience. Instead of seeking cost savings offshore, we're achieving these higher savings with our own team,” said Wheeler.

“SLIM has been an incredible motivator to our staff. After using SLIM on three XP projects, we have experienced continuous improvement; in fact, our most recent three projects have hit even higher levels of productivity. Such a return is unprecedented in our experience," Wheeler said. Follett’s experience and expertise in library automation and materials serves as the launching pad for both information and resource management tools and solutions. Follett Software’s legacy of innovation includes multiple awards, and a leading role in the Schools Interoperability Framework (SIF) initiative.

The SLIM MasterPlan component of the SLIM 7.0 Suite has been greatly enhanced to accommodate the more complex development strategies that are common to today’s software environment. For example, the development landscape for today’s enterprises often includes multiple release, multiple partners, multiple product integrations, and iterative strategies like Agile and RUP.

The new version of SLIM also provides off-the-shelf templates that enable developers to build models of many complex programs. These templates, which are based on best practice profiles from thousands of QSM consulting engagements, include Agile, off-shore, multi-release, and multi-contractor, as well as package implementation templates for SAP, PeopleSoft, and Oracle.

The concepts of systems design, modeling and reuse are all essential to both productivity and quality in today’s enterprise. Taking these concepts to a higher level, SLIM’s Available Task Component Library easily add tasks outside of the typical software development modeling process, such as systems engineering, fixed cost, milestones, system-level integration and testing, long term sustainment, and program management.

A new Global what-if Scenario Generator allows for quick assessment of the impact to any individual component on the entire program. For example, users can change team sizes, productivity assumptions or functional content, and the scenario generator calculates the impact for each program component then applies the dependence rules and displays an alternative solution.

All SLIM Suite elements are compatible with Microsoft’s Access open architecture, and allow seamless interfaces to any ODBC-compliant tool. And, all can export to and import from the latest version of MS Project, including multi-level Work Breakdown Structure [WBS] files. An improved API also facilitates the importing of statistics and other information from leading independent tool suites, such as those provided by IBM/Rational and Telelogic.

Information from independent tools, in such areas as requirements definition, design, configuration management and defect tracking, is critical to the world-class project management delivered by this newest version of the SLIM Suite. With its strong integration capabilities, SLIM delivers unparalleled project planning and management.

Backward-compatible with previous versions, SLIM Suite 7.0 is available now from QSM, its U.S. affiliate QSM Associates, and the network of QSM offices worldwide. A single-user license for SLIM 7.0 starts at $12,500.

About QSM Associates

QSM Associates, Inc. helps organizations measure, plan, estimate and control software projects. It offers the SLIM (Software Lifecycle Management) Suite of tools, so managers can benchmark and forecast Agile, waterfall, in-house, and offshore/multi-shore software projects. SLIM contains statistics from a worldwide database of more than 7,500 completed projects, enabling productivity benchmarking on the desktop. Using SLIM to dynamically run ‘virtual project simulations,” companies routinely model and forecast waterfall and Agile releases to deliver on time, within budget with > 90% estimation accuracy. SLIM can also derive ROI achieved by Agile methods and other process improvements. QSM Associates offers consulting, training, and coaching to help accelerate this capability. QSM and SLIM are registered trademarks of Quantitative Software Management. Information is available at www.QSMA.com.

Contacts:
General contact: Edward Bride, 413-442-7718 [Ed@edbride-pr.com]
QSM Associates: Sean Callaghan, 413-499-0988 x105 [sean.callaghan@qsma.com]

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Last month, I had the privilege of being one of four keynote speakers at the Better Software Conference in Las Vegas. I'm not a gambler, so I didn't partake at the card tables or roulette wheels, but I do watch software project managers gamble all the time, so it seemed to be a fitting place for a technology conference.

During my speech, where I talked about statistics on agile projects, offshoring, and other types of software scenarios, an interesting question emerged from the audience. The person asked, "What happens when agile projects fail?"

There are many reasons why any project could fail, but what came to my mind was a slide in my deck that was more cartoon than boring PowerPoint bullets. It showed an image of the human brain with the words "Domain Knowledge" underneath it. Next to it was a cartoon image of talking heads, and above it was the word "Dialog."

That one slide actually came into being when, about four hours before my talk, I realized that my presentation file was mysteriously missing from my laptop! After nearly passing out from the realization that in a very short time I'd have to speak before about 600 really smart people, I thought to myself, "What are the one or two ideas that I want to communicate to my audience?"

The phase "development as conversation" popped into my head, often also discussed by Kent Beck, Jim Highsmith (both fellow Cutter Senior Consultants), Robert Martin, and others. I thought about the agile case studies in my missing slide deck. Two of the companies were considered productivity and quality "poster children." The others had mixed success. I then blended my one or two key ideas into a previous story deck and created a new incarnation of my keynote. Voila! Refactoring in action!

Cut to the chase on the answer for the audience member's question: "Sure," I replied. "In my opinion, a distinct difference between the five companies in my case study presentation -- each of them implementing agile -- and their degree of success or failure can be traced to how well or poorly they handled two critical attributes: domain knowledge and dialog."

With regard to these attributes, let's talk for a moment about one of the projects that "failed." In this story, the company brought in a new "green" team in an attempt to bring a new medical IT application to market. These new developers were learning about this product and its features for the very first time. Moreover, key players who were once with the company -- who were familiar with the requirements -- had recently quit and were unavailable to help. Much of the brain of this company was hollowed out, as in a lobotomy.

Score on Domain Knowledge: LOW

Next came the subject of Dialog. This project was a new Scrum initiative, and various parts of the team were not co-located. The processes necessary to move critical knowledge from people's minds and into the minds of other players were not in place yet. They also skipped a co-located release planning meeting (Iteration 0) because it was considered too difficult to coordinate getting the people in one room, but mostly because "there was no time." Thus, face-to-face relationships weren't established -- quite different compared to a cohesive group where members know and trust each other, where people watch each other's backs, and at times, you experience a special synergy that sometimes manifests in things like one person finishing another person's sentences during a conversation.

Score on Dialog and Communication: LOW

I've always said that software development as knowledge work is about taking ideas from smart people and creating, inside a dumb machine, a model of the human mind that takes information and seems to think and act like a person or a collective. That's what software is: the brains inside a dumb box. Creating that inside a piece of hardware is equivalent to downloading the human brain, and to do that requires expert thinking and smart folks moving that information around -- often under a deadline.

This medical IT application project ultimately was cancelled. It never got off the ground because of -- listen carefully to the coup de grace -- the looming deadline. That was the critical third "failure factor." As my friends Tom DeMarco, Tim Lister, and their co-authors said in Chapter 28 of Adrenaline Junkies and Template Zombies (a fantastic book), "Time removes cards from your hand." This team never had a chance from the beginning. The deadline was set first, and it was fait accompli that low domain knowledge and ineffective dialogue would manifest in slower code progress, lower productivity and velocity. They missed early (aggressive) milestones in quick succession from the onset, and management quickly lost faith.

Score on Project: CANCELLED

Interestingly, projects like this never make it into our historical database. When the plug gets pulled, there's no data left behind. Nothing gets delivered, and productivity is zero. But what is left is the lore that circulated among the team members and consultants like me who took part in and witnessed the story as it unfolded. And in this one, and quite a few others, was the lesson, "When domain knowledge is low, and when ideas on solving complex problems can't move around through effective dialog and conversation, and when time dials up the pressure failure is virtually guaranteed."

Isn't this the case, regardless of whether or not a team implements agile methods? I welcome your comments on this Advisor and encourage you to send your insights to mmah@cutter.com.