When the Going Gets Tough, the Smart Get Agile.
In a series of blog posts, Maven Wave has detailed both our commitment to and success with Agile methodologies for software development and project management. In most cases, Agile delivers superior results to traditional, step-by-step, “waterfall” style development. The principles of the discipline naturally foster greater communication and collaboration as well as a more steady stream of product releases. All of this is fine and well in theory, but how does Agile apply and what type of success can it lead to in a real-world industry vertical like financial services?
From Boom to Bust and Beyond
The financial services sector has witnessed a nearly complete reversal of fortune since the Great Recession, moving from a go-go growth business to an industry facing a restricted upside and unrelenting headwinds. On the face of things, it may seem that a business in the midst of such tough times is the last place where adopting new practices like Agile would be a good idea. How is Agile relevant in this scenario? The answer is that Agile fosters greater cooperation both within and across business units and it delivers solutions faster and more responsively.
Greater cooperation: Just like a football team that is in the locker room down by three touchdowns at halftime, an industry that is facing tough times is ripe for innovative new methods that hold the promise of fostering greater cooperation. In tough times, it is imperative that the team pulls together and first and foremost, Agile emphasizes individuals and interactions over processes and tools1. This means that it is extremely helpful in getting teams that are operating in a stressful business climate to shift their focus from what is happening “out there” with processes to what is happening “in here” with the team.
Faster, more responsive cycles: A challenging economic climate, where business activity is declining and the long-term future of the enterprise may be in peril, is no time to embark on a multi-year project to address critical business issues. With Agile, work is separated into discrete, short-term units called “sprints” that ideally are 2 to 4 weeks in length. New features and functions are created in each and every “sprint”, which delivers the dual benefit of beginning to immediately address the issues at hand while simultaneously creating a feedback loop that shows the business what is and isn’t working. This feedback loop allows for a constant recalibration of needs and objectives that ultimately delivers superior results.
That’s all fine and well in theory, but how is Agile being applied in real-world situations in the financial services industry? Recent examples from ITG, LMAX Exchange, Capital One, and Maven Wave illustrate the power of Agile.
Agile is a Good Fit for the Times
According to David Metz from ITG2, Agile is particularly well suited to some of the most important issues facing the financial services industry these days. For example, continual and rapid changes are required for trading systems, such that “the old-school process of designing complete software applications with lengthy specifications can no longer dominate the development cycle.”
Further, Agile methodologies are useful in dealing with “the often overlapping demands of national and increasingly international regulation” that are continually unfolding over time. In both cases, according to Metz, Agile is “an acknowledgement that there are no crystal balls when it comes to software development.” Adoption of Agile methods allows businesses to respond to both internal and external changes.
Driving Rapid Innovation
According to Edward McDaid, CIO at LMAX Exchange, “our real secret weapon is our mature Agile process.”3 LMAX is a multilateral trading facility (MTF) in the crowded and rapidly changing foreign exchange (FX) market. Rather than follow “widely accepted, traditional trading practices”, LMAX has innovated by launching “a truly exchange-style trading model”. With innovation comes the need to respond and evolve rapidly. “Our time to market for business ideas is very short”, says McDaid, “…our development teams swarm4 on stories…(which) get delivered very quickly with higher quality and a lot of knowledge sharing.”
Agile is foundational for LMAX. “LMAX Exchange brings a lot of fresh thinking to everything we do,” says McDaid. “We really believe in test-driven development and continuous delivery, and we’ve been practicing what we preach since we started.” This means that LMAX has a robust and thoroughly tested environment and this rock-solid integrity allows them to quickly and confidently develop new features and businesses.
Producing Profound Results
Widespread adoption of Agile has had profound impacts at Capital One5. Agile was first introduced at Capital One in 2011 and “it amounted to just one percent of software that was delivered.” Fast forward to 2014 and Capital One now “releases approximately 400 product releases a month, has cut delivery times to three to six months…and has 95 percent of products meet expectations on the first release,” according to Rudy Wolfs, Senior VP of Card IT.
A critical driver for success is the close cooperation between business and IT. “Our business engagement is very high and that is very important,” Wolfs related. “By having business involved with the development team along the way, it changes the entire dynamic with the business. They get a better product when they
[busines and IT] are together.”
It Can Be What You Don’t Do That Matters the Most
When times are tough, it’s helpful to cut waste to a minimum. An oft-quoted statistic from the Standish Group is that 64% of all software features from traditional development projects are never or rarely used6. It’s Maven Wave’s experience that Agile is a big help in separating the useful from the unnecessary in development projects. Unlike traditional waterfall projects where requirements are defined in the first phase and the first phase only, requirements in Agile are constantly examined and prioritized at each and every step. In this process, not only are the most important parts of the project delivered first, but over time, those features and functions that have little or no value are kept at the back of the queue and ultimately discarded if they don’t provide value. Contrast that with a traditional development project where requirements are baked in from the get-go and you can see that Agile saves effort and resources at the same time that it is delivering the results that the business needs.
Agile is Made for These Times
The Agile Manifesto was published over 10 years ago and the roots of Agile stretch back into the 1990s. The discipline has now entered a phase where it is both battle-tested and highly documented. Traditional methods still have their place in certain situations but the more flexible and inclusive nature of Agile has heightened its adoption. Such an approach is particularly relevant in today’s financial services industry, where tough economic conditions and evolving demands combine to create a difficult business climate. The greater cooperation between business and IT and the efficiency gained by going Agile make it the perfect solution to meet today’s challenges.
Written by Chuck Mackie, Senior Principal, Financial Markets. Please contact us for more information on Maven Wave’s approach to Agile development.
1In fact, this is the very first principle the original Manifesto for Agile Software Development from 2001
2“The Irresistible Rise of Agile Development”, Wall Street & Technology, 14 April 2014
3“Agile Testing in Financial Services”, Equinix Blog, December 2013
4A “story”, or “user story”, is an Agile requirement, stated as a sentence or two of plain English. A user story is often expressed from the user’s point of view, and describes a unit of desired functionality. You can find this and other Agile term definitions here.
5“Capital One Delivers 85% Of Software Through Agile”, Bank Systems & Technology, 31 March 2014