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Why Agile Adoption Fails in Some Organizations

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How often do you hear that a company attempting to adopt agile practices fails? This article attempts to examine and explain the often overlooked key organizational reasons that agile fails, why it isn't obvious to most of us and some potential strategies for coping with organizational impediments. The article's target audience is managers with budgetary responsibility although technical groups might also find interest.

Historical Perspective on Agile

Where did agile practices originate and why? Asking this question takes us directly to large software development efforts in companies that market and sell software as their primary revenue generator or companies that see their custom software as a primary competitive differentiator for their business....we'll call this company X. Agile did not originate on a fixed bid development effort in an IT department at company Y.

Why is this important?

The answer lies in how the development effort is viewed by company X and Y financially. In company X the software development effort is viewed as an investment, indeed the primary investment, in the company's future. In company Y the development effort is a small application and is viewed as an expense to be time bound and tracked. In company X the team is funded. In company Y the project is funded. Read those last two sentences again.

In company X agile will succeed. In company Y agile will fail.

In a fixed bid development effort the software development is intended to end at some point. Securing funding for the project requires that you define it up front, estimate it, resource it, develop it, test it, implement it, and then turn it over to support. This is company Y.

In a time and materials funding scenario the company determines it has need for a software development team as there are many projects that require development well into the future. An estimate of how big a development team they can afford is created for the budgetary time frame (1 year, 2 years), it is resourced, and then project scoping and scheduling are done. This is company X.

See the difference? In company X there will always be software development. There is no end and the team is funded with that intention. So putting that work in a backlog, prioritizing it, and estimating and reviewing it in time boxed iterations makes sense.

In company Y the effort can only afford to be funded for some subset of the budgetary period (say 3 months). After that there is no more money or the company is unwilling to allocate additional money. They don't want a long term development team because they can't afford it and besides there wouldn't be enough development work to keep them busy anyway. So deep controls and strong project management is required to ensure that something is delivered in that 3 month period.

Viewed this way.....financially, agile is a luxury. It assumes that you'll always have a software team and there will always be development work. It assumes you're team is funded year after year and you, as a manager, don't have to worry about funding individual projects. As an agile manager you're primarily concerned with schedule, scope and capacity. Budgets are an annual or bi-annual thing. You flex up or down depending on the economic realities facing the company. The criteria for success are largely centered on functionality delivered over time.

In company Y you might have $50,000.00 that is set aside to complete you're project in 3 months. Budgeting and expense tracking are critical and will determine whether the project is a success or not. A manager here gets funding on a project level at various times throughout the capital cycle. You may deliver all functionality on time and over budget, but that won't be seen as a successful project. As a manager in this company you are concerned with all 3 legs of the iron triangle. Your team is likely temporary and staffed by contractor labor. Adoption of agile in this situation is a mistake.....even superficially. Why?


The key lies in estimation.

In an agile software team you don't estimate your work till right before you begin. And you only estimate, in the case of Scrum, the next iterations work. So how do you know how long it will take? You don't. Furthermore, you really don't care. You'll continue to deliver functionality every iteration. As soon as product management and QA say you have a good enough product; it'll be released as a production version. You might have a guess, but until the team estimates really don't know long it will take.

In a fixed bid situation....your estimation needs to take place up front. The company is asking you how much it will cost to build the application because they are unwilling to fund it forever. They want it to end.......preferably sooner rather than later. Funds are limited and your project, although perhaps necessary, is not viewed as critical to the company's future. Its ROI may even be negative. Returning to the leadership of this company with the answer; “I'm not sure how long it will take....just fund the team for a year and we'll see how it goes every iteration” would be a mistake that would likely result in your dismissal.

In the 2nd scenario, if I told the team, after securing funding and hiring them, “we're using Scrum”: they'd estimate the work the next iteration. They would assume their estimates would be taken seriously and you'd give them time to complete the work as it unfolds regardless of whether their estimates fit your original project funding or not. That's only fair. Unfortunately, that puts you as the manager in the uncomfortable position of submitting budget/schedule variances and/or cutting scope when you're original estimate is proven to be inaccurate. Hence, you've failed at managing the project and therefore.......”this agile thing doesn't work”.

The mistake was to assume the company's leadership understood and was organizationally committed to Scrum and agile principles. The mere fact that they are asking you to estimate the funding you'll need to complete the project tells us otherwise. If they had asked us, “How much does it cost to fund a software development team for the next 3 years?” Then we'd be wise to approach it from an agile perspective.

The Real Problem

So, what is the real problem with agile adoption in organizations? It can be boiled down to these points:

  • Agile assumes that the company wants a long term software development effort not a short term project.
  • Agile is often assumed by company leadership to be a development process with no impact on budgeting. This is not the case.
  • Development teams assume leadership understands the implications of adopting agile at the budgetary level.

The complexity of these points can't be underweighted. Developers and development teams often have zero visibility into budgeting so they are unaware of how their agile efforts are being accounted for in monetary terms. This is evident in so many agile articles on the web. Likewise, management is often ignorant of development and specifically agile development practices. Agile adoption requires education to ease the clash and misunderstanding of these two worlds.

So what are some of the consequences of attempting to adopt agile practices on a fixed bid project...essentially laying an agile façade over the waterfall project?

Story Points

Story points are often used on agile teams to determine the complexity of the work being done. The number of points completed each iteration determines their velocity ( points per iteration ) and gives management an approximation on how much work can be completed in a given iteration.

If you come from a fixed bid shop like company Y your immediate question is, “How does this relate to hours? How do I project costs and ROI?” Truthfully, it doesn't. It isn't intended to. Again, the agilist is assuming you're funding a software development team not a software development project.

In company X you could estimate things by hamburgers or cigarettes in each iteration. It doesn't matter. You're going to get the product done at some point ( +/- functionality requested ). The only real question is at what point to do we call it complete and release it to production. Funding for the team is not contingent on estimation of effort.

In company Y project funding is directly related to estimation of effort. It is critical that we tie this to time because our cost driver is often an hourly rate. Story points have no meaning here.

ScrumMaster vs. PM

“Agile does away with the need for a project manager.” Ever heard this before? It's scary for traditional PMs and unintentionally threatening. However, it is correct. If you assume that a team is funded year after year regardless of projected effort then the needs for organizing and managing the development effort are more centered on technical leadership, task and risk management. Timelines and budgets go out the door. A ScrumMaster is sufficient, preferable for getting the job done.

However, if you're in a non-agile situation, like company Y....then traditional PM practices are not only valid, but essential to making sure the effort is kept within budgetary and schedule tolerances. In this situation the leader of the development effort is being entrusted with precious company resources that can't be wasted and needs to have the skills of a CEO-Lite.

A funded development team does change the project manager role. A fixed bid project does not.

Daily Stand Up Meetings

Agile uses daily stand up meetings for a variety of reasons: motivation, risk mitigation, status, accountability, team building, etc. It's a good idea that is equally at home on a fixed bid waterfall project. There is no reason this practice can't continue to be used, but the team on that fixed bid effort has to realize that you're not really doing agile and there is a deadline looming. You also might want to weigh the time needs. The daily stand ups should be short, but 15 minutes a day adds up when you only have 3 months of funding.

Iteration Reviews

With fully funded software teams that use agile the question of when something is done is answered incrementally. Functionality is reviewed at the end of each iteration ( say 30 days ) and evaluated for readiness for production release. Again, this is a good idea that could still be used in a fixed bid situation, but the business owners need to be coached to understand the iteration review as a risk mitigation and accountability technique and not a demonstration of the completed product.

Iteration Planning

Iteration planning really does assume you're using agile in a team funded scenario. It necessitates your costs are known and fixed for the budgetary cycle and that any estimates the team comes up with won't play havoc with your budget. Doing iteration planning in a fixed bid situation will almost certainly result in confusion, budget variances, and/or loss of functionality.

Burn Down Charts

Burn down charts show the progress of completing functionality in a given iteration. They are a measure of team performance over time. They do not illustrate how close the project is to completion. If we were to sum all of them up.....they might show this, but given that they are usually used strictly for the development effort of a project; this won't always be the case.

In fixed bid scenarios the question is not usually one of how much functionality the team is doing per time period. It really doesn't matter. They need to get all the functionality done within the time frame that the money allows.

So using burn down charts and iterations in a fixed bid project sends the wrong signal to the team and your customers.


Firstly I would suggest that trying to adopt agile in a fixed bid scenario/project funded situation is not recommended. Instead, as a manager, you should make the assessment of whether the company can support an agile practice/fully staffed development team through time. If the company can; then you should use works well. If the company can't....then you'd be wise to stick with traditional project management practices.

If you determine that your company has the resources and the workload to support a software development effort but isn't using agile then it comes down to convincing the leadership that agile makes sense for this effort. Put on your change management and sales'll need them.

Secondly, project manager and Scrummaster are not static roles and titles. In one company a PM/SM may have budgetary responsibilities. In another they may not. In some they may have direct reports in a traditional organizational structure. In another the structure may be more matrixed and the PM/SM might have no direct reports. I mention these differences because agile articles, like all writing, is written from the viewpoint of the author. Too often what worked in one situation is attributed to being a superior process or technique.......when in actuality the organization and roles fit the process and technique. Change the roles and organization and it might not work as well. Context is often missing in the agile vs. waterfall blogosphere.

Lastly, the agile debate is often likened to a philosophical war. But from my experience and vantage the confusion is largely an outgrowth of misunderstanding. Too often a technical manager hasn't thought through the business implications of adopting agile. Likewise business folks frequently misunderstand agile as being ‘some development thing' with no relevance to how they just funded the effort. I've been fortunate in my career to walk across the bridge of misunderstanding and see both sides. Doing this has given me insight into the background budgetary assumptions that so frequently go unrecognized as the cause for agile adoption failure.

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