By Jane Robarts and Mark Rickmeier - 24 September 2008Teams and organizations usually choose to distribute an Agile project across multiple locations for one of two reasons: cost savings or location of resources. In the latter case, organizations often have no choice but to distribute a project due to the location of delivery team members or subject matter experts, or the availability of office space. Cost savings, however, are another matter entirely. Many organizations are choosing to distribute projects overseas to development shops in Asia. Wooed by the reduced costs overseas development can offer through lower salaries and expenses, organizations often leap into distributed development expecting a margin equal to the difference in salaries of the employees.
Distributed delivery, especially captive offshore or outsourced overseas delivery, has additional costs often not considered. Identifying and quantifying these costs before deciding to distribute can be the difference between a well-budgeted and planned project and one that continuously leaks money and time.
On the surface, it may seem simple to forecast the extra costs associated with distributed delivery: budget a few trips to transition knowledge at the start and end of the project, ensure the teams all have phone lines to communicate, and recognize that people may have to adjust their schedules a bit due to time zone challenges. However, as one digs deeper, it becomes clear that there additional prices to be paid to successfully distribute a project.
Take, for example, the costs associated with travel to and from the distributed sites. An organization has undertaken a distributed project and is sending a subject matter expert (SME) to the offshore location to transfer knowledge early in the project. Flights to and from the site have been priced and accommodations budgeted. On the surface, all seems planned out. It turns out this employee needs a visa to travel. But first he needs a passport. So the organization digs into its pockets, pays for the passport and visa, and absorbs the cost of the SME having to spend two days queueing at the passport office and consulate. Now, the SME is ready to travel. Almost. There are the immunizations to be taken care of. Digging further into the organization’s pockets, immunizations are paid for and a further half day is taken off to visit the doctor.
Costs continue to mount once the SME realizes that he’ll need a computer while at the offshore site. His company-issued desktop can’t travel with him. Yet again, the pockets open up and a laptop is procured. A day of the SME’s time is spent configuring this computer for his needs.
Finally, our SME starts his voyage offshore. It’s a 36-hour trip overseas to the offshore facility. He’s travelling during the week, and the organization reaches a little further into its pockets as the SME is unavailable during this time to answer questions and productivity of the development team slows down. Despite the SME arriving at the offshore site a bit jetlagged, the visit is a huge success. Knowledge is transferred to the offshore team, rapport is built, and only once does the organization have to dig into its pockets unexpectedly when the SME realizes his cell phone won’t work overseas.
These small costs, while individually insignificant, accumulate to become a big expenditure for the organization, not only in terms of cash but also in terms of loss of the SME’s valuable time and the compounding impact this has across the team.
Beyond travel, there are other costs of distributed delivery. All projects plan a certain amount of contingency. Distributed projects need to plan for more. Events at one site can have a ripple effect on the other. A snowstorm at one site may mean half the team is out, creating a bottleneck to the other team. A power outage on the offshore side may mean developers onshore can’t get the latest code. These two independent events can have double the impact, requiring the organization to reach into its pockets to pay for the loss of productivity.
Employee loyalty is expensive. Distributed delivery, especially where it involves extreme time zone changes, can take a toll on an employee. This ‘flat world’ of software delivery still has activity regulated by daylight and normal operating hours. Distributed delivery teams have to work outside of these normal hours to collaborate with their distanced team members. It’s not uncommon for distributed teams to be burdened with early morning and late evening phone calls, emails, or video conferences. People tire. Social lives suffer. And employee loyalty is challenged. Compensating for this with perks such as extra paid leave, in-office meals, and even late-night cab rides home all add to the cost of a distributed project.
Adding up all the factors for this distributed project, the organization’s pockets had better go deeper than simply the cost of resources and travel. The little items add up and often compound, and the embedded costs escalate. Planning for all of these costs prior to embarking on a distributed project will guarantee that the true cost advantages to distributing are realized.
All of this makes distributed Agile delivery sound like an expensive venture not worth pursuing. This isn't necessarily true: cost benefits can definitely be realized. There is a point where the investment becomes worthwhile. It's just important to understand and factor in all those hidden costs when budgeting for distributed delivery. This is particularly true with distributed Agile delivery which expects changing requirements, relies on a solid business understanding by the team, and expects designs to evolve.
At what point does the investment in distributed delivery make sense? There is no set rule, no formula that can be applied. Having the right economy of scale to justify the cost of distributed development is critical to reaping the benefits of lower salaries, 24-hour development cycles, and available resources. The simple rule is: don't be blinded by the lower burn rates offered by offshore development. Be prepared to do the homework and fully understand the hidden costs of distributed development:
- infrastructure and hardware, and more complex (and time-consuming) procurement rules for each
- travel costs, especially last-minute emergency trips
- cross pollination: transferring team members from each location to work for long periods with teams in other locations de-risks a project, but isn't done in zero time or for zero cost
- additional roles: duplication of roles in each location may be necessary to ensure the right individuals are available to answer questions, guide the team, etc.
- latency in communication: at best, work is delayed because somebody isn't instantly available; at worst, work proceeds and leads to a false positive that work is complete and requires rework to correct what was done
- additional contingency to reflect the exponential loss of capacity when key people are unavailable or where events in one location impact progress in another
- long distance calls, communication devices, video recorders, digital cameras, international mobile phone roaming, etc.
- personal strain of communicating (or not communiating) via lo-fi channels that leads to frustration, hostility and even withdrawal
- changes in personal schedules to account for timezones
- learning the rules and procedures - all countries have different visa requirements
Longer-running Agile projects composed of multiple releases typically see the cost savings to a greater extent than short-term ones. Many of the additional costs for distributed development are one-off or early-stage events in the life of a project. Hardware investments typically occur only once. If there is a stable distributed team, knowledge transfer visits and rotations may decrease over the lifetime of the project. As Agile practices mature for the distributed team and they find their pace and understand the business, communication needs between the locations may diminish. The longer an Agile team works together on a project, the better able it will absorb startup costs and more likely it is to become efficient in work patterns, yielding the expected benefits of distributing work.
Distributed Agile delivery in most cases is a worthwhile undertaking. The benefits may not be realized as early as you might anticipate, and the costs may be higher, so your pockets may have to be deeper than initially thought. However, careful and considered planning and budgeting early on will help predict if the project is worth the distributed investment.
About Jane Robarts: Jane has over 10 years of experience in custom development of enterprise applications as a developer, analyst, project manager, and coach. She has consulted on and managed projects in India, China, the UK, the US, Australia and Canada. Jane has spent most of the last several years coaching distributed teams and working directly on distributed Agile delivery projects both onshore and offshore. She has also developed and delivered many sessions on Agile delivery to a variety of audiences.
About Mark Rickmeier: Mark has 8 years' experience as a quality assurance tester, business analyst, iteration manager, Scrum master and project manager working on large scale enterprise applications. He has extensive distributed development experience working with project teams in Australia, India, China, Canada, the UK, and the US. His industry background includes equipment leasing, retail, insurance, healthcare and retail banking. He is currently a project manager specializing in Agile transformation and project governance with a focus on metrics and measurement.