# Analyzing the Project ROI in Scrum Methodology

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Introduction

Today, most of the companies that follow an Agile approach for project management adopt Scrum as the framework. So, these organizations are looking for financial facts that justify its adoption by them. In this article, I will discuss the evaluation of ROI of utilizing Scrum and suggest some tips about the mistakes that must be avoided and on how to derive meaningful results from this activity.

Several strategies have been named as the best management of the process of software development. While every developer has his own way of coding and every manager has his own way of administering things, the goal of a software company is to find the most effective process for maximizing profits.

The Evaluation of ROI of Scrum

In any industry, the primary concern is the rate of ROI(Return on Investment). This represents the advantages obtained from investment vs the costs that were expended. For each and every decision they take, the managers must consider ROI and collaborate with the customer to make sure that everyone agrees upon choices that maximize the return on investment. Any backlog item must add value to the project. For a team, the implementation of a new process involves a lot of money, the benefits are much more difficult to calculate.

The main purpose of Scrum is to enhance the ROI of entire project. To opt for an approach that is ideal for the project, you must come up with a method to compare the different approaches effectively and to establish an approach that will gain a better ROI. Nevertheless, while comparing the development methods, an issue arises. To evaluate each method, various studies utilized estimation and pseudo-science. Their conclusions depend on how the organizations feel that the method is working out for them or how the methods fit into Agile principles. In one study, the project managers were asked to share their experiences and compare them with the famous processes and a final conclusion depended on the most famous choice. Actually, this is bad science. While in other studies, in order to estimate the perceived benefits and costs of these methods, metrics have been developed. For instance, one study calculated the benefits and costs by the lines of code that were generated. Nevertheless, there is no guarantee that the lines of code that were greater in number enhanced the efficiency of the team, and the same exact method may not work well for your organization or your project. The field of the evaluation of software development process should be advanced in a more studious and empirical manner.

While a methodology may work for one organization, one size will not fit all. You must begin your development process by evaluating various methods and estimating the profits for your own business. In comparing methods, the first step is to put a scenario in place where two or more processes can be evaluated via the same guidelines. You can achieve this in 2 ways. The first one requires comparing two projects that are similar in cost, scope and size, then developing each project utilizing a different process. As two projects are never the same, this approach does not guarantee success. Also, it can be difficult to transition a team to an Agile methodology from a traditional methodology. Taking a big project and breaking down each process into large, medium and small piece is a better option. This enables you to compare the processes together. At first, you must execute the testing processes against traditional methodologies and after that, transition the team into Scrum methodology by executing the same processes in an agile way. With this approach, the risks will be reduced to a greater extent by the transitory approach and by the number of pieces although it has few of the similar pitfalls as two projects approach. As your team must get used to Scrum process, the “piece approach” could take several iterations.

We must measure hard values that can be utilized to calculate ROI after the test scenario is set up. The time needed for establishing a stable build is one such measurement. While this definition may not be different per project or company, a good measurement of a stable build is the one that consists of zero critical bugs. We can have a hard value of which method involves less cost by taking this measurement and calculating the utilized man-hours. The other method is the number of critical bugs that are found as they need considerable resources to correct. In both methods, by correcting the bugs, you can measure the resources that are utilized in those methods, and can compare the expense of both methods. You can compare any savings to the amount of money that is invested by measuring these values, thus calculating your return on investment.

It is very important to note that other Agile methods and Scrum have benefits that are very hard to measure empirically. While the Agile methods are executed as they enhance flexibility, how we can measure a method’s consequential flexibility concretely? One option is to measure the time it takes to incorporate our test scenarios by analyzing how they deal with added features. Scrum boasts a collaborative process that enhances the interaction between your employees. You can see how many mistakes are made by tracking the errors in communication via emails or other modes. The involvement of customer is another principle of Agile. The goal of this principle is to enhance customer satisfaction. After the projects are delivered, we could conduct a survey and gather the opinion of customers to know which process was better. Moreover, few employees could work better under distinct processes and their opinions must be considered. Nevertheless, these benefits are very difficult to measure empirically and so, they are not added easily into the ROI.

Conclusion

In order to speculate or estimate the ROI of Scrum, there are many proposed ways. For the project of your organization, Studies may suggest methods depending on scope or size, but these proposals will never be as great as measuring your own results by testing the process in your environment. Scrum and other Agile processes have great intentions and values, stressing the business value and providing a better product. This doesn’t mean that they are the ideal practices for your project or your organization. Moreover, you must consider that while learning a new methodology, the initial attempt of a team may not represent the best possible work that can be produced with that particular methodology. Therefore, it is important to find a method that fits you and your team perfectly.

### Savaram Ravindra

Blog Author

Savaram Ravindra was born and raised in Hyderabad, popularly known as the ‘City of Pearls’. He is presently working as a Content Contributor at Mindmajix.com. His previous professional experience includes Programmer Analyst at Cognizant Technology Solutions. He holds a Masters degree in Nanotechnology from VIT University. He can be contacted at savaramravindra4@gmail.com.