Mckinsey Findings Support Value of Agile - But More is Needed

MikeWe are always on the lookout for industry data to support or refute our views on Agile (see the Trusted Advisor report, "Data to Suggest That Agile Has Had A Positive Impact on Performance"). In this case, it was pleasing to see supportive data in a recent report from McKinsey, “How winning banks refocus their IT budgets for digital.”

One such finding revealed in the article is that “high-capability” banks tend to spend less on day-to-day IT operations; in fact, McKinsey found that, for application development, the capabilities most related to lower spending were:

  • Effective demand management
  • Centralized application-architecture governance
  • Use of Agile software development

The report states that, on average, banks with self-assessed high capabilities in these areas devote only 3.5 percent of the bank’s total expenses to application development, while banks with lower capabilities allocate as much as 8.2 percent of expenses to the area. What’s more, this difference in spending is not attributable to the elimination of discretionary projects. Mckinsey found that banks with high capabilities in areas related to application development, on average, manage to invest 62 percent of their application-development spending on customer-facing applications, compared with only 47 percent for banks with lower capabilities.

It’s an interesting report and I believe that these findings are applicable to other industries.  Of course, the three critical capabilities taken together amount to more than just Scrum.  Do you think that your organization can claim high capabilities in these areas?  What challenges do you see?

Mike Harris
DCG President

Written by Michael D. Harris at 05:00
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"It's frustrating that there are so many failed software projects when I know from personal experience that it's possible to do so much better - and we can help." 
- Mike Harris, DCG Owner

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