A global technology vendor increases productivity by a third and reduces time-to-market by 30 percent.
This global high-tech software provider asked McKinsey to help its development group improve product development processes, which were characterized by long development cycles and inconsistent practices.
Specifically, the client wanted McKinsey to help the development team realize the benefits of using appropriate and measurable metrics in software development (such as time to market and quality), and adopt lean/agile software-development best practices that contribute to improving those benchmarks.
The McKinsey team focused on two critical tasks:
- Performing a diagnostic to identify ways to measure productivity of software development
- Collaborating with the client team to design replicable lean processes that could be analyzed and quantified using those productivity measures.
The key discovery was that within the software group, the use of metrics in a development environment was not standard practice at the time. The solution required the incorporation of traditional business benchmarking frameworks as well as tools used in creative disciplines such as media or product development.
To institutionalize this lean approach, the McKinsey team helped build both a temporary project management office (PMO) to spearhead development of both the metrics and new processes, and a standing center of excellence (COE) devoted to sharing lean-development best practices and agile development approaches throughout the company.
After adopting the lean practices, the client’s software development team showed significant improvement in a number of key performance metrics including:
- A 20–35 percent improvement in productivity as measured by case points per week
- A 30 percent reduction in time to market with new products
- A 10–15 percent reduction in the defect rate as compared to the previous 6 months
In addition, these improvements in productivity and quality allowed the software team to develop new products and update releases faster, thus providing current customers with a more predictable stream of new functionality.