Example Of The Use Of Agile Methods In Small, Medium And Micro Enterprises (Smes) To Remain Research Paper

COMPETITIVE IN A GLOBALIZED WORLD

A thesis submitted in partial fulfillment of the requirements for the
Major Program in the College of
Fall Term 2014
Thesis Chair:
ABSTRACT (246 words)
SMEs must remain competitive in a highly competitive global market. Adapting to change easily and quickly to new circumstances can make the difference between success and failure. The research reviewed the Agile Method, the development of the method and the components that build a resilient management system for SMEs. In order to react as quickly, efficiently and as knowledgably as possible; an Agile framework with Scrum and XP features is a useful strategy. A questionnaire was designed, developed with Likert Scale rankings and distributed within an SME. The participants consisted of managers and middle managers in a local SME. The weighted responses demonstrated that management level employees recognize the elements of Agile, Scrum and XP that are already applied in the company. The main obstacle was the conservative nature of staff and employees and a reluctance to change routines. On the other hand, teamwork was accepted and few employees worked independently on only one project from start to finish. Therefore, the teamwork component of Agile is already in place. A method for introducing change can include not labeling the change as an Agile, Scrum or XP component. Instead the change can be linked with producing a successful end to a project. Another finding led to the suggestion that short-terms goals like benchmarks be included into daily routines to ensure timely, high quality products. Overall, the questionnaire led to the conclusion that the management at the company are value-added personnel and well-suited to successfully manage the business.
(Key words: Agile, Scrum, XP, SME, change management, value-added)

SME refers to small, medium and micro enterprises

SMEs may be as small as a family business, but the company must still compete globally
Study Objective
Significance of the Problem
SMEs that cannot adapt to changing circumstances will fail
Very little research is available on SMEs and agile because the published research focuses on large companies
Agility is the ability of members of a company to adapt quickly and accept change easily whether the change is unexpected or expected
Agile was originally developed to develop higher quality software products; breaking out of formerly rigid project management guidelines is the main characteristic of agile today.

Enterprise Agility

Six design management elements are: investigative, purpose, assignment, organization, communication and files
Five steps are: imagining new product, imagination evaluation with feedback, concept creation of the new project, Design and then filtering or sieving the designed plan. And then, final revisions take place so the prototype can be finished.

Risk Management

Risk must be defined by first identifying who is making the risk and then understanding the risk from their perspective
Agile Basics - Primary guidelines are to respond to change, collaborate with the customer, and to put individuals and interactions above processes and tools
Scrum - Use of iteration and incremental process steps to develop a high quality product & three main concepts: adaption, visibility, and inspection
XP Programming – Designed to accept and use change as an asset, simplest design for quality product is the one to chose

Methodology mixed method qualitative & quantitative; questionnaire with analysis of the responses

Result – the main challenge according to participants are employees who want to continue to use traditional / conservative procedures
DEDICATION
ACKNOWLEDGMENTS
Key Words
Adaptive case management
Agile Manifesto
Agile methods
Agile software development
Agile stepwise
Architectural Runway
Business process management
Burning platform and vision
Change
Cloud
Collaborative risk
Collaboration Culture
Competence Culture
Consensus Culture
Continuous Integration
Crisis
Control Culture
Creativity
Critical path
Digital Ecosystem
Disaster Management
Dynamic Systems Development
Enterprise Agility

Enterprise Architecture

Extreme Programming (XP)
Factors of Change
Feature –Driven Development
Five Points of View
Gantt chart
Gartner’s Hype Cycle
Human Factor
Internet Technology
Internet and Communications Technology
Lean Agile
Likert Scale Peak of Inflated Expectations
Prince 2
Product Agile design
Program Development
Program Level
PMBOK
Product Management Office
Production Case Management
Project learning
Quality Improvement Paradigm
Rapid time to Market
Release Management Team
Risk process
Scaling agility
Scrum and XP
Sigma Six
Slope of Enlightenment
Small medium and micro-enterprises
Scrum
SCRUM Master / Progress Manager
Spring backlog
Stakeholders
Stability
Supply chain management
System Team
Technical debt
The Big Picture
Trough of Disillusionment
Waterfall enterprise
Acronyms
ACM Adaptive Case Management
(Agile) RRS Agile Reconfigurable-Reusable- Scalable (RRS) Development

AWU Annual Work Unit

CEO Chief Executive Officer
CIO Chief Information Officer
COST cost efficiency
CUST customer effectiveness
DM Design management

DSDM Dynamic Systems Development Method

EC European Commission
FFD Feature-Driven Development
FSCA Firm supply chain agility
IEEE Institute of Electrical and Electronics Engineering
IT Information Technology
PAD Project Agile Design
PADM product agile design management
PCM Production Case Management
PMO Product Management Office
RUP Rational Unified Process
SMEs Small, medium and Micro Enterprises
TDD Test-Driven Development
UML Unified Modelling Language
XP eXtreme programming
CHAPTER ONE: INTRODUCTION
Background
Agile solutions for Information Technology (IT) systems were first applied to software development. Agile software architecture and design principles were designed to develop secure software in short periods of time. Agile solutions are also applied to the combined enterprise of IT and the business portion of a company. The business enterprises that address change for IT and business at the same time are called agile enterprises. Addressing the two company parts at the same time works well when the managers and team are not afraid of change. Agility is the ability to adjust to change quickly and easily. Adaptability is not linked to time but only to the capability of changing appropriately to new circumstances. An agile enterprise is flexible but flexibility, like adaptability, is only one feature of an agile method. Flexibility is the ability to handle change in order to meet new challenges and events. Agility takes into account time, adaptability and flexibility. Agility has the “capability to quickly sense and respond to environmental perturbations” (James 2014).
On the other hand, the question is asked by Gligor, Esmark, and Holcomb (2015) recently is whether or not agile can work just as well in stable environments. The purpose of the study was to learn when performance outcomes show the need for agile. The study recognizes the assumed attributes of lean when compared to agile and determines if agile is more like lean than appreciated in the past. The traditional assumption is that agility is linked with “the effectiveness of supply chain management” and lean is linked with “cost efficiency” (Gligor et al., 2015 71). Effectiveness at the supply chain level by agility is always directly linked to customer effectiveness” in the research done in the past (p. 71). Gligor (et al. 71) devised a research project to accurately describe the relationship of agile with cost efficiency, because of little empirical study on the subject. A cornerstone of lean is “the elimination of waste” (71). Another purpose of the research was to better understand basic relationship between agile and lean. The research method used several different business environments to look at the relationships by evaluating supply chain agility, cost efficiency and customer effectiveness (72).
Agile Manifesto
Agile methods were developed in the 1990s and in 2001 a group organized and presented the Agile Manifesto. The entire manifesto is discussed below, but in general the manifesto makes clear a break from traditional strategies. The values that are important in the modern agile methodology include placing more importance on interactions between individuals and on individuals, not on tools and processes. The agile manifesto also calls for developing software that works well instead of spending days and weeks writing comprehensive manuals that document how the software works. Contracts are necessary in business enterprises, but in the software and product development part of a business transaction the collaboration with a customer is more important than negotiating a good contract. Finally, instead of following a rigid plan made at the beginning of a project, the agile method responds to change.

Emergency Response

Agility is particularly suited to emergency response and the example is useful for understanding the adaptability and flexibility of the method. The goal of a European Commission project called BRIDGE is tasked with developing a platform to “provide technical support for multi-agency collaboration in large-scale emergency relief efforts. The key to this is to ensure interoperability, harmonization and cooperation among stakeholders on the technical and organizational level” (EC 132). In true agile fashion the association organized to solve the problem is made-up of individuals from many areas of expertise. Academics from many disciplines, technology developers, experts on the domain, and the representatives of end-users, in particular, the end users are highly involved throughout the development process (EC 132). The project uses agile software development, participatory design and iterative user-centered to incorporate and validate the user and domain requirements (EC 132).

SMEs

A successful agile enterprise responds capably to business as usual and responds well to unexpected events (Highsmith 2014). The purpose of agile methods in enterprises is to build companies that remain competitive in a global world market. Agile enterprises are most often applied to large companies and the analysis of huge agile projects is available the literature (Ilincuta and Jergeas 2003). Slowly, more research is being applied to Small and Medium Enterprises (SME). SMEs are trying to survive against large international corporations and the same changing business environment.

Agile-eXtreme Programming

Several types of agile methods have been developed, but this paper focuses on Scum and eXtreme Programming (XP). XP is based more on engineering concepts such as iterations, unit tests and acceptance tests, and the two agile methodologies complement each other (Highsmith 762). The rigidness of engineering is not part of the agile concept though. The human element of learning and communication are an important part of agile methods. The paper describes the problem for SMEs and offers a thorough literature review. The literature review describes the theory behind agile methods and Scrum and XP agile methods. Published research is described for concepts that are related to SME and projects that have been done in SMEs. Challenges arise when working to transition from traditional methods to Agile methods are discussed from the research available.

Non-IT Development Projects

Stare (2014) carried out a study of agile project management for product development projects, and the design of the questionnaire used for his research was helpful. Stare (2014) decided to carry out a study on projects like “engineering, research and development, and organization of events’ instead of on IT projects (Stare 295). Stare assumed two general possibilities for use or non-use of agile for non-IT projects. Firstly, many reasons are assumed for not applying agile to non-IT projects including the following.

Too many changes are too expensive

The ability to market or make use of the product development in the short-term steps may not be large enough
Employees who are working on more than one project at the same time cannot give the focus needed to an agile project.

Concurrent Agile Strategies

On the other hand, some agile strategies may be carried out with the parameters of traditionally run projects (295). Traditional is defined as “solution and requirements are clearly defined, large changes in scope are not expected, (the) projects are routine and repeatable, using a proven template” (297). Traditional project management is almost exactly the opposite of agile management. The traditional (or conventional) manager will assume the strict regulation of procedures is the best way to deal with change. Order must be maintained for good business, and the only way to do that is through a carefully adhered to hierarchal system. Decisions should be made at the top and filtered to the bottom. In conventional management another assumption is that when tasks are assigned to the correct team members and the breakdown of tasks is good, then no problem will arise. And finally, traditional management will develop a very careful plan before the project starts and everything, including risk, will be handled throughout the project without changing the original plan.
In agile the one original plan of traditional management is replaced by the idea of many smaller plans based on how the research is going. Coupled with this idea is the ability to offer more software or product applications so functional parts can be offered throughout the project, and not having to wait until the project is finished. The capability to offer more applications or products is based on the way that iterations are an important part of every step of development with agile. Testing and improving each step using the iteration method also sets a solid base for the result of the project. The foundation of a product or software application is very well tested and by the end of the project, the reliability of the end-product is high.

Agile’s Dark Side

On the other side of agile development, Janes and Succi (2012) warn of a dark side (1). The reason is because the after all the hyper-excitement over any phenomena, eventually the excitement calms down. In this case, the calm has reached a “Trough of Disillusionment” (Janes and Succi 1). Agile software development could be stuck in the trough unless steps are taken to raise the agile style to “the Plateau of Productivity” (Janes and Succi 1). The phenomena are described by the Gartner’s Hype Cycle that has found five basic stages an innovation passes through before becoming productive. Step one is a trigger, a technological innovation that gains a great deal of attention. The second step is when the attention peak as at the “Peak of Inflated Expectations” and decrease into the trough of disillusionment (Janes and Succi 1). During the period of disillusionment the innovation is outside the attention sphere and falls out of fashion (1). But the stage of expectations does not necessarily mean the end of an innovation, because a certain amount of companies and individuals will retain enough interest to still experiment with the advantages and disadvantages. Learning how the innovation can best be put to work and where it does not work at all is taking place and the visibility starts to increase in “the Slope of Enlightenment” (2).If an innovation passes through all four stages, then the plateau of productivity is reached. That means the innovation is shared and accepted (2).

Turning Around the Dark Side

The trough of disillusionment can be passed through if the innovation is successfully applied to different applications. Applying agile management to SMEs is an idea that could be beneficial for small companies and give agile another task to enhance product development. Janes and Succi (10) developed a “Quality Improvement Paradigm” with two linked cycles. The larger cycle is called “organizational learning” (12). The first step is to characterize and understand the project. The second step fits with the first step, because the similarities of the project with past experiences can help understand the context of the new project (11). They suggest categorizing different aspects of the project like (a) the human factor, (b) process factors, (c) product factors like quality and what is deliverable, and (d) resource factors such as the funding and the computers needed (11). At this point goals can be set.
After the goals are set, realistic and practical “process models, methods, techniques and tools” can be chosen. At this point the second smaller cycle comes into play. The three steps in this cycle, called “project learning” include (a) Process execution, (b) analyze results, and (c) provide feedback into the process into (a) process execution. The step is similar to the iteration process. The process moves to the larger cycle and the fifth step of analyzing results after satisfaction is reached in the project learning cycle. Jane and Succi do not stop the process at this point because importance is placed on “packaging and storing” the process so the experience can be accessed in future projects (12). The authors pointed out that they have not designed the only model possible, but they have proven that the mystique and fame of agile development does not have to ruin its importance in software development and other projects. Janes and Souci recommend that agile development continue to be used. The Quality Improvement Paradigm is an example of how scientific method can be applied to agile (Janes and Souci 12).
Agile Manifesto
SMEs around the world are engaged in manufacturing and the relationship with agile and product development has not been well-studied. Agile management is a collection of practices that allow team members to adapt meeting the projects needs when necessary. An unforeseen problem like lack of resources or an unexpected risk can be solved by changing the project plan to accommodate the situation. Creativity is a critical component of agile management, because part of the reason for developing the agile style was to put people and ideas back into projects for IT development. The Agile Manifesto includes the idea that work should be fun and interesting. Also work should last forty hours a week, not around the clock until a project has finished. Agile management is a movement within management theory, and started to become very popular in 2000 or 2001. The strategy became so popular that the Agile Alliance was organized in 2001 (Ambily and Malliga 2011). The alliance focused around agile applications like Scrum and XP that had been developed during the 1990s. Agile is considered ‘lightweight’ and was developed in contrast to ‘heavyweight’ methods like the waterfall. Ambily and Malliga (2011) point out that historically, small projects were more successful than large project; agile development allowed large projects as well as small projects to gain success, too.

Waterfall and Prince2

The waterfall method and Prince2 are strictly process oriented to constantly push ahead. Prince2 is the same as Waterfall; methodology at each stage in the process is rigidly defined. (See fig. 1-1) Clutterbuck (et al. 2009) listed the reasons waterfall fell out of favour when compared to agile. Some of the criticisms came from stakeholders in a development process who were unhappy with the focus on process and governance that hindered flexibility. The end result using waterfall was productivity reduction (Clutterbuck et al. 2009). Many developers had the same complaints and agile became more popular. The main attractions to agile included the small sized design development teams, decreased number of development phases in the process and time tables allowed for shorter durations of the phases (Clutterbuck et al. 2009). Stakeholders recognized the capability of reaching the production phase more quickly with agile methods.
On the other hand, the agile methods encourage feedback and discussion so a change can be linked to other changes to make sure the fit is good, before moving on. For that reason, initiation and analysis overlap, and so do design and construction, and testing and deployment.
Figure 1-1 Waterfall process vs. agile stepwise (Seque Technologies 2014)

Hypothesis

The purpose of the research is to demonstrate the type of mindset and activities that support agile and lead to success. Some of the research points out the different between agile and conventional (traditional) problem solving methods. Original research is carried out by choosing a random number of SMEs and contacting them to learn if they use agile methods or not. If the answer to the question is ‘yes, we use agile methods’ the interview continues. If the answer is no, the researcher asks for the reasons. And even if the answer is ‘no’ the researcher asks to distribute the questionnaires. Agile methods might be used although they are not labelled as agile. A better understanding of the impact on agile methods on SMEs is the purpose of the research. The hypothesis is that ‘If change is welcomed or accepted by a company, the chances for agile methods to be adopted are good.’

Definition of the Problem

Small to medium enterprises (SMEs) are small businesses and factories that can be found everywhere in the world. The world is globally connected for business because of the great technological advances in communication, especially IT. Huge corporations are able to market their goods and services at the local level as well as nationally and internationally. The internet coupled with computers at home and at work allows consumers to send orders in a matter of seconds to any place in the world. The result is that SMEs are competing with huge, multi-national on the local level, in their cities, towns and communities. The problem is that the SMEs are like David and the corporations are like Goliath. The corporations have large resources that are not available to SMEs. The reasons stated above are exactly the types of motivation for SMEs to establish good management strategies to succeed. Although some SMEs hesitate to invest in Agile and Scrum strategies, the investment is worth the outcome.
An SME is a small to medium enterprise, in other words a business of small to medium size that offers consumer goods or services. In order to compete with bigger companies SMEs need IT systems set up. IT mangers make sure that employees networked with their computer to the appropriate co-workers and departments that will make their jobs easier and more efficient with the appropriate. The IT system in a company allows connection with customers, supply vendors and merchandize storage, and can track the goods or services during their transfer from the company to the customer. Agile is a good management strategy for setting up the system for training the employees, etc. XP and Scrum strategies will be part of the management system.
Agile methods are desirable because rapid changes can be handled. On the other hand, criticism of agile methods states that design and architectural issues do not gain enough attention (Kumar and Bhatia 2012).
Executives and managers of an SME may feel like they are constantly riding in a small tugboat in a stormy ocean. The chaotic, rapidly changing global competition status is difficult to navigate. Judging the uncertainties in order to make realistic decisions must be done for success. The research argues that a modern SME needs to be able to react as quickly, efficiently and knowledgably as possible; an Agile framework with Scrum and XP features is a useful strategy.

Objectives of the Study

Significance of the Problem
SMEs different problems than large companies and corporations, but agile methodologies are flexible and able to adapt present circumstances. Each SME is unique and SMEs and sometimes are only alike, because of their similar size. Agile methods can be used in business enterprises that are different from each other, because agile methods are designed to work best when “doing agile (practices) and being agile (values)” not the product or service offered by the company (Highsmith 749). The best development method is an engineering problem, but the topic is moving to the executive level according to Highsmith (762). The difficulties for accepting include the problem that CEOs are familiar with making linear decisions, because “investment decisions are linear: spend some money, receive some results, and decide on the next investment increment” (769).
On the other hand, in order to deliver the optimum operations, service, or product the process takes one step forward, and then a step back to make the product better. The one step forward and one step back is a simplistic description of the iterative method integral to agile method. Hightower notes that when operation and project teams start working iteratively and the governance of the company is working linearly, “disconnect” takes place and “friction” can grow (769). Small and medium enterprises are much smaller than corporations and sometimes, an SME is a family business. In order to learn how SMEs bridge the gap (or do not successfully bridge the gap) between governance (CEO) and project teams has not been well studied. The way that SMEs adapt agile methods to unique projects needs more research, because almost all the literature is on huge projects in big business.

Definitions

Adaptive case management (ACM) is a system developed because the process and the actions required to meet the needs of the process are changeable. Under certain business condition the processes and solutions needed, can be volatile. A pre-plan is not designed into the management system; the management must be adaptable, and therefore agile. “Knowledge workers . . . direct the course of the process (and) can . . . create new goals that have never been needed before” (Swenson 2014 212). Different ways of problem solving and meeting goals are allowed. The daily routine requires changing the process. Every participant, everyone involved in the process can make a change that is deemed necessary. Swenson (2014) replaces the word ‘processes’ with ‘planning.’ The culture of the business is that one way to do thing ‘right’ does not exist. If a process fails, an opportunity to make improvements is create, not failure.
Business process management is the strategy of making a plan and then expecting employees to keep to the plan regardless of their roles or the changes in the business environment (Swenson 2014)
Burning platform and vision refers to component of change management Conner (1992) teaches as the component of urgency a CIO must relay to the employees that the change to XP (or other management method) is essential if the company expects to be successful.

Product Management Office (PMO) is the department that oversees the standards of the enterprise or organization’s internal project management.

Production Case Management (PCM) is a type of case management that applies to a system with hundreds, thousands or more people engaged in similar tasks. The developer designs the system so that whatever the need the management system offers a solution. In this type of case, the developer must identify all the options and then find the solutions during the development process. PCM is the opposite of ACM.
Stakeholders are the individuals who are directly and indirectly affected by the management method chosen including processes such as change from a traditional management strategy to an agile strategy and process for the development of a product. Spayd (2003) lists examples including customers, managers, executives, testers, developers and analysts.