Topic: rfp

Agile Development Improves ROI – But RFP Processes are Stuck in Waterfall.

Paul Dittmann, Monday, June 15, 2009 @ 9:17 am

Agile development, when done right, results in better software at a lower cost. More and more companies are coming to this conclusion, but most are struggling with how to adjust their RFP and Governance processes to adapt.

The typical RFP process for custom software development is looking for a fixed bid, thinking this will provide budget protection and guarantee ROI. History clearly shows this is not true. Issuers expect to come within 10-20% of budget. Studies show that custom software costs can range from 50% under budget to 300% over budget. Why?

• Requirements are usually inadequate (though there is a very wide range if inadequacies.)
• The requirements produced generally have little to do with usability.
• Things change – requirements change, technology changes, the competition changes, etc.
• Too many features are built that aren’t used – studies show that 45% of features build under waterfall are never used.

Because all vendors know the above, they all take different approaches to responding to RFPs. Some try to provide a relatively accurate estimate by using historical patterns. This can be fairly accurate if they’re building an application they have done many times before using the same technologies.

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Software Development