RIM and Market Value of an Iterative Software Development Life-Cycle (SDLC)

By · May 20, 2012 · Filed in Software Development for Executives
Is there a correlation between a companies worth and their SDLC process?

I recently read The Open Letter to RIM’s Management that discussed what  RIM should do to get back on its feet.

The letter had 8 key points, but my interest was point #2.  “Recruit Senior SW Leaders & enable decision-making”. Within that point the letter compared RIM against 3 competitors Apple, Google and Microsoft.  That point made me wonder if there was a correlation between the value of a company and the Software Development Process.  Specifically – are companies that are ‘more ‘Agile’ or ‘Iterative’ worth more money?

Theoretically, agile development should create a higher value company as is less wasteful, delivers value based on ROI and projects can be measured with meaningful metrics.   It therefore stands to reason that companies who have adopted an agile or a disciplined iterative SDLC style should be creating more value and therefore those companies should be worth more money.

What is the SDLC process of  Google, Apple, RIM and MSFT?

Below is the market cap of the four companies mentioned from July 26 2011
Market Cap                                           SDLC Process

  1. Google $196 Billion                          Agile / Iterative
  2. Apple   $363 Billion                           Agile / Iterative
  3. RIM      $12 Billion                               Ad-Hoc
  4. MSFT   $8.3 Billion                             Bureaucratic

I have taken some liberty with my assumptions on the SDLC processes from each company and gathered most of this information from searching google. So while I admit it’s not perfect one thing is very clear – companies that are closer aligned to  an Iterative Software Development Life-Cycle approach have a higher value.  I would also suggest they grow faster as well.

What do I suggest RIM do?

I suggest that RIM is Ad-hoc because of this comment in the letter – Teams still aren’t talking together properly, no one is making or can make critical decisions, all the while everyone is working crazy hours and still far behind”.

RIM is the farthest away from agile development and it really shows in the value of the company.  Perhaps the letter was right – perhaps if RIM was to get new leadership that adopts an iterative or agile development strategy like Apple and Google and embraced self directed teams and let the staff make a meaningful contribution with structured accountability the value of RIM would change.  If Google and Apple are any example it would be worth a try.

What do all software development organizations need to do?

This example shows one more thing – companies need to know how to turn software development effort into a value center for the company.   Executives need to know that the teams are focused on the right business priorities and the SDLC process supports those priorities.  I know this is a plug for our SDLC Assessment and Improvement Roadmap but our Assessment tool helps to make sure the development team is creating company value with subjective measurements.   The Assessment measures business priorities and maps those to meaningful SDLC practices needed to support those priorities.

Now I would like you to imagine what would happen if a Canadian Bank adopted the same SDLC as Google and measured its improvement with meaningful metrics.  What would that banks value be in 5 years?

Now imagine what it would be like to be the other 4 banks that did not adopt the process?

John Munro
Partner, Web Financial Solutions (WFS)

Web Financial Solutions provides expert Software Development Life Cycle process improvement.

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For more information about our services you can fill out our online contact form and someone will follow up with you shortly. You can also call John 416-505-4756

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