Case Study

Improving Performance of Software Developers for "XYZ.com"

The company was in need of creating additional space to accommodate their growing workforce of software developers and associated knowledge workers.  The company felt that a change in workplace strategy, away from its historical strategy – “we build generic floor plans and they will come” – could have a significant positive impact on the performance of those knowledge workers; however, there was a lack of analytic data to support that intuition.  PdK Consulting was brought in to work with the company and the design team to develop new space that would support management’s objectives, as summarized below:

1.       Senior Management Directions

During interviews with various members of the senior management team, the following directions regarding the new environment were given:

• Enable space flexibility to facilitate quick reaction to the rapidly changing business climate
• Remove physical/design obstacles to productivity by “pushing” people into working collaboratively, and avoid physical settings that could drive staff apart
• Insure adaptability of the environment to allow for the co-location of various team members during a portion of, or for the duration of, a project – with team size varying from 8 to 200 members
• Provide every opportunity for informal communication
• Stay close to the median of industry benchmarks, particularly density (area per person)
• Reduce annual churn rate from well over 100%
• Stimulate adolescent energy and discourage adolescent selfishness
• Favor “evolutionary” over “radical” change

2.       Solution: “Team Molecule”

PdK Consulting and the Design Team proposed a solution based on a series of interconnected “team molecules”.  A team molecule is a flexible and adaptable team area, owned by a development team which tailors the area to meet its particular needs, and that is adaptable enough to convert practically overnight for a new team to move if and when needed.  The following outline explains the solution strategy, which clearly responds to senior management direction:

• A single design is appropriate for all development teams for all stages of projects life cycles:

•   Scoping and Planning

• Designing

• Constructing

• Testing

• Packaging

•  Releasing and Shipping

• Post-ship customer support

• A single design is appropriate for all teams developing all types of products:
  • Incubating
  • Emerging
  • Established
  • Maintenance
• Development Teams generally include 8 to 12 “permanent” core members augmented from time-to-time by 8 to 12 “part-time” support members who may come from marketing, strategy, documentation, testing, quality and training
• Each Product Group can be made of 2 to 6 development teams, forming a community of “teams of teams”
• All teams members perform different activities balancing individual and collaborative work best performed in different settings:
  • Working alone and thinking hard – high level of concentration
  • Working together and thinking hard – high level of acoustical/visual privacy
  • Working alone with low level of concentration
  • Working together with low level of concentration
• Team Molecule includes 4 types of space (which is “owned” by the team):
• Individual space which can be permanent space, loaned space (days) or drop-in space (hours)
• Team space which include team room, sandbox, testing room, labs, project room
• Team Support space which include coffee area, print, fax, supplies, storage areas
• Shared Support areas (shared between 5 to 6 teams) which include game room, test room, group meeting (16 to 24), assembly space (40 to 60), storage
• Density is decreased by 14%, which includes increasing individual workstations to 120 sf (more area per person)
• The proportion of “shared” spaces is nearly doubled to be 2/3^rd of the total area (yet density is still decreased)
• Deploy technology infrastructure maximizing versatility of use for both private and shared spaces (network, telecom, plug-and-play)
• Invest in change management and training to “tailor” users to the new environment

3.       Benefits

• As determined through the Balanced Scorecard and Decomposition Analysis, the new workplace accounts for 10% of the developers’ performance (the remaining 90% is accounted for by factors such as pay and incentives, manager’s directions, skill-to-task matching, technology, processes, opportunities for advancement, work-life balance)
• The new workplace component of developers’ performance, as measured by the Balanced Scorecard, increased by 15%
• The net benefit of the new workplace is therefore15% of 10%, or 1.5%
• The historical Valued Added Revenue for developers (defined by netting pass-through costs from total revenue) is $203,000 annually
• The net annual benefit per developer is 1.5% of $203,000 or $3,045
• There are 1,600 developers affected by the new workplace.
• The annual net benefit of the new workplace is therefore 1,600 times $3,045 or $4,872,000.

4.       Investment

As reference, the new workplace described above is more expensive to build and operate than the previous workplace:

•   Construction cost was 10% higher

• Flexible technology is 20% more expensive

•   Density is reduced by 14% (more area per person)

• There is $500,000 additional project cost from consulting, data gathering and analysis, and for change management/training expenses

• The resulting Total Occupancy Cost (TOC) per developer is $8,400, $400 (5%) higher than the previous $8,000 TOC

•   For the 1,600 developers, the annual incremental cost is $640,000

• With a 5 year amortization the total investment is 5 years times $640,000, plus $500,000, for a total investment of $3,700,000

5.       Payback 

The payback is just over 9 months. 

6.        ROI

The ROI is 131%  

(Assuming that the project expenses are amortized over 5-years and that there is no residual value at the end of the 5 years)

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The annual net benefit of the new workplace is therefore 1,600 times $3,045 or $4,872,000.

 

The resulting Total Occupancy Cost (TOC) per developer is $8,400, $400 (5%) higher than the previous $8,000 TOC

 

The payback is just over  9 months.

 

The ROI is 131%