Becoming world class at developing software is a more strategic imperative for companies across industries than ever before. While we have seen developer teams in many organizations around the world building amazing customer-facing and internal line-of-business applications for years, over the last year, we’ve seen massive shifts in the way many organizations connect with customers and employees. Businesses and organizations of all sizes are adopting solutions to enable remote work and are creating brand-new, cloud-based applications with an increasing focus on staying secure. Today, there is an even greater urgency for companies to invest in software development to adapt and thrive in 2021 and beyond.
COVID-19 drove significant durable demand and business model disruptions across industries. Banking and retail were two particularly impacted industries. While our earlier research highlighted the importance of Developer Velocity, post COVID-19, there is even more urgency for companies to invest in software development in the right way to adapt and thrive today and in the future.
In late 2020, we conducted new industry-focused research to understand the journey that leading companies in banking and retail take to become world class organizations. Deeply understanding the unique experience of our customers, and learning valuable lessons on how they are reinventing the value they drive through software excellence, is a fundamental part of our continued effort to recognize how organizations can accelerate business performance.
Specifically in this phase, we partnered with five leading companies who are building solutions with the Microsoft Cloud and we studied in depth how these companies built top-performing software organizations: ABN AMRO, Albertsons, Capital One, a leading global Quick Service Restaurant (QSR) chain, and a large global US-based bank. In addition, we interviewed a few additional leading retailers with global footprints. Each of these companies made it a core focus to build world-class software and drive a culture that attracts technical talent.
We focused on these large companies’ software transformation journeys, investment priorities, drivers of Developer Velocity, approaches to change management, and—crucially—the resulting impact on business performance. For example, in banking, one of our customers invested in standardized tools, engineering practices, and reinventing the team operating model—and has seen significant dividends. After the changes, productivity increased by 33 percent, testing time has declined by 95 percent, and 45 percent of workloads are now cloud-based, with Microsoft Azure as the primary cloud vendor. For retail, one of our customers transformed software development to meet rapidly growing demand for online orders, with e-commerce as the clear growth driver for its business. As a result, it recently achieved its third straight quarter of more than 200 percent sales growth—up 225 percent in September 2020. The company’s developers are also proud of their work: launch time for new customer features has reduced by more than 85 percent, and testing time by more than 50 percent, while maintaining quality. About 70 percent of their customer-facing e-commerce stack is in the public cloud, compared to zero percent just three years ago.
Key lessons from digital leaders
Before gathering data on the companies that participated in this study, we completed Developer Velocity Assessments and calculated Developer Velocity Index (DVI) scores for each company overall and for its business units. Within each of these companies we interviewed over 20 senior technology leaders, product managers, software architects, and developers across a range of product areas. This focus allows us to present insights for organizations that have committed to technology transformation with specific details on best practices. While each company is unique, the research is meant to both distill the lessons from these companies’ experiences and to identify patterns that lead to success. Many of the learnings across the following themes can be universally applied across industries.
Technology
Key learnings in the technology category highlight critical considerations for multi-year successful public cloud adoption. The most relevant is the importance of the partnership across business and technology to enable and empower development teams to identify the optimum cloud adoption path. We also learned there is critical value in including data architecture as an inseparable part of driving application modernization efforts, and of course, security is a critical area of focus, with strong potential in the power of the cloud as a key enabler of improved security. Security has also not received the attention it warrants. Companies with top DVI scores are responding with investments in DevSecOps practices, which build security considerations into every part of development. Lastly, a common theme emerged for tooling, namely that it is important to consider a balance between a standardized software development toolchain for key areas (CI/CD pipeline, planning, and code management tools) while leaving flexibility of choice in other areas for individual developer teams.
Working practices
The most successful organizations understand that transforming into software companies cannot be achieved solely through the introduction of new technologies—it requires a deep focus on supporting the people who will catalyze change and create the new value they seek. We learned about the importance of adopting a software architecture that helps agile tech transformations to succeed. Surprisingly and similar to what we learned on the first phase of our research, we also learned that open source adoption is a differentiator between the top performing businesses compared to the rest. Significantly, what matters is not just open source usage but contributions, particularly in attracting and retaining top talent and increasing speed of innovation. Finally, while adoption of inner source practices is early across the board, it is a top priority for companies that are looking to achieve a top-quartile DVI.
Organizational enablement
The final set of lessons include important considerations on culture and organizational change to create the right environment for productivity and psychological safety, as well as increased value in companies outside of the software industry, also becoming as recognized brands to attract and retain technical talent. Unsurprisingly, world-class talent differentiates the top performers from the rest. Companies across industries compete with leading tech companies for the best talent through culture and emphasizing their unique value proposition (i.e. the ability to work on products that impact the lives of millions of people every day). Another surprising finding similar to the learnings from our first phase of research is the critical importance of a product management (PM) role within organizations. Product management and adoption of a product and platform-centric operating model is the next frontier for many organizations. Some of the common challenges for many organizations include balancing product management skills across business domain knowledge, experience in design and technical skills, lack of a well-defined operating model across business and technology and lack of a strong Technical Product Management (TPM) function. Finally, empowering developer teams to continue to work remotely is a critical driver of organizational enablement.
Developer Velocity: Lessons from digital leaders accelerating business performance through software excellence
The report uncovers eight valuable key lessons, deep dive learnings in banking and retail, and four case studies (two in each respective industry).
This research has significant implications for technology leaders wishing to help their organizations tap into the full power and creativity of developers, in order to drive transformative business performance and accelerate the journey to software excellence and digital transformation.
Download the whitepaper and learn more
Increase Developer Velocity in your organization
Since introducing the Microsoft Developer Velocity Assessment tool in May 2020, Microsoft has helped hundreds of companies of all sizes discover where their organization is on the Developer Velocity maturity scale, benchmark their Developer Velocity Index (DVI) scores relative to industry peers, as well as understand actionable guidance for how to drive better business outcomes for their organization.
Now we are excited to release a new update to the Developer Velocity Assessment tool based on learnings from our recent industry research. This release includes a simplified questionnaire with additions covering remote work and application modernization, new reporting sharing capabilities and charts, an anonymous login experience, and seamless integration with curated partner offers.
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