How do Scrum Masters generate profit?
How to measure the impact of their work?
How do they earn their pay?
Let’s start by pointing out what a Scrum Master is not!
Definitely not a project manager who we label as Scrum Master, declaring, “from now on, you are the Scrum Master!” Not even an administrator who we call Scrum Master so that he/she doesn’t feel neglected.
Then what and who is a Scrum Master actually?
The Scrum Master is the soul of the software development team. Not a technical person. The value of a Scrum Master’s work is manifested differently.
They remove organizational and operational obstacles around the team. They represent and teach the Agile methodology to as wide an audience as possible. Thereby they help to ensure that the developers can focus on the really valuable tasks without getting tired and burnt out.
Scrum Masters are also key experts of the Agile methodology. They constantly research and develop methodological best practices. They also implement these practices.
To make the above work, Scrum Masters can tell anyone anything at any time.
They have the authority that allows them to see processes in a way that no one else can. With this strength and methodological knowledge, they are able to increase the team’s effectiveness for a long time through small, well-defined experiments.
The price of an experienced Scrum Master is comparable to that of a senior software developer.
The remover of obstacles
When we say that Agile with the Scrum methodology does more with less, it is because it does not waste the available resources, i.e. the Scrum Team, on overcoming unnecessary obstacles.
We often don’t even realize how much organizational weight we are carrying: The elements, steps, methods, administrative tasks that have evolved over the years, once perhaps useful but now obsolete; the processes that are only seemingly laid down and can be overthrown at any time by management ego or the person in the position of greatest power or with the highest income (HiPPO syndrome).
The Scrum Master (from now on SM) is able to take all this out of the system.
The reason why, and the way they can do it, is that ideally they are tied to the highest ranking person in the hierarchy, if possible, the CEO. Thereby the SM will be far in the power structure from the actors who are the line managers of the Scrum Master’s immediate operational area. They cannot therefore directly influence the SM’s work. This is particularly important when the SM has to make changes that are inconvenient for the managers concerned.
The Scrum Master proves its usefulness by being the driving force behind the three to fourfold increase in efficiency that has been measured in Scrum Teams for more than 10-15 years, and by making the processes smoother. As an actor independent from organizational politics and power games, the SM can say anything to anyone at any time, and no one in the house knows the methodology better than the SM does.
For teams operating in the knowledge-based economy, the key to increased efficiency is not overtime or mind-altering drugs consumed to unleash creativity, but clearly the process, the system and the environment where these teams must exist.
The three- to fourfold acceleration in efficiency means that teams are increasingly able to deliver business value rather than the operational continuity (workload) that was typically measured in the past. This requires that the Scrum Master understands his/her job, understands the methodology, and is free to do what he/she needs to do according to the methodology specifications.
Workload versus business value
What does it mean in practice?
One team is definitely required.
At Nitrowise, the monthly price of an average ADT (Agile Delivery Team) is HUF 7.5 million, including a Scrum Master.
As an ordering party, for this money, I would like to get something that brings at least as much value. This is possible if, and only if, teams can work in a way that nothing prevents them from delivering business value.
Over the past 15 years, the initial (!) efficiency in business value measured for my clients was in the range of 8% to 12% depending on the total effort invested, while people were actually pushed to work at 110% performance.
There is a huge difference between people’s workload and business value creation!
The Scrum Master is able to use the transparency he/she creates, develops and manages to make visible what the 92% of investment that could also make profit is actually spent on.
Let’s stay with Nitrowise’s Agile Delivery Team for a moment. When someone buys a team from us, they don’t buy a group of resources that they can use for whatever they want. They also buy a Scrum Master.
In addition to running the software development team, this also means that the SM keeps the processes on track and moves the actors and stakeholders according to the methodology. A typical task is to get people to talk to each other in a way and about what they need to in order to develop the product. Then, with the facilitation of the SM, to translate what has been discussed into actionable, develop-able elements that can benefit the end users and the business.
Micro maths, macro numbers
New business value means we’ve done something that hadn’t been done before and we can now get money for it.
8-12% of the total effort is the energy that is manifested in new business value at a typical software development company. This means that we can ask for money from our customers for that much energy, because that’s how much progress we have made on the project.
In comparison, an experienced Scrum Master, given the right empowerment and protection as discussed earlier, can ramp this up to 26-35% in 4-6 months. This is a 300% increase in efficiency compared to the previous performance! 300% more tasks to be paid for. 300% revenue growth within a year for software development teams working effectively with the Agile methodology!
We still need a Product Owner
A well-tuned engine will not take you anywhere without fuel in sufficient quantity and quality.
This is where the role of a Product Owner becomes critical.
The PO and the SM are both necessary for an Agile Delivery Team to truly deliver the outstanding business value that the market has been waiting for. And rightly so.
If the SM moves the actors well across the system, the Product Owner, the team and the various stakeholders can produce, following the 5 levels of Agile planning, the amount of information and demand required to get the team to deliver the tasks with a 300% increase in efficiency compared to the previous level.
We need to be prepared to manage the increase in efficiency
With the transparency and the three times more efficient development, we will see the team deliver improvements with business value much faster than before. This can cause problems in the organization, because we were not prepared for early deliveries. This might result in downtime when the team doesn’t really have a meaningful task. A team that has had a taste of business value-driven, hyper-efficient operations cannot be pushed back to the previous state.
Two scenarios are possible: the organization gets a taste for the methodologically correct way of doing things, launches a complete organizational transformation to adapt to the accelerated delivery of development, and finds a way to gain a massive market advantage by continuously expanding organizational channels where possible.
The other possibility is that they are frightened by the expected transition tasks and attribute the previous results to a fortunate coincidence that they do not want to repeat in the future.
Someone who only sees costs and wants to avoid spending on a Scrum Master by saying they only need software developers is actually buying only 8-12% of the resources. Compared to this, a senior Scrum Master costs virtually pennies. After all, with the help of an SM, with a team for a price of HUF 7.5 million, you can achieve the marketable operating result that the competition can generate only for HUF 22-24 million. This HUF 15 million difference means a 9-17 times return on a single person!