Developer Velocity
Developer Velocity
Contents
Executive summary 3
Resources 41
Developer Velocity Phase II Report 3
Executive summary
Specifically in this phase, we studied five In retail, we found Albertsons and a global
leading companies in depth:⁴ ABN AMRO, Quick Service Restaurant (QSR) faced a
Capital One, Albertsons, a leading global different set of challenges and have taken
Quick Service Restaurant (QSR) chain, and slightly different approaches to building
a large global US-based bank. In addition, software capabilities. However, some
we interviewed a few additional leading common themes emerged including:
retailers with global footprints. Each of these organizing around autonomous teams that
companies have made it a core focus to build can own a product end-to-end (checkout,
world-class software and build a culture that POS, etc.), and an aggressive push to cloud
attracts technical talent. In this whitepaper, for business applications—often prioritizing
we detail the steps they have taken and customer-facing workloads (e.g., the
the Developer Velocity drivers they have e-commerce stack) and the core backend
deployed. While these insights contain several systems (e.g., merchandising). For both
learnings for other retail and banking leaders, retailers, the impact has been high, enabling
many learnings also apply across industries. them to increase digital revenue growth.
For example, e-commerce was a key growth
We observed common patterns that predict driver for achieving its third straight quarter
success in the three banks we profiled. of more than 200 percent sales growth, up
Included among them is a strong push on 225 percent in Q3 of FY 2020.
software and cloud that functions as a joint
partnership across business and technology.
Each company also took a phased and
multi-year approach to building software
capabilities. This starts with the foundations
of adopting Agile, rearchitecting the code
base to be loosely coupled, up-leveling talent,
and migrating to public or hybrid cloud.
While doing this, each of the banks took a
thoughtful approach to security and risk—
automating and embedding controls within
the pipeline versus driving manual processes.
⁴We included 3 banks in this research, but in this document we will only discuss two banking
case studies in-depth.
Developer Velocity: Lessons from Digital Leaders 5
In technology:
Product Management (PM) and Inner source adoption is early across the
adoption of a product and platform- board, but a top priority for companies
centric operating model is the next that are looking to achieve top-quartile
frontier for many organizations. Developer Velocity.
Common challenges include;
balancing PM skills across business This research has significant implications
domain knowledge, experience for technology leaders. In the early stages
design and technical skills, lack of a of transformation, leaders should look to
well-defined operating model across invest in foundations such as adoption
“business” and “technology,” and of Agile practices, integration of business
lack of a strong Technical Product and technology, cloud adoption, and re-
Management (TPM) function. organization into small autonomous teams. It
is critical for leaders to guide the organization
Finally, cloud adoption and modern through this early phase, constantly
tools differentiate companies that adopting the latest cloud technologies,
have parity between in-person and rearchitecting into microservices, driving
remote developer productivity. organizational agility, adopting open source,
and continuously integrating and deploying
(CI/CD) processes. The most successful
organizations are taking this continuous
improvement journey further by adopting
DevSecOps and building true product
management and design capabilities.
Developer Velocity Phase II Report 7
In late 2020, we launched phase two of the 2. Developer Velocity drivers deployed
developer research focused on a select set Which capabilities have been most
of digital leaders to better understand how impactful in driving performance of
they have accelerated Developer Velocity. software development teams to achieve
This work investigates what has and has not business outcomes. In these areas, how did
worked well, and the impact on business they drive adoption and scale changes. We
performance. These companies have made asked what key learnings other software
significant investments in software over leaders could take away from their
the past several years. Within each of these experience, and what two to three areas
companies we interviewed senior technology they are looking to focus on next.
leaders, product managers, software
3. Impact of investments
architects, and developers across a range
The quantified impact of investments the
of product areas. This focus allows us to
companies made in Developer Velocity
present insights for organizations that have
drivers on business performance.
committed to technology transformation
with specific details best practices.
While each company is unique, the research
We focused our investigation in three areas: is meant both to distill the lessons from
these companies’ experiences and to identify
1. Overall software journey patterns that lead to success. Additionally, in
How the company has invested in this second phase of research we also added
software development capabilities and a set of new drivers focused on remote work
top business priorities. to address changes with COVID-19 and
application modernization.
Exhibit 1
ABN AMRO
Reinventing team
operating models
2016–2017
ABN AMRO wanted the core unit of Further, a core ABN AMRO value is that
development to be a single Agile team, any third party it works with is considered
with each team accountable for a product a partner, not a contractor. Partners were
end-to-end. Technical leaders thus created included in broader decisions (such as
standardized teams of 8 to 10 people, each technical roadmaps) and internal trainings.
with developers who specialized in specific Some ABN AMRO employees even relocated
areas such as tooling, security, and testing. to offshore development facilities to form
Teams often included an embedded closer bonds with partner teams. Their efforts
business product owner who guided were so successful that many partner teams
planning and ensured sprint cycles aligned hung pictures of Amsterdam on their walls and
with business priorities. adopted ABN AMRO’s values as their own.
Impact
95%
teams use Agile methodology, testing time
has declined by 95 percent, and 45 percent of
workloads are cloud-based, with Microsoft Azure
as primary cloud vendor. Less testing time
Developer Velocity: Lessons from Digital Leaders 16
Capital One
Impact
⁷Doing business the digital way: How Capital One fundamentally disrupted the financial services industry
(Capgemini Consulting, 2017)
Developer Velocity Phase II Report 21
Deep dive on
learnings in retail
For retailers, software has increasingly brands or retailers through the pandemic and
become the basis for growth, e-commerce spending was up 30 percent from
including hyper-personalized the beginning of March through mid-April of
2020 as the appetite for digital and contactless
experiences and omnichannel
ways of shopping intensified.
adoption. These changes drive high-
priority digital use cases on both the However, driving a software transformation
front-end (which affects customer in retail is not without its unique challenges.
experiences) and the backend (which Large retailers handle millions of transactions
helps manage core retail systems such across diverse channels, and need to maintain
as merchandising and supply chain). consistency of experience and data across
these transactions and channels. Additionally,
The rewards for those who get this right can retailers that are driving growth across physical
be significant. For example, McKinsey research and digital channels can have a fragmented
suggests that effective personalization can technology landscape. For example, they
increase store revenues by 20 to 30 percent.⁸ may be using legacy on-prem technology
for point-of-sale and store management
In this context, our earlier research highlighted systems at their physical locations and cloud
the importance of Developer Velocity in applications for their e-commerce stores. It
retail. In the light of the COVID-19 crisis, may only take a few minutes to publish new
there is even more urgency for companies features to their mobile apps, yet updating
to invest in effective and impactful software physical store systems may take weeks.
development to adapt and thrive. COVID-19
drove significant durable changes for retail; Finally, many retailers own multiple brands
by some estimates,⁹ retailers have vaulted across multiple geographies, often as the
10 years ahead in consumer and business result of acquisitions. This can also produce a
digital penetration in less than three months. fragmented technology stack, with disparate
Forty-six percent of US consumers switched systems that do not communicate.
Many retailers recognize this challenge and For each of these digital leaders, we observed
are investing in the consolidation of their a methodical and phased approach to
technology stack data platforms, and are driving a multi-year software program. They
building loosely coupled services that are have invested in foundational capabilities
available as a platform for developers. with Agile, DevOps, and close integration
of business and technology. They have also
To understand the ways that successful made an ambitious push to public cloud
retailers are overcoming these constraints, starting with the customer facing experiences
and leveraging software to differentiate and the e-commerce stack, with an eye to
themselves, we deeply studied two leading driving speed.
Finally, many retailers own multiple The companies we studied have seen massive
brands across multiple geographies, impact from their investments in software.
often as the result of acquisitions. Their digital businesses have grown one to
This can also produce a fragmented three times in recent years, driving business
technology stack, with disparate success even during the COVID-19 pandemic.
systems that do not communicate.
Many retailers recognize this
challenge and are investing in the
consolidation of their technology
stack data platforms, and are building
loosely coupled services that are
available as a platform for developers.
Albertsons
Impact
85%
Impact of investments at Albertsons has been
high. E-commerce is a key growth driver for
the company, as it recently achieved its third
straight quarter of more than 200% sales
growth—up 225% in Q3 of FY 2020. Developers Launch time decreased
50%
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 the customer-facing e-commerce Less testing time
stack is in the public cloud, compared to zero
percent just three years ago.
Developer Velocity: Lessons from Digital Leaders 26
Global Quick
Service Restaurant
(QSR) chain
This retailer is a global, fast, casual As a starting point, the company decided a
restaurant chain with $10B+ revenues cloud-migration initiative supported with
in 2019. It has transformed its software executive commitment was the best way to
ensure a successful migration. Executives were
development organization over
given specific cloud-adoption initiatives and
the years via a strong focus in three
targets to incentivize migration. They also
areas: cloud migration, adoption of recognized that each department had its own
world class tools and engineering technical needs, maturity, and business case for
practices, and a focus on talent cloud migration. Each department was given
and culture. These key investments target timelines to migrate but empowered
helped it dramatically improve digital to choose the right strategy. For example, one
performance. In the last two years, team strategically migrated services according
digital orders have grown 100 percent. to the business case, optimizing for cost and
rapid scalability to meet growing demand.
In contrast, another team migrated more
opportunistically. Many strategies can lead to
Migration to a successful cloud migration, and the retailer
public cloud recognized that its orgs were best suited to
decide their own paths.
In 2017, the company drove an aggressive
push to public cloud. It adopted a three- Lastly, technical leaders created a cloud Center
pronged approach to making this transition of Excellence (CoE) to accelerate the migration.
successful; a joint partnership across business Their focus was on evangelizing the technical
and technology, ownership and autonomy to benefits of cloud migration, leading education
teams, and a cloud technical director leading a and training efforts on cloud technology,
cloud Center of Excellence (CoE). creating learning curricula for developing in the
cloud, and disseminating best practices. The
CoE ensured that every organization had access
to the expertise and coaching needed to make
the migration successful.
Developer Velocity: Lessons from Digital Leaders 28
Adoption of world
class tools and
engineering practices
across the entire
organization
On tools and engineering practices, the for its DevOps requires them to enforce strict
company focused in three areas: standardized quality and compliance controls to ensure
tools and processes for cross-functional high standards are met across all teams. The
collaboration while maintaining autonomy QSR requires all code to be released through
for teams, full-stack DevOps teams using standardized, automated CI/CD pipelines
standardized CI/CD pipelines, and security to enforce quality at each step. At code
embedded into day-to-day development. check-in, security and compliance checks run
automatically. Tests, including unit, functional,
As a foundational capability, the QSR drove integration, regression, and capacity tests,
high levels of consistency in tools and automatically run every night and during
processes, but empowered the teams to deployment. Finally, the production code
have the flexibility to select tools and ways is constantly monitored, and alerts sent
of working that are unique to the individual whenever issues are detected.
team. JIRA planning tools, Confluence
documentation, and GitHub repositories are Lastly, embedding security in the day-to-day
required for working across teams. Cross- development cycles is a priority for teams. All
training and standardized learning journeys developers are trained in secure-by-design
ensure that developers are well trained on all methodology and incorporate best practices
toolsets, enabling developers to move among into the code. They also enforce robust data
teams with minimal friction. classification systems, ensuring that data
receives differential treatment and privacy
Additionally, the company has made a depending on its sensitivity. A central security
significant push on adopting the DevOps team is also available to help developers refine
model. All teams are full-stack DevOps teams; their work, from providing risk assessments to
responsibility for the service end-to-end instills consulting on how to improve service security.
a sense of ownership and enables teams to
see the impact they have on customers daily.
However, granting every team responsibility
Developer Velocity: Lessons from Digital Leaders 29
Investments in talent
and culture
The retailer recognized early on that meeting that scale and crossing the physical-
developer talent was critical to its success. digital divide attracts developers looking for
When competing for talent, the focus is on unique challenges. The company also focuses
clearly articulating the mission and what on engaging with the developer community
makes it a unique place to work. For example, via conferences and events. Most importantly,
the ability to work on systems that transact the retailer is well known for deeply caring
millions of orders per day globally, across for its employees, and that reputation alone
both digital channels and through thousands attracts thousands of applicants every year.
of brick-and-mortar stores. The demands of
Impact
100%
The investments in cloud, engineering
practices, and talent have paid significant
dividends. Almost all code is deployed
through standardized CI/CD pipelines, and a
Digital sales growth
significant portion of infrastructure is on the
public cloud. Digital sales have grown 100
percent in two years.
Developer Velocity Phase II Report 30
Cloud Center of Excellence (CoE) that We observe that standardization in a few key
builds a “scaffolding” and provides areas such as the CI/CD pipelines can drive
support for teams as they migrate higher levels of autonomy and psychological
safety for developers. Standardization helps
Successful companies create a increase the confidence of developers to push
recommended path for cloud adoption code to production while reducing friction
and application modernization that and manual quality, risk, and compliance
makes it easy for a vast majority of reviews. Standardization of planning and
teams to thrive. They also give teams code-management tools helps organizations
with advanced track records or unique coordinate and manage dependencies more
needs the flexibility to choose their own easily, allowing developers to distribute
tools, architecture, and services as long knowledge and share learnings. In other areas,
as they adhere to baseline standards organizations should look to be flexible and
on security, quality, availability, allow developers to pick tools that support
performance, etc. in the cloud. success. For example, flexibility in dev tools such
as an IDE is a critical factor that contributes to
2. For tools, companies often look to developer happiness in many organizations.
standardize the software development
toolchain in a few key areas—typically Some of our case studies found that early
CI/CD pipeline, planning, and code software transformations were fragmented by
management tools—and leave flexibility organizations that experimented to identify
in other areas to individual teams and the best tools. This fragmentation can make
developers. the adoption of standard tools difficult. After
ensuring uptake is supported by changes
Earlier research showed that tools are the top
in culture, decision makers can clearly and
driver of Developer Velocity; companies with
positively communicate the tools' benefits for
top-quartile scores on tooling have developer
the individual developer.
satisfaction scores that are 47 percent higher
than companies in the bottom quartile. 3. Data architecture and data platform
However, many companies struggle with modernization are the next evolution of
the balance between maintaining a level of application platform modernization efforts
standardization versus empowering teams with for even the most successful companies.
the flexibility to use tools of their choice.
Developer Velocity: Lessons from Digital Leaders 32
On working practices
5. Autonomous scope and loosely coupled We found in our earlier research that open
architecture are must-haves for Agile to source adoption is highly correlated with
succeed. outperformance in business results and
innovation. Companies with high open source
Agile methodologies, where teams are not
scores realize three times more impact on
autonomous and cannot deliver business
innovation and 20 percent higher developer
value independently, are unlikely to deliver
satisfaction compared to peers, assuming
favorable results. Successful companies
foundational capabilities are strong.
tackle these topics concurrently. For example,
one executive, when asked about what
Using and contributing to open source
drove success early in their company’s
projects is a significant way to attract and
software journey, told us “Agile is equal to
retain development talent. Indeed, the ability
architecture.” On the other hand, the lack
to contribute to open source projects is an
of architectural changes alongside an Agile
important way for developers to build their
transformation can result in a high degree
network and create a stronger technical
of interdependences in backlog, significant
reputation. Usage and contribution to
time spent on “stabilization” or “integration”
open source code is an important way for
of codebase, and a general culture of lack of
companies to signal that they embrace
ownership, empowerment, and accountability.
innovation, no matter the source.
and bringing follow-on benefits in culture Another approach we see companies take is
and the ability to retain the best talent. to focus on a smaller percentage of top talent
Some successful companies are increasingly that can be embedded in the most important
shifting to a platform-oriented model, roles. They use this critical pool of talent to both
encouraging teams to both contribute accelerate the most important projects and
services to the platform and leverage build capabilities in the rest of the organization.
services wherever possible. The focus should not just be on leaders, but also
strong individual contributors who can have
On organizational enablement disproportionate impact. The hiring, retention,
8. Unsurprisingly, world-class talent performance management, and succession
differentiates the top performers from planning in these critical roles are often led
the rest. directly by CxOs.¹⁰
Companies across industries compete with
leading tech companies for the best talent 9. Product Management (PM) is the next
through culture and emphasizing their frontier for many organizations. Common
unique value proposition (i.e., “the ability challenges include: balancing PM skills across
to work on products that impact the lives of business domain knowledge, experience
millions of people every day”). design and technical skills, lack of a well-
defined product- and platform-centric
In our previous research, talent showed up operating model across “business” and
as top four driver for business performance. “technology,” and lack of a strong TPM
Successful companies make technical talent function.
a C-suite priority and articulate a distinctive
value proposition to appeal to technical Based on our previous research, a well-rounded
talent. For instance, many retailers tout the product management function is critical. A
opportunity for developers to solve technical strong product management function is even
problems that affect millions of consumers, more critical with remote and distributed teams,
especially in the context of the COVID-19 crisis. where clarity and alignment on outcomes
The top performers in attracting talent also matter more than ever. Far too often, product
invest in campus programs and leverage their managers in banks and retailers have been
brand recognition to attract talent from top merely a re-branding of an existing business
local and national programs. role, resulting in gaps in capabilities of areas
such as experience design and technical a comparable role and struggle to achieve
skills. Successful companies realize that there their goals from these efforts.
are no shortcuts, and they are investing
significantly in hiring and developing PMs 10. Finally, cloud adoption and modern tools
who have balanced skills across business differentiate companies that have parity
domain knowledge, experience design, and between in-person and remote developer
technical skills. productivity.
Implications for
technology leaders
Becoming world-class at developing agility (that is, going beyond Agile at the team
software is a strategic imperative level to agility in enterprise-wide planning,
for companies across industries. As dependency management, risk management,
etc.); continuously integrating; and
we have seen from the case studies,
continuously refining deployment processes.
getting there is a multi-year journey.
If done well, the above capabilities will deliver
The most successful companies, ones significant results through the ability to reach
that are almost indistinguishable from customer and market inputs quickly and go
a native software company, have been from idea to release in days and weeks versus
on this journey for close to a decade. months and years. However, leaders cannot
And in the true spirit of continuous rest on their achievements. The most successful
improvement, they are continuing to organizations are taking their continuous
explore new horizons. improvement journey and investing in areas
such as DevSecOps, building true product
management and design capabilities (similar
In the early stages of transformation, leaders to software companies, where product
should look to invest in adopting Agile managers can own and deliver end to end
practices and restructuring into small, business outcomes), adoption of low-code
autonomous teams with persistent missions. tools, and transforming their data and analytics
Leaders should bring business and technology architecture.
together on a day-to-day level, attracting
top-tier talent in-house, and investing in cloud The individual journey, pace, and sequence
adoption and application modernization. of how the different levers are deployed will
be unique to every company. However, there
Leaders should help guide the organization is one element that we believe is a constant:
through ongoing challenges: the continued transformation requires a close partnership
adopting of the latest cloud technologies; across business and technology, with the focus
rearchitecting into microservices; adopting of the entire leadership team, over a long
open source; embracing organizational period of time.
Developer Velocity Phase II Report 37
Developer Velocity helps you unleash The Developer Velocity Index (DVI) is a score
the full potential of your developer calculated by assessing a company in three
categories: Technology, Working Practices, and
teams, drive innovation, and boost
Organizational Enablement. You can benchmark
business performance. Today, more
the maturity DVI score for your organization
than ever, investing in software relative to the peers in your industry. The
excellence and building a culture Developer Velocity assessment provides key
that empowers developer teams learnings and actionable guidance to boost your
will continue to be critical for every Developer Velocity and drive business outcomes.
organization’s success.
Calculating your Developer Velocity Index is
The digital transformation journey often straightforward. For this purpose, Microsoft is
begins when a company realizes it increasingly helping many of our customers by providing
needs to operate like a software company. unique guidance and recommendations to
Developer Velocity is essential for a company increase Developer Velocity through the
to drive better business results through Developer Velocity Assessment tool.
empowered developer teams.
Take a self-guided
Developer Velocity Assessment by
visiting https://aka.ms/dva or
by clicking on “Take the assessment”
at azure.com/developervelocity.
Developer Velocity Phase II Report 38
Building a more
resilient future together
Application migration and modernization like Microsoft 365, LinkedIn, Dynamics 365,
is top of mind for many organizations, and the Power Platform to connect your
and more recently, public cloud adoption employees and business processes to your
has enabled companies to quickly scale custom applications.
resources to support an influx of employees
working remotely—and millions of As we enter a new post-COVID era, we see
customers shifting to online. massive improvements on application time-
to-market thanks to shifts to remote developer
Increasingly, we are seeing customers who productivity and public cloud adoption.
value the idea of innovating at a faster pace
by using cloud-native architectures with Whether your goal is to modernize and build
loosely coupled microservices, managed new apps, continuously and securely deploy
databases, AI, DevOps support, and built-in your code to the cloud, contribute to open
monitoring to detect failures and problems source, or rapidly build apps with low-code
before they happen. platforms, Microsoft is pleased to play a
small part supporting developer teams and
Such apps are typically powered by elastic thousands of organizations around the world
infrastructure that adjusts to the varying to increase Developer Velocity.
load, supports zero downtime rollouts,
and provides low latency access to data
worldwide.
Microsoft would like to thank Dr. Microsoft would like to thank McKinsey & Company,
Nicole Forsgren, PhD as research GitHub, and HashiCorp for their contributions to
advisor and reviewer for this paper. parts of the Developer Velocity research.
Developer Velocity: Lessons from Digital Leaders 41
Resources
Developer Velocity