In their in-depth article McKinsey explores the dynamics and successes of the ‘Digital Factory’ model.
‘Software Factories‘ are described as such because the underlying management science is literally derived from the world of manufacturing, utilizing practices such as Lean and Six Sigma, pioneered by organizations like Toyota.
It applies a production line metaphor for software workflow management, that can be monitored and managed through KPI metrics under a headline of ‘Developer Velocity‘, so that output can be improved via the same type of process improvement regimes.
“A Digital Factory is the “construction site” where change happens. It comprises dedicated, cross-functional teams that work together on change-the-business programs. They resemble factory workers in that they employ reusable tools and repeatable processes to build specific “products” in the form of new experiences, services, or solutions. The secret to the Digital Factory’s success is that its small teams, working closely with the business side, function as a start-up accelerator.”
“We see reductions in management overhead of 50 percent for technology teams in the DF, 70 percent in the number of business analysts needed to write technology requirements, and, as test automation becomes the norm, a drop of 90 percent in the number of testers. Finally, we see top engineering talent performing at eight times the level of their peers, as measured with metrics such as code commits.”