Caterpillar digs into Agile development methods

To speed the development of a critical Web-based financial system, Caterpillar Financial Services Corp. made Agile methods a part of its project plan.

Launched at year’s end, the application suite, called ExpressTrack, took three years and cost several million dollars to build. Yet because the Nashville-based subsidiary of Caterpillar Inc. used Agile methods, it had small parts of the Java-based application early on, said Tom DePauw, manager of IT at Caterpillar Financial.

“Far too much business value is lost in software development projects because everyone wants to get to the final solution before deployment,” DePauw said.

He credits ThoughtWorks Inc., the Chicago-based systems integrator that developed the application, for infusing the project with Agile methods.

Agile development techniques call for keeping code simple, testing often and delivering small, functional bits of the application as they’re ready. The idea is to build from those parts, rather than delivering one large application at the end of the project.

“We agreed on the big vision,” said Roy Singham, chief executive officer of ThoughtWorks. “The reality is that you can’t deliver every business requirement in the first release.”

ThoughtWorks started the project in March 1999 and delivered a vital credit rating analysis application six months later. The alternative would have been to draft an exhaustive requirements document upfront, which would have included more than 1,000 business requirements. By taking a modular approach, DePauw said, only 5 percent of code was discarded as requirements changed.

John Dalton, an analyst at Forrester Research Inc. in Cambridge, Mass., said more companies are experimenting with Agile methods because traditional waterfall techniques – where every step is completed before you move to the next stage – require lots of upfront planning, are time-consuming and often miss the mark as business requirements evolve.

To avoid these pitfalls, ThoughtWorks delivered functional parts of the application – such as credit approval, pricing, document preparation and booking – every three to four months.

Peoria, Ill.-based Caterpillar began expanding its core business three years ago to include less-expensive, compact equipment such as loaders, which cost about US$25,000. As the parent company evolved, Caterpillar Financial needed to transform its systems to support Web-based transactions from dealers, instead of the lengthier mortgage-type financing process that was in place for machines with sticker prices up to a US$2 million.

Instead of taking as many as 10 days to process financing, the new system reduces the transaction to roughly 30 minutes.

“We would often load the same data four times, but we couldn’t afford to continue doing that, and we had to drive costs out of the transaction side,” DePauw said.

About 60 U.S. dealers access the Web browser-based system, which connects to a back-end document management, transaction processing and third-party financial services systems.