Incremental development

What Is Incremental Development?

Incremental development is a project management methodology where a product or system is designed, built, and deployed in successive, fully functional parts, known as increments. Instead of delivering a complete solution in one go, the process breaks down the overall project into smaller, manageable modules. Each increment adds new features or refines existing ones, building upon the previous version. This approach is widely used in software development but has implications across various industries, including financial services, for improving efficiency, managing risk management, and enhancing customer satisfaction.

History and Origin

The concept of incremental development, often combined with iterative processes, predates many modern project management frameworks. Its application can be traced back as far as the mid-1950s in various large projects, aiming to avoid the single-pass, sequential "waterfall" approach to development.¹³,¹² Early proponents and organizations like NASA's Project Mercury in the 1960s and IBM's Federal Systems Division in the 1970s and 80s, which notably built critical software for NASA's space shuttle, utilized incremental and iterative methods.,¹¹

A significant shift towards formalizing these concepts occurred with growing criticisms of traditional, linear development models. By the mid-1980s, there was explicit advocacy for incremental development, particularly when initial requirements were incomplete or unstable.¹⁰ This philosophy laid groundwork for modern agile methodologies. The U.S. Department of Defense (DoD) even shifted its guidance, recommending evolutionary acquisition and incremental development over single-step approaches in the early 2000s, building on earlier standards like DOD-STD-2167 from 1985 which mentioned "incremental build" approaches.,⁹ Furthermore, principles for securing information technology systems, such as those outlined in the National Institute of Standards and Technology's (NIST) Special Publication 800-14, published in 1996, implicitly support modular and phased security implementations that align with incremental delivery.⁸

Key Takeaways

• Incremental development delivers a product in functional, successive parts rather than a single, complete release.
• Each increment builds upon the last, adding functionality and refinements.
• This approach allows for early delivery of basic features, enabling quicker user feedback.
• It facilitates adaptation to changing requirements and reduces overall project risk.
• While originating in software, its principles apply to diverse fields requiring phased product development.

Interpreting the Incremental Development Approach

Interpreting the success of an incremental development approach involves assessing not just the final outcome, but the ongoing value generated with each delivered increment. Unlike traditional models where major issues might only surface at the very end, incremental development allows for continuous evaluation and adjustment. Stakeholders can see tangible progress and provide feedback loop early and often, which is crucial for steering the project in the right direction. The emphasis is on delivering working software or functional components rapidly, making "working software" the primary measure of progress. This enables organizations to respond to market conditions and evolving user needs with greater agility.

Hypothetical Example

Imagine a financial institution developing a new online wealth management platform. Instead of building the entire platform at once, they opt for an incremental development strategy.

Increment 1: Basic Portfolio View
The first increment focuses on delivering a secure login, account summary, and a read-only view of a client's investment portfolio. This basic version is released to a small group of beta testers, allowing the development team to gather initial feedback on usability and performance.

Increment 2: Trading Functionality
Based on feedback, the second increment adds basic trading capabilities for stocks and exchange-traded funds (ETFs). Clients can now initiate buy and sell orders. This further tests the system's integration with brokerage services and ensures smooth transaction processing.

Increment 3: Advanced Features
The third increment introduces more sophisticated features, such as personalized financial planning tools, performance analytics, and automated rebalancing. Each feature is developed, tested, and integrated, incrementally expanding the platform's utility.

This step-by-step approach allows the institution to deliver value quickly, test core functionalities early, and incorporate user feedback throughout the development lifecycle, ensuring the final product closely meets client needs.

Practical Applications

Incremental development is broadly applied across industries that require flexible and adaptive strategies. In finance, this methodology supports the phased rollout of new financial products, digital banking solutions, or regulatory compliance systems. For instance, a bank might use an incremental approach to launch a new mobile banking application, starting with core features like balance inquiry and transfers, then gradually adding bill payment, peer-to-peer transfers, and budgeting tools in subsequent releases. This allows them to quickly capture market share with a minimum viable product and refine it based on user engagement and feedback.

Another application is in capital budgeting decisions, where incremental cost analysis can evaluate the financial impact of small, successive changes or additions to a project.⁷ Rather than a large, single expenditure, investments can be made in phases, allowing for adjustments based on the performance of earlier increments. For example, a firm considering a large-scale IT infrastructure upgrade might implement it incrementally, assessing the cost-effectiveness and return on investment of each phase before committing to the next. The adoption of agile methods, which are inherently incremental, is becoming more prevalent in financial services transformations, despite unique challenges such as mandatory compliance dates and distributed teams.⁶

Limitations and Criticisms

While offering significant advantages, incremental development is not without its limitations. A primary challenge is the need for thorough upfront strategic planning and design, particularly for the overall system architecture. If the initial design is flawed or insufficient, subsequent increments may lead to significant rework, increasing overall project costs and complexity.⁵,⁴ This can also make it harder to manage and maintain the system as more increments are added.

Another criticism is the potential for higher overall costs compared to a purely linear approach if not managed carefully, due to repeated planning, design, and testing in each cycle.³ Effective resource allocation across multiple increments can also become complex, especially for larger projects with numerous functionalities. Moreover, while flexible, incremental development requires that major requirements be defined clearly from the outset, even if details evolve. Without a comprehensive understanding of the entire system's requirements, there's a risk of developing discrete modules that don't integrate seamlessly into a cohesive final product, leading to "potential for incomplete initial requirements."²

Incremental Development vs. Iterative Development

While often used interchangeably and frequently combined, incremental development and iterative development represent distinct but complementary concepts in project management.

Incremental development emphasizes building the system in "slices" of functionality, where each slice is a working, user-visible part that adds to the previous one.,¹ Think of building a house by first completing the living room, then adding a functional kitchen, then bedrooms. Iterative development, on the other hand, focuses on refining and improving the entire system, or a major part of it, through repeated cycles. For example, building a basic prototype of a house, gathering feedback, then rebuilding a slightly better version, and repeating this until the final design is perfect. Most modern agile methodologies, like Scrum, combine both: they are incremental in that they deliver functional pieces of software, and iterative in that those pieces are continuously refined and improved based on feedback in repeated cycles or "sprints."

FAQs

What are the benefits of using an incremental approach?

The benefits of an incremental approach include faster delivery of working components, early opportunities for user feedback, reduced project risk by addressing issues in smaller phases, and greater flexibility to adapt to changing requirements or scope changes. It allows organizations to generate value quickly and adjust plans as needed.

Is incremental development suitable for all projects?

No, while highly beneficial, incremental development may not be suitable for all projects. It works best when requirements can be clearly broken down into independent modules or when there's a need to get a product to market early. Projects with extremely stable and well-defined requirements from the outset might still find a more traditional sequential approach viable, though even then, incremental aspects can offer advantages in quality assurance.

How does incremental development relate to Agile?

Incremental development is a core principle of many agile methodologies. Agile frameworks, such as Scrum and Kanban, typically involve delivering working software or product increments in short, time-boxed cycles (sprints or iterations). This approach aligns with Agile's emphasis on flexibility, customer collaboration, and continuous delivery of value.