Customer satisfaction with business services: is agile better?

Purpose - Agile methods have considerably transformed project management. The purpose of this study is to analyze the impact of agile (as compared to plan-driven) methods on customer satisfaction in the context of knowledge-intensive business services. Design/methodology/approach - This study uses a survey examining the experiences of 361 customers with different outsourced software projects in Switzerland and a regression-based model to test the hypotheses. Findings - The findings show that agile approaches can lead to higher customer satisfaction than plan-driven approaches, but the impact size is not as substantial as expected. The effect does not depend on the number of specification changes. Practical implications - Managers must be aware that merely switching from a plan driven to an agile approach will not lead to substantial improvement in customer satisfaction. Satisfaction with the process is a more important driver of overall customer satisfaction than satisfaction with the service outcome. Thus, providers of knowledge-intensive services should train their employees in recognizing the importance of the cooperation process. Originality/value - So far, the positive impact of agile methods is often only based on anecdotal evidence as well as on surveys examining the supplier perspective. This study provides support for the positive impact of agile methods on customer satisfaction, an important response variable from a marketing perspective, which has not been examined before in the context considered here.