This methodology has been given different titles over the years, and while each has technical differences they all point to the same basic project management technique - break a large project down into small pieces, treat each as a separate project with its own requirements, specification, development and testing cycles, rinse and repeat. Whether you call each cycle a mini-project, a Sprint or something else is immaterial.
You evaluate how well each cycle went, adjust plans, how estimates are arrived at, whether the technology, database, coding methods or staffing need adjusting and begin the next block of work. Sometimes the next block will even go over the same area because you are trying to fine tune the user experience (like prototyping, but in a more structured sense). In other projects the cycles relate to building pilot projects to evaluate a technology or approach, building the system for a single office/branch/state to verify that it works as expected before scaling it up company wide.
If you are planning a large scale greenfields project that is a bet-the-company operation, we strongly recommend this approach, so you can establish if the new system/approach really does work as expected and can scale up as required before you turn off the old system. It also allows you to keep a firm control on cost & schedule blowouts and minimise the risk of a project failing. It also allows for testing to be conducted in a real environment, but with limited fallout if/when bugs are found - meaning you can hold off doing the company wide rollout until critical metrics are met completely.
The other benefit to this approach is that it allows you to change your priorities as the project progresses, based on real-world needs. This is vital when the new system is something you need to start using ASAP...
One important point - on paper this approach can look more expensive than just proceeding through a project plan step buy step. But its about risk management. The larger the project, the more of your business that might be affected by its success or failure - the more you can’t afford to not choose this approach.
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