ROI of Software Process Improvement: Metrics for Project Managers and Software Engineers available in Hardcover, eBook
ROI of Software Process Improvement: Metrics for Project Managers and Software Engineers
- ISBN-10:
- 193215924X
- ISBN-13:
- 9781932159240
- Pub. Date:
- 01/01/2004
- Publisher:
- Ross, J. Publishing, Incorporated
- ISBN-10:
- 193215924X
- ISBN-13:
- 9781932159240
- Pub. Date:
- 01/01/2004
- Publisher:
- Ross, J. Publishing, Incorporated
ROI of Software Process Improvement: Metrics for Project Managers and Software Engineers
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Product Details
| ISBN-13: | 9781932159240 |
|---|---|
| Publisher: | Ross, J. Publishing, Incorporated |
| Publication date: | 01/01/2004 |
| Pages: | 240 |
| Product dimensions: | 6.00(w) x 9.00(h) x 0.70(d) |
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CHAPTER 1
INTRODUCTION
The return on investment (ROI) of software process improvement (SPI) is an indispensable tool for determining how effective an organization is at computer programming. The ROI of SPI also extends to the fields of software engineering, information technology, and commercial shrink-wrapped software. The ROI of SPI is useful for providers of high-technology products and services. ROI is not limited to a single market sector, but rather applies equally to the commercial, government, and military sectors. ROI of SPI is useful for ensuring the peak operating efficiency of large, nonprofit organizations in terms of dollars and cents.
The ROI of SPI involves determining how much money a new software tool, process, or methodology yields. ROI reveals how much money a software engineering standard yields on the bottom-line corporate balance sheet. It can also reveal how much money a training program, improvement initiative, or new organizational design yields. The ROI of SPI is an invaluable measurement instrument for stakeholders at all levels of a corporation and organization. ROI enables stakeholders to design the most effective strategies to achieve the maximum benefits. The benefits are often expressed in terms of productivity, quality, profits, and peak operating efficiency.
The ROI of SPI answers the basic question, "How effective is my software engineering in economic or monetary terms?" Gone are the days when processes were improved for the sake of merely changing. Instead, we now ask the question, "What is the economic impact of changing the software process?"
1.1 WHAT IS ROI OF SPI?
The ROI of SPI is the amount of money gained from a new and improved software process. That is, the ROI of SPI refers to a new and improved software process which results in more money than is spent to improve it. For example, ROI is 10 to 1 or 1,000% if a new process requires 100 hours to create and use, versus 1,100 hours for an old one.
The ROI of SPI is generally a ratio of benefits to costs for creating a new and improved software process. The benefits are first adjusted by removing all of the costs before calculating the ratio of benefits to costs. The ROI of SPI or ratio of adjusted benefits to costs indicates the economic value of a new and improved software process. The ROI of SPI is used for determining the value of a new and improved software process. It is also used to decide whether to use a new process, revert to an old one, or begin seeking an even better software process.
ROI of SPI is a tool for teaching people, ranging from executives to the technical staff, that processes have economic value. Software processes affect economic performance and should be evaluated for the purpose of improving cost and quality efficiency. Cost and quality are inseparably linked in often surprising ways.
1.2 WHY IS ROI OF SPI IMPORTANT?
The ROI of SPI is important because it is a process of determining the amount of money to be gained from a new process. It can even be used to determine how much money is lost from creating and using a new and improved software process. The ROI of SPI for a new software process can be astonishingly large, disinterestingly negligible, or soberingly negative. The ROI of SPI is an indispensable everyday tool for aggressively profit-driven corporations. Oftentimes their rise and fall hinges on the ability to successfully steward their assets through many economic obstacle courses. The market is often fraught with dangerous fluctuations, conditions, and confusing indicators. Corporations can avert financial catastrophe and seize their rightful titles as captains of industry by applying the ROI of SPI.
The ROI of SPI is quite useful for large nonprofit organizations and government institutions. The ROI of SPI helps them manage their hard-won resources, capitalization, and funding. It does this by helping to steer them clear of a new software process that has negligible effects on peak operating efficiency. Minimally, the ROI of SPI has a sobering effect on unbridled enthusiasm for a new software process with a negative ROI.
However, it is important to note that the ROI of SPI is merely one of many tools to support critical decision-making processes. There are many tools to support decision making when it comes to selecting a new and improved software process. In fact, it may be necessary for a corporation or organization to create a new process that has a negligible or even negative ROI. This is often done because it is sociopolitically correct or part of a mandatory government regulation or industrial trade agreement. Sometimes, inefficient processes are tied to other forms of economic incentives, motivations, or gains.
For instance, a new and improved software process may have an acceptably negative ROI. However, this process may be part of an industrial trade agreement, resulting in long-term economic gains in place of short-term loss. This, of course, doesn't mean that the ROI of SPI is unimportant, invalid, or fails under certain conditions. It simply means that long-term economic gains should be factored into the equation for ROI of SPI if they can be reliably quantified. Doing this helps to overcome the effects of negligible or even negative impacts on short-term economic performance.
1.3 HOW IS ROI OF SPI DETERMINED?
The ROI of SPI is determined by calculating the ratio of benefits to costs for creating a new and improved software process. The ROI of SPI is a simple ratio of all of the benefits to all of the costs for a new and improved software process. The exact formulas for the ROI of SPI involve subtracting the costs from the benefits before stating the ratio of benefits to costs. The formulas are nonetheless very simple, easy to use, and indispensable.
The benefits for a new and improved software process are usually increases in product variety, portfolio size, and market share. The benefits also include increases in customer satisfaction, productivity, efficiency, quality, and reliability. Decreases in costs, cycle times, and process complexity are important benefits too.
The costs of a new and improved software process include strategic planning, education, and designing new processes. Additional costs include process and development tools, consultants, training, travel, facilities, lost productivity, and project simulation. Costs also include salaries, actual project effort, sociopolitical resistance, and preparation for appraisals and external audits. Don't forget the costs of appraisals and audits, action plans, reaudits and recertification, and software process maintenance. The benefits of some SPI methods are quite large, so do not be discouraged by the overwhelming costs.
1.4 WHAT ARE KEY METHODS FOR ROI OF SPI?
The key methods for ROI of SPI include analyzing SPI studies, conducting literature surveys, and collecting cost-benefit data. This also includes researching ROI studies and data, examining the cost of quality, and performing cost modeling. Studying defect models, conducting benchmarking studies, using pilots, and collecting long-term data are also key methods.
The key methods have been purposely arranged in order of increasing complexity. They have been arranged from the easiest and most cost-effective means to the most difficult and expensive approaches. It is ironic that the most effective methods for ROI of SPI are often the simplest and least expensive. Conversely, the most difficult and cost-prohibitive methods for ROI of SPI are often the most risk intensive. The difficult methods are generally not worth the time and trouble. They can be hazardous to a person's political career and undermine one's power and status.
It is ironic that some people would insist that you place your hand in a fire for a long time to determine its temperature. That only results in a trip to the hospital and a long and painful recovery. In other words, you don't have to burn yourself to learn that a fire can be very hot. The same principle applies here. Use your head, or your brain to be more specific. Apply a small and inexpensive amount of effort to learning what others have spent millions of dollars to learn firsthand. Use reliable sources of data to help you zero in and focus on the methods that will offer the greatest ROI of SPI. Then, when you have collected some convincing hard data, begin with small-scale piloting and experimentation.
1.5 WHAT ARE KEY PRINCIPLES OF ROI OF SPI?
Key principles of ROI of SPI include application of basic ROI formulas, analysis of ROI inputs, and focusing on benefits of SPI. Key principles also include analysis of simple defect models, cost of quality, total life cycle costs, and pervasive defect prevention. Key principles of ROI of SPI do not require a postgraduate degree in design of mathematically analyzable attitudinal surveys, and they do not include the derivation of indecipherable ROI equations or the application of complex discounting methods. Mastery of Nobel laureate economics, collecting reams of data, and performing years of software measurement are not necessary. ROI of SPI also does not require a personal 15-year SPI journey.
ROI formulas contain only two fundamental terms: benefits and costs. How hard is that? Cost is by far the easiest of the terms to grasp, so focus on the benefits. If you can master the benefits, then you're almost there. Where does information on benefits come from? Benefit data come from analyzing SPI studies, conducting literature surveys, and collecting cost-benefit data. Information also comes from ROI studies, examining the cost of quality, performing cost modeling, and studying defect models.
The benefits of SPI come from two basic sources, increased revenue and profits and decreased costs and cost savings. The benefits of SPI originating from increased revenue and profits are primarily due to increased productivity. That is, increased output or work products per unit time. The benefits of SPI originating from decreased costs and cost savings are due to less maintenance, rework, and testing. This often leads to shorter cycle times and faster schedules.
1.6 WHAT ARE PITFALLS OF ROI OF SPI?
The pitfalls of ROI of SPI are quite numerous. It is easy to believe that ROI is more than just the application of a few basic equations if you haven't done your homework. Unfortunately, many believe that the ROI of SPI and SPI economics are a nonessential part of their continuing SPI journey. Similarly, some people feel that ROI does not apply to them, their situation, or to the field of SPI. A few well-placed individuals think that there is no room for ROI principles in an ad hoc, immature organization. Oftentimes, key SPI leaders believe that their software organization has to be performing at world-class levels before using ROI principles. Too many people think ROI is a farce, all ROI studies are a bunch of lies, and ROI authors are snake oil salesmen. SPI is often perceived as too difficult and immeasurable, but SPI is worthy in spite of its impossibility. Some believe organizations must embark on a multiyear, multimillion-dollar ROI study by itinerant measurement scholars. Some feel that organizations cannot perform an early, top-down ROI analysis of their portfolio of software assets due to immaturity.
The exact opposite of these common pitfalls for the ROI of SPI is remarkably true. The formulas for SPI are amazingly simple. SPI economics should be your first concern, not your last. ROI is an indispensable tool in the field of SPI. ROI is the perfect tool for low-maturity organizations. ROI is a stepping-stone to high maturity, not vice versa. ROI of SPI is a simple fact. SPI without ROI is not SPI. ROI can and should be a quick, easy, and cost-effective exercise. Performing an early, top-down ROI analysis of your portfolio of software assets is the ideal approach to strategic planning.
1.7 WHO CARES ABOUT ROI OF SPI?
Computer programmers, software engineers, supervisors, and software engineering managers care about the ROI of SPI. Software quality assurance analysts, test analysts, support group leads, and functional area managers care about the ROI of SPI. Software process improvement analysts, software process improvement managers, and directors care about the ROI of SPI. Software engineering managers and directors and business unit managers and vice presidents also care about the ROI of SPI.
Computer programmers and software engineers often carry the bulk of the responsibility and workload in the field of technology. They are constantly seeking ways to ease the burden of poor management and get the job done successfully. Supervisors and software leaders are often asked to manage overly ambitious projects without the necessary resources. They often seek ways to overcome the productivity paradox.
Software quality assurance and testing analysts are saddled with the impossibility of building in product quality after the fact. They desperately seek ways to educate managers that the only way to build high-quality products is to do it right the first time. Support group leads and functional area managers are usually given the job of Atlas, to support the world on their shoulders. They welcome the idea that front-line engineers and managers should seize responsibility for quality, productivity, and reliability.
SPI analysts are responsible for coaching engineers and managers to simplify their processes. They also coach engineers to measure their results and constantly improve productivity and quality. They have no excuse for ignoring the ROI of SPI. Software process improvement managers and directors have the authority and responsibility to create and enforce a vision for SPI. It is their job to form strategies to realize their vision and establish tactical plans to implement a strong and pervasive vision for SPI. Doing so ultimately ensures the success of their software-producing organizations.
Senior software engineering managers and directors are responsible for ensuring peak levels of operating efficiency. They should be the primary stakeholders and customers for performing studies involving the ROI of SPI. Business unit managers, directors, and vice presidents are responsible for economic performance and business growth. They do this by expanding the customer base, reorganizing the infrastructure, and hiring productive workers at fair market prices. They also view their job as getting rid of the bad apples. However, they need to realize that the ROI of SPI is an indispensable tool for achieving near-term profitability. In addition, the ROI of SPI is a good tool for responding to ever-changing and constantly fluctuating market conditions.
CHAPTER 2SOFTWARE PROCESS IMPROVEMENT
Software process improvement (SPI) is an approach to designing and defining a new and improved software process to achieve basic business goals and objectives. Examples include increased revenues and profitability and decreased operating costs. The benefits of SPI are numerous. Major benefits include increased customer satisfaction, productivity, quality, cost savings, and cycle time reduction.
SPI is used to increase revenues or profits and decrease operating costs by manipulating or changing software processes. SPI is accomplished by measuring the performance of an old software process, improving the process, and then trying it out. SPI also consists of measuring the performance of new software processes and institutionalizing them if they have improved.
Key methods for SPI consist of process improvement cycles, process improvement criteria, and software process notations. Key methods also include software standards, software life cycles, software methodologies, and software notations. Software processes, software tools, software metrics, and programming languages are also key methods for SPI.
SPI is often performed to improve effort, cost, cycle time, productivity, quality, reliability, precision, and predictability. Goals also include improving efficiency, simplicity, customer satisfaction, degree of automation, consistency, and repeatability. Improving measurability, variety, and innovation are also popular goals.
SPI is the means by which software organizations can achieve significant increases in profitability and peak operating efficiency. The benefits of SPI form the basis for calculating the return on investment (ROI) of SPI. Thus, SPI and the ROI of SPI are intimately, intricately, and inseparably linked by basic origin, purpose, and function.
2.1 WHAT IS SPI?
SPI is the act of creating a new and improved software process in order to obtain a benefit. In other words, SPI is used to create a new and improved software process to achieve some level of benefits. The benefits are often increased revenues or profits, decreased costs, and significant cost savings. It is somewhat ironic that the field of SPI has evolved to include cost savings. Early attempts at SPI were designed to improve quality and reliability at any cost.
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Excerpted from "ROI of Software Process Improvement"
by .
Copyright © 2004 J. Ross Publishing, Inc..
Excerpted by permission of J. Ross Publishing, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
Foreword,
Preface,
About the Author,
Acknowledgments,
Web Added Value,
Chapter 1 — Introduction,
Chapter 2 — Software Process Improvement,
Chapter 3 — Methods for Software Process Improvement,
Chapter 4 — Methods for Return on Investment Analysis,
Chapter 5 — Methods for Benefit Analysis,
Chapter 6 — Methods for Cost Analysis,
Chapter 7 — Software Inspection Process ROI Methodology,
Chapter 8 — Personal Software Process ROI Methodology,
Chapter 9 — Team Software Process ROI Methodology,
Chapter 10 — Software Capability Maturity Model ROI Methodology,
Chapter 11 — ISO 9001 ROI Methodology,
Chapter 12 — Capability Maturity Model Integration ROI Methodology,
Chapter 13 — Costs,
Chapter 14 — Benefits,
Chapter 15 — Benefit/Cost Ratio,
Chapter 16 — Return on Investment,
Chapter 17 — Net Present Value,
Chapter 18 — Breakeven Point,
Chapter 19 — Analysis of Return on Investment,
Chapter 20 — Optimizing Return on Investment,
Chapter 21 — Future of Software Process Improvement,