Archive of ROI Articles

Is your product successful because you were lucky, or because you were methodical and intentional?

Do you want to build a plan where you are dependent on good fortune, or do you want to make your own “luck?” Both approaches work, but only one makes sense as an intention. Slide 3 of your presentation to a venture capitalist should not say “And then we get lucky!”

Learning how to write use cases can be tough, but it is simple compared to the balancing act of determining which use cases to write and how to manage the expectations of all the stakeholders that are involved. It can be a difficult balancing act to prioritize use cases to assure that you meet the goals of the business while satisfying the needs of the users.

You want your software to be used, not to sit on the shelf. You can’t achieve the ROI of your software if people don’t use it. And you can’t achieve the ROI of your software by forcing people to use it either.  Some will fail to achieve the benefits, and others will delay using it or refuse to use it entirely.  You have to make them want to use it, and you have to design the software for the users who must use it.  Otherwise, you won’t achieve the ROI.

I am a big fan of boxes and arrows, but this time, Jeffrey Davidson found a great article by Dan Willis before I did, and told me about it. Thanks Jeffrey! The article is about how to deal with the what and how of requirements and design - and it provides some really sage advice. But what got my attention was the lack of prioritization of requirements in his example.

We all know the story about the emperor’s new clothes. I’ve been thinking about prioritization and scheduling, and as far as I know, no one is promoting that we maximize value - they (and we) have been promoting that we do the most valuable stuff first. Doing the most valuable things first does not result in getting value the fastest. In this article, we show why not.

Measuring the return on investments in design may be the hardest ROI calculation you can do. It certainly is one of the rarest. To measure ROI, you have to be able to determine what would happen without the investment, and what happens with the investment. The difference between them is what happened because of the investment.

Learning curves have been studied for decades when evaluating manufacturing systems and proposing cost reductions. The Boston Consulting Group did an oft-cited analysis in the 1960’s that describes how people get faster at tasks through repetition. Peter Abilla looked at the extension of this to writing software. We look at how it applies to using software.

Over 90% of the cost of software development is software maintenance (cite). This alarming trend was predicted as early as 1972. McKinsey suggests that CIOs should spend no more than 40-60% on maintenance. Gartner’s IT Spending and Demand Survey (2002) reports that CIOs are spending 80% of their budgets on maintenance (p12 of presentation). Agile development can help reverse this trend.

The product life cycle is a description of the presence or behavior of a product in the marketplace over time. The framework for description is a function of the sales volume of the product versus time. Over time, products are created and introduced, and sales grow, peak and decline. The product life cycle uses phases to describe these different periods in the life of a product. Understanding the product life cycle is also key to calculating the ROI of agile development.

Return on investment calculation is critical to using ROI for prioritizing requirements. We’ve discussed how to forecast return on investment by estimating costs and predicting benefits. Here are five tips to help you when calculating return on investment.

The following ROI calculation tips are detailed in this article:

1. Recognize the Risks
2. Discount Future Cash Flows
3. Separate Sales From Expenses
4. Overcome Ozymandias Syndrome
5. Ignore Infinite Elvises

Read on for the details…