ROI on Software Work

Let us start by thinking critically about how a high ROI might be possible. Software work is knowledge work that has become essential to all businesses and governments, salaries are high and the work quality is variable. Businesses invest in IT (inc software) because they expect a high return on their investment. Working software can bring incredible value to a business and its customers. The benefit (return) of having and using the software far outweighs the cost of building and maintaining it. This is why we invest in software.

What is Essential for any ROI from Software

To get the value from it, we must be very clear about what the software needs to do for the benefits to be achievable.  We must also be able to quantify those benefits.  In other words, we need to know what capabilities it needs to provides to users and what value it provides to them.  Capabilities can be thought of as high level requirements. So, if we get the requirements wrong, we might achieve no benefit whatsoever from the software. Correct quantifiable requirements are therefore essential.

Without clear requirements, you will be wasteful and unlikely to enjoy success in knowledge work, especially software development.

If you don’t know where you want to get to, you are unlikely to get there

(adjustment of Lewis Carroll’s quote).

ScopeMaster brings automation to this neglected aspect of software work – the requirements.

The key to ScopeMaster’s high ROI is that it solves problems that otherwise would be very costly.

Defects in Requirements and Defects in Software

In order for software to deliver the expected value, it must be delivered as per specified. Consequently, much attention is devoted to the software working “correctly”. The requirements are considered to be the reference for what is meant by correct. And yet 15% – 30% of observed problems in production systems are caused by poor or incomplete requirements. Undermining the benefit of delivering the software in the first place.

The cost of poor requirements

On average a software requirement is 5 CFP in size, with a typical build cost of $3500. A mistaken requirement will directly cause that software needing to be rewritten, ie cost a further $3500. However if the defects are found late, even in production, and they affect users, the total cost of the poor requirement increases dramatically and becomes:

  • The direct cost of the extra work to fix the requirement, architecture, design, code, tests and documentation that have already been created, incorrectly.
  • The opportunity cost of fixing this problem vs working on other valuable things.
  • The disruption cost of coping with the problem until it is fixed.
  • The consequential cost to users of the software being wrong (maybe somebody got paid the wrong amount of money for example).
  • Other consequential costs such as brand damage.

So when we think about the cost of poor requirements we need to think of them in the context of their overall impact. A requirement defect found and fixed in production may lead to tens of thousands of dollars. Whereas if the same requirement problem was fixed before any coding work started, the total fix cost may only be a hundred dollars or even less. Since the cost of a mistake slipping through into production software is so high, the corresponding benefit of finding and fixing problems early high.

An ROI of over 50% is usually considered quite good, but 1,000% (10x), is astounding!

ScopeMaster ROI explained

ScopeMaster provides direct effort saved benefits and consequential benefits.

Direct Effort Saved by using ScopeMaster

  1. Finding defects in requirements.
  2. Sizing
  3. Generates test scenarios
AND

Consequential Benefits

  • Knowing size allows for more efficient planning and project management.
  • Reduced time coding and testing the wrong thing (rework reduction)
  • Shorter project schedules (6%+ )
  • Customer gets benefit of the software sooner

Quantification of Effort Saved

1. Finding Defects

ScopeMaster will typically expose 3-5 defects per requirement.  Finding those defects manually would (on average) take 1-2 staff hours each, totalling 3-10 hours.

2. Generating Test Scenarios

The typical manual effort to create a test scenario, is 10 minutes.  ScopeMaster will generate about 3 test scenarios per requirements.

3. Sizing

Paying a sizing specialist to size your software manually would cost about 5 minutes per requirement.  
Total effort of doing this work without ScopeMaster is 3.5 hours – 10.5 hours.  The cost of achieving the same with ScopeMaster is about 10 minutes + $10.
In most markets the $10 cost of ScopeMaster is approximately equivalent to 10 minutes of a BA/product owner.
So, with ScopeMaster each requirement costs 20 minutes of time (10 minutes + $10).
Without ScopeMaster each requirement costs 3 hours 35 mins – 10 hours 35 mins.
So the ROI range is 10.5x – 32x  (215/20  up  to 635/20).

Time to benefit

This “effort saved” component ROI is typically achieved within 10 weeks of using ScopeMaster on any given project.  The consequential benefits of using ScopeMaster can take a little longer to realise.

Realistic ROI of Using ScopeMaster

We typically claim 10x – 20x ROI which, given that this excludes the consequential benefits of using ScopeMaster, we consider to be very conservative.

Measures Value As it Goes

What’s more, it keeps track of the work it does for you.  So when you use ScopeMaster, you can show your boss the valuable work it is doing to help the success of your project.

Incredible ROI

ScopeMaster calculates the value of the work it performs, as it goes.

So What?

Nowadays every company is a software company.  Delivering software faster and with greater certainty is a strategic concern.  Companies that do not deliver software based innovation will fall behind.  ScopeMaster makes a big difference, especially on your larger (riskier) software projects.  It wil reduce scope volatility, reduce rework, shorten timelines, reduce risk and much more.

Can you afford to let your competitors discover the power of ScopeMaster first?

Learn More

ROI Explained

ROI assesses the benefit of an investment decision relative to the investment’s cost, calculated as the overall benefit divided by the overall cost. ROI is commonly used as a first calculation to determine the worthiness of a decision to change or make an investment. If the net benefit far exceeds the cost, the benefit can be achieved in a reasonable timeline and with few negative consequences, then it is deemed a good investment.

Total Benefit / Total Cost = ROI

Examples of ROI

Marketing Decisions:

(Sales Growth – Marketing Cost) / Marketing Cost = Marketing ROI

Software Tooling Decisions:

Total benefit of using the tool/ cost of using the tool

 

 

Requirements Granularity

Requirements usually can be structured in three levels of granularity. Each being a detailed expansion of the one above.

Business objectives

Capabilities

Functional requirements

Acceptance criteria

Summarised ROI of using ScopeMaster

Direct Effort Saved by using ScopeMaster
  • Finding defects in requirements.
  • Sizing
  • Generates test scenarios
Plus Consequential Benefits
  • Knowing size for better project management.
  • Reduced rework
  • Shorter project schedules