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20.4 High Return on Investment

High ROI consists of identifying, evaluating, and selecting SPI methods with the greatest number of economic benefits. High ROI also involves choosing SPI methods at the least possible cost. ROI is a ratio of benefits to cost. However, ROI involves subtracting the costs from the benefits before declaring them as benefits. This subtraction validates the benefits and marginalizes SPI methods with high costs.

ROI is superior to the individual assessment of the costs, benefits, and B/ CR of SPI methods. ROI no longer analyzes and evaluates the costs and benefits independently of one another. Instead, ROI treats costs and benefits as inseparable variables which must be considered together as a whole. Thus, costs and benefits are no longer evaluated in a vacuum , but are evaluated together along with their impacts on one another. For instance, a SPI method with high benefits and low cost has a high ROI. This SPI method is certainly worthy of consideration. On the other hand, a SPI method with low benefits and high costs has a low ROI. This SPI method is worthy of further analysis and justification.

Sometimes even ROI alone does not tell the whole story. For example, some SPI methods have admirable ROI values. The Personal Software Process ^SM , Software Inspection Process, and Team Software Process ^SM have high ROI values. The Software Capability Maturity Model , ISO 9001, and Capability Maturity Model Integration have high ROI values as well. The ROI values amount to 4,133, 3,272, 2,826, 871, 229, and 173%, respectively.

Let's take Capability Maturity Model Integration as an example. Its ROI is 173%. This alone may be the only justification necessary to convince a software executive that it is the right SPI method to pursue . However, when you consider the costs of these SPI methods, they lose their attraction. Their costs are $26,400, $20,518, $37,100, $77,858, $43,250, and $277,058 per person, respectively. What piece of evidence would you show your software executive: an ROI of 173% or a cost per person of $277,058?

Think of ROI as more than just an objective ratio of benefits to costs that is considered in isolation. Think of ROI as an evaluation of multiple factors involving costs and benefits. At some point, the costs must be identified, counted, and validated . Use ROI as a tool, but do not ignore the other indicators of economic performance along the way, such as costs.