2.2 Why is SPI Important?

SPI is important because it is the primary means by which a new and improved software process is created. This is done in order to achieve significant economic benefits at the least possible costs. Notice that benefits and costs are mentioned yet again. Aren't these the terms of the ROI equation? Indeed they are. ROI of SPI is the ratio of benefits to costs. In fact, higher benefits and lower costs increase the ratio of benefits to costs. This helps realize a greater ROI of SPI. SPI is important because it maximizes the ROI of SPI.

A well-designed software process has a positive effect on the bottom-line economic performance of a software enterprise. Performance is often measured in terms of productivity and cost efficiency. This applies to commercial and nonprofit organizations.

Conversely, poorly designed software processes have negative consequences on the economic performance of an enterprise. Poor software processes result in high cost of operations, inefficient use of resources, and lost market opportunities. Lack of quality and reliability, poor customer satisfaction, and poor internal morale are the results of poorly designed processes.

It is important to remember that ROI is just one tool for evaluating the performance of a new and improved software process. SPI is used to create a new and improved software process for a variety of reasons, not just ROI. At a very basic level, SPI can be used to increase productivity, quality, cycle time reduction, and cost reduction.

However, SPI can also be used to create a new and improved software process to respond to a new industry standard. SPI is often performed to adhere to a new customer standard, lower operating capital, and changing skill requirements. Technological innovations, changes to organizational structures, and increased competition are also reasons to perform SPI. Unprecedented and ambitious product and service offerings usually result in broad sweeping SPI initiatives. SPI may be performed to effect incremental changes in operating efficiency.

SPI is even performed in support of aggressively new market maneuvers that require radically new software processes. SPI is the primary means by which operating performance is deliberately measured and manipulated. This is done to achieve basic business goals, leading to improved economic performance.

Getting new customers doesn't satisfy them, entering markets doesn't capture them, and cutting costs doesn't lower them. Hiring and firing people doesn't improve productivity, and reorganizing doesn't implicitly increase operating efficiency. However, SPI can result in higher customer satisfaction, lower costs, increased productivity, and greater operating efficiency.