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 re-certification, and software process maintenance. The benefits of some SPI methods are quite large, so do not be discouraged by the overwhelming costs.