Return on Investment in Software Development

Hi I thought I would write a series of articles on a topic that I believe is becoming absolutely critical in the software development industry, that being the magical and mysterious ROI (return on investment) in software development.

As the owner of a programming company here in South Africa, I decided at the outset of the company that a rule of thumb for accepting any software development project would be that I would need to figure out how to measure the ROI in that particular project. Now you may or may not be surprised to know that in most instances my clients don’t actually think of this measure before taking on the project, they know that they have a business problem or business need that needs to be solved with technology and are willing to pay an amount of money for that. Experience over the years however has shown me that the best way to retain that client in the long term and or to make more business from that client is to prove a ROI in some way on that software development project.

I find this measure to be critical because for my companies purposes it shows exactly how successful a project is to my client in monetary terms. The bigger my impact through the software I develop, the more successful I have been at satisfying that clients need, the easier it is for me to go back to that client and offer further services. Contrary to popular belief, I don’t believe that a project coming in on time or under cost is a great measure of the success of that project at all, this is typically what IT companies do. If I really want to do a great job for my client then I always intentionally build a monitoring tool into the software I develop for them and that tool must track the ROI for the client in some way and present a report to the client whenever they want to see what this piece of software really is worth to them, be it through savings, additional income, time savings, it doesn’t matter so long as you track the value.
So how do you go about figuring out the ROI on software development project?

This is the difficult portion because it requires listening to the clients need carefully and scoping there need correctly, once you have done this, it should become fairly obvious what the client is trying to solve by having the software developed, this should then be a clear indication of the measure to be used on ROI. For example,a client of mine wished to have a system developed that automated the process of allowing shareholders in various properties to swap there owned weeks with each other. Before the client came to me they did this process manually, ie called there shareholders to find out if they were willing to exchange a week with a fellow shareholder that already gave an indication that they wanted to swap there week etc. This took a lot of time and for the administration fee that the client asked to do this, I suspect the profit was very little. Once we had developed the system and allowed the shareholders to interact with each other through the website instead of the web system, the ROI was very clear, why?

-We tracked each exchange in the system, each exchange has a monetary value associated to it.

-The clients telephone bill dropped significantly

-More swaps occur because of the ease at which shareholders can swap weeks, instead of having to go through a process of calling the company then waiting etc, this increase in sales is measurable

-Because the client offered the service electronically he could increase his administration fee.

All this information the client could get through there system thereby ensuring that he could very clearly see what his ROI was.
Conclusion

I believe without a doubt that if you truly want to complete a software development project successfully for a client, then you need to build a ROI tool into the software. Convince the client to do this, if you cant do that then build it free of charge, but make sure that you get your client to look at these figures. In the long term this will have a positive effect on your business and keeps your software development projects honest in terms of creativity and keeping the clients needs in mind constantly.

Please offer your comments and views on this topic, I am very sure that peoples opinions and views on this vary quite considerably, I am very willing to listen to other opinions in this regard.

In my next article on ROI and software, I will be describing more specifically how you can measure ROI on certain types of projects, in this case it will be how to measure ROI precisely in SMS campaigns.

Software Development – Risk Management

The first thing to accept is that software development is unpredictable. No matter what new fangled software is implemented and how many function points are estimated, experience has shown that making the target date (let alone achieving the desired quality outcomes), is a hit and miss affair.

Risk may arise due to loosely defined requirements, difficulties in estimating the time and/or resources needed for the software development, dependence on individual skills and rapidly changing requirements due to changing needs.

Here are some thoughts on how to make the unpredictable a little bit more predictable.

Spend more time setting objectives

Project objectives are important. A project should not be initiated without well thought out objectives. Spend time analysing what the project is trying to achieve. The project objectives need to provide guidance to the programmer for every programming task. Pin up the objectives for each programmer to see.

Here is an example of setting an objective. I was asked to analyse the requirements of a busy manager. His manual filing system was constantly in use, and never in order. A system was needed that would maintain the current details, and ensure that records could always be found. That was easy enough. However, during the interview, the phone rang constantly, with requests for information. The objective finally agreed on was “Eliminate the phone requests”. This led to a very successful solution, but completely different to that originally envisaged.

Having set the objectives of the project, do an exhaustive analysis of how the objectives can be achieved. This should eliminate unrealistic objectives – like “The best and nicest and cheapest and quickest”.

Do not spend too much time gathering requirements.

Rigid analysis stifles programmer and user creativity. It is also no guarantee against a software disaster. Where the documentation of the requirements runs into several volumes, it usually guarantees a software disaster.

Users frequently do not know what they want, but they will recognise it when they see it! What was the original requirement may not be what was wanted at all. Rather spend time on creating a solid project framework that will enable you to achieve the major objectives.

Break a project into multiple tasks.

Wherever possible, a large project should be broken into smaller tasks. Each task will then be more predictable with less to do and less that can go wrong.

The initial programming task should be to create a framework with minimal functionality. Create dummy procedures to show the style and the intent – it is important for the users to see the “look and feel” of the project early in the development cycle. It is equally important for the users to get involved right from the start. What you want is users to start “owning” the project.

With the project objectives soundly set, the basic functionality should be subject to little change. The dummy procedures can be completed once the project concepts and design have been approved. Later tasks can then add the “bells and whistles”.

The project must be “infinitely modifiable”.

The project must be designed so that it can handle major changes to requirements. With a soundly defined framework and infinitely modifiable design, the effect of users changing their minds will be minimal. As will the consequences of new or better ideas as the project evolves.

There needs to extensive thought on how an “infinitely modifiable” system can be created. This must be done before any programming is initiated. “Top down”, modular design standards will help.

The consequences of having a rigid system are unpleasant. When change occurs, and it will, you will have very unhappy management when the target date needs to be extended. Equally unpleasant is to send the programmers on a “death march” to get the project finished on time.

Do not use new or complex technology

Using straightforward, tried and trusted Software provides a head start. There is always some advantage in using the latest version of software – but there can also be a heavy cost. If new technology is essential for the project, then an independent trial of the software is needed to ensure adequate technical knowledge and that all the software bugs have been ironed out (are they ever?).

Relying on immature software with limited programmer exposure to the software is a recipe for disaster.

Hire only the best and brightest

The success of a software project is mainly dependent upon the abilities of the developers. They determine, more than any other factor, the viability of a project and have a tremendous influence on productivity.

A few tips: The successful applicant should have a keen sense of humour (see De Bono and Lateral Thinking) and a good grasp of idiomatic English. Excellent communication is all important.

Do not proceed with a large project where the best and brightest have recently left the company. The company will be suffering from the “skim milk” syndrome – and you need the cream of the crop for successful development.

Reusable code

It is always productive to collect a large library of reusable code. The procedures should be used to standardise: error handling, database access, edit routines, grid handling, etc. The reusable code will reduce debugging times, as each procedure will be called multiple times. It also lessens the amount of coding needed.

Software Development Life Cycle – Basic Steps Leading to A Strong Product

After realizing and experiencing the alluring advantages of outsourcing, more and more companies are getting inclined towards outsourcing software development projects to major offshore destinations. However, having an in-depth knowledge of software development life cycle becomes a priority task for not only the service provider software development company but also the client to keep a check on the project progress throughout the software development.

Software development is an intricate process that requires a lot of planning, implementation and testing. You can not develop perfect software with full functionality unless it passes all the tests and quality analysis. So, companies should keep a check on SDLC while experiencing software development outsourcing, a company No software is perfect and in full functionality unless it overcomes all the tests.

A software development company put special emphasis on SDLC to produce the most effective, functional and mission critical software that can help one’s business in a long run. The software development life cycle (SDLC) is a pre-set framework that is used by all software development companies for through understanding and developing effective information systems and software.

Though software development life cycle can have many versions and each version carries its own plus points and minus points, but all version have same steps or activities that are discussed below;.

Feasibility

First of all, the project is checked for its feasibility if it should get the go-ahead. If the project is to proceed, then a project plan is thought out together with the budget estimates for future stages of development.

Requirement Analysis and Design

After testing the feasibility of the project, system or software requirements are gathered. Business analysts perform a thorough study and analysis of the business needs of the organization and the market trends. Necessary changes are proposed. From interface design to data design, every program is discussed in this stage to keep the software of high level design.

This phase considers the overall structure of the software and defines the strategy for its development. That’s requirement analysis and design phase is believed to be the most critical part of software development life cycle. Any flaw in this phase may prove very expensive for further stages of life cycle. In simple words, this phase considers the logical system of the product.

Code generation and Implementation

This phase involves the code translation of the well-thought design. Desired programs are created using a conventional programming language and with the help of programming tools like Compilers, Interpreters, Debuggers. The code is generated using various high level programming languages like C, C++, Pascal, Java, etc.

Testing and Quality Assurance

Apart from requirement analysis, testing is another crucial stage of SDLC that decides the effectiveness and functionality of the product. This phase unravels the bugs and errors of the system. Initially the individual modules of programs are tested separately which is followed by testing of the system as a whole. The system testing includes the integration testing to check whether the interfaces between modules are working properly, Volume testing to ensure the capability of the system to work on an intended platform with the expected load of data, and acceptance testing to check whether the system does what the user needs.

Maintenance and Support

Software system maintenance is an inevitable need. It undergoes various changes once it is delivered to the client. Software development should be flexible enough to inculcate required changes with time and according to changing business needs. Inevitably the system will need maintenance. Software may undergo certain changes once it is delivered to the customer. There are many reasons for the change. Change could happen because of some unexpected input values into the system. In addition, the changes in the system could directly affect the software operations. Therefore, the software should be developed in order to accommodate changes that could happen during the post implementation period.

Each and every stage of SDLC carries its own importance and plays a key role in success of any software development project.

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