Return On Investment from Software Process Improvement
by Thomas McGibbon, DACS Director

A recently published report from the DACS, titled A Business Case for Software Process Improvement: A DACS State-of-the-Art Report, researched, generalized, and modeled in a spreadsheet the cost benefits one can achieve from Software Process Improvement (SPI). The model was developed from information obtained in a detailed review of the open literature.

The report analyzes benefits from four approaches to software process improvement:

  1. Implementing a complete SPI program such as that of the Capability Maturity Model (CMM) from the Software Engineering Institute (SEI);
  2. Formal inspection programs;
  3. Software reuse; and
  4. A cleanroom software engineering approach.

Process improvement programs are shown in the report to reduce development costs and rework costs, as well as to improve productivity, cycle time and quality. These improvements, once implemented by an organization, are shown to have a significant positive Return-On-Investment (ROI) to the improved organization. The report and accompanying spreadsheet model the costs of the improvement, the reduction in costs to develop software and the reduction in maintenance costs.


Figure 1. Modeling Rework Costs from Defects

Maintenance costs examine the impact on rework costs from defect removal with process improvement programs. A major issue addressed in SPI programs is the detection and removal of software defects at or near the point of insertion of the defect. As can be seen in Figure 1, as you move from design/implementation stages to test stages, the cost to repair a defect induced during design has repeatedly been shown to be a 10 times (10X) cost increase. If that design defect has not been found until the product is released to the customer, the repair costs increase by 100X compared to finding and removing the defect during design. Each process improvement strategy has documented the efficiency with which it is able to remove defects sooner. This effect is modeled in the spreadsheet and report.

Each process improvement strategy has many examples in the literature which document both the increased productivity from the strategy as well as the costs associated with implementing the strategy. Improved productivity results in reduced development costs. Within the report and spreadsheet, a COCOMO cost estimation model is employed to estimate what the cost of a particular sized development effort would be when the increased productivity associated with that improvement is factored in. Each improvement strategy also has a cost, which is typically a function of the project team size and amount of code to be developed. Those costs are also modeled in the report and spreadsheet.

The report concludes by comparing the ROI from each of the process improvement strategies for a particular sized project, as well as comparing results for each strategy for various sizes of project.

The report also includes a thorough 10 page annotated bibliography on the ROI from SPI topic.

This report titled A Business Case for Software Process Improvement: A DACS State-of-the-Art Report, can be viewed in its entirety through the DACS web page under the Software Process Improvement Topic Area.

A free hardcopy of the report can be ordered by contacting the author via E-mail: [email protected].

The spreadsheet that accompanies the report can also be ordered for a nominal fee from the author.

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