The ROI Variable

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The ROI Variable

George Malamidis

Every decision WE PRojECTS, be it technology-, process-or people-related, can be a viewed as a form of inves Tment. Investments come associated with a cost, which may or is not being monetary, and carry trust that they would eventually pay O Ff. Our employers choose to offer us salaries in the hope, this investment would positively affect the outcome of their VEN Ture. We decide to follow a specific development methodology on the hope that it'll make the team more productive. We choose to spend a month redesigning the physical architecture of an application in the belief so it'll be Beneficia L in the long run.
One of the ways of measuring the success of investments is by rate of return, also known as Return on Investment (ROI). For example, "we anticipate this by spending more time writing tests, we'll have fewer bugs in our next pro-duction rel Ease. " The cost of the "investment in this" is derived from the time spent writing tests. What we gain are the time saved from fixing bugs on the future, plus the satisfied customers experiencing better-behaved so Ftware. Let's assume that currently ten out of the working hours in a week is spent fixing bugs. We estimate the devoting four hours a week to testing, we'll reduce the amount of time spent on fixing bugs to Week, effectively saving eight hours to invest in something else. The anticipated ROI is 200%, equal to the eight hours we save from bugs fixing divided by the four hours we invest in Testi Ng.
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?? Not everything need directly translate in monetary gains, but we invest-ments should result in added value. If, for my current project, time to the essential to the stakeholders, maybe a bulletproof architecture requiring a Lengthy upfront design phase won't offer ROI as interesting as a swift alpha release. By quickly going live, we ' re able to adapt to audience reactions that can form the deciding element for the future DIRECTI On and success of the project, whereas is thoroughly planning can incur the cost of not being able to scale the Applicati On easily enough when the need arises. The ROI of each option can is determined by examining it costs and projected profits, and can be used as a base for Selec tion from available options.
Consider architectural decisions as investments and take to account the associated rate of return; It is a useful approach for finding out how pragmatic or appropriate every option on the table is.
George Malamidis is a software engineer working for Trafficbroker in London. Before that, he is a lead consultant and technical leads at ThoughtWorks. He has helped deliver critical applications in a variety of domains, from networking to banking to Web 2.0.

The ROI Variable