In this slideshare we delve deeper into the types of costs that you should consider when working on your software development project forecast. It’s important to not just include the obvious elements such as people working on the project and additional equipment required but, to also think of other potential direct or in-direct costs.

1. Types of costs to
consider when
calculating ROI
August 2014

2. How can you measure costs?
In this document we will take you through the
different measures that can be used for ‘cost’
when working on ROI calculations for your
Software Development project.

3. 1. Total cost of ownership (TCO)
Helps determine both the direct and indirect costs of a system
Be aware that TCO can vary
significantly between off-the-shelf and
bespoke software
If your software project is a cost saving
or revenue growth project costs must
be calculated as TCO

4. 2. Cost Saving Investments
With any software development there are 4 key cost
measurements
People - think about the cost of those that
currently support the system and those that
may be required for development
Equipment & Hardware – think about
current costs including maintenance or
management fees
Running costs – what is required and what
are the existing costs? e.g. servers, storage,
network infrastructure
Efficiency – think about operational efficiency
in terms of productivity and scalability

5. 3. Revenue growth investments
These should be measured consistently at key points over the
lifetime of the software
When using this option consider:
Opportunities for growth
Incorporating organisational circumstances,
sector status, scalability, new product
development and speed to market
Measuring new revenue
Include the revenue that is judged to have
been created as a direct result of the new
software development project

6. 4. Added value from unlikely sources
Make sure you consider not just internal savings but direct
commercial benefits too
Here are some examples of potential
commercial benefits:
Application for R&D Tax Credits . This is
where in essence the Government
rewards organisations for innovation
based on a set criteria
If the project is a success why not think
about licensing it to others?

7. Find out more about
Software Development
Services from MSM
twitter.com/msmsoftware
msmsoftware.com/blog
Company Page – MSM Software