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Spi Cost Roi


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  • 1. Software Process Improvement (SPI) Cost and ROI Ikram Ahmed Khan Business Beam (Pvt.) Limited [email_address]
  • 2. An Eye Opening Experience!
    • One of the software house (lets name it XYZ) in Karachi bid for a project for a US based company.
    • Its competitor was a CMMI Level 5 company (lets name it CL5) from our neighbor.
    • Both competitors had no previous experience with the intended project domain.
    • XYZ bid with very low profit margin, aiming to “snatch” project from CL5.
    • XYZ came to know that CL5 bid less than half, both in time and cost, and won the project. ( Later: CL5 successfully delivered the project also )
  • 3. Quotes by Some Software Industry “Gurus”
    • “ Why should I pay to testers? My client pays for development, not for testing!”
    • “ We implemented ISO9000:2000, but it proved to be a HUGE overhead.”
    • “ With tight schedules and even tighter budgets, we just can’t afford software process improvement.”
    • “ Efficiency is secondary to me. My first priority is code development!”
  • 4. More Quotes by Some Software Industry “Gurus”
    • “ Software Process is just BS!!! I tried to follow process by book and it turned out to be a disaster. I ultimately had to do programming by myself.”
    • “ My team is not responsible at all. If I am with the project, it is a success, otherwise it’s a failure!”
  • 5. Hallmarks of Our Industry
    • Its an unfortunate truth that our most projects are:
      • Late: deadlines are usually missed
      • Over budget: cost more than planned
      • Not fully functional: don’t have all the promised features and functionalities
      • Defective: deployed with defects and need heavy re-work to remove them.
    • We do the same thing over and over again, and expect different results.
    • Do you still feel that we should not spend on improvement?
  • 6. Common (Mis)conceptions about Software Process
    • Investment in Process = More Cost
    • Industry operate at such a low margin that it cannot afford processes.
    • Processes increase overheads, resulting into more development and/or deployment time.
    • Processes makes an organization inefficient. Our time is consumed by documentation, rather than coding.
  • 7. Realities about Software Process
    • Industry operates on low profits because it does not have efficient processes.
    • Engineers do lot of re-work because of incapability of existing processes.
    • If a process makes you do unnecessary work, then its not an efficient process.
    • An effective process must reduce your response time, increase productivity and stabilize your internal systems.
  • 8. Questions about SPI
    • Is software process improvement worth the investment?
    • Can a mature process really pay for itself?
    • Is SEI/CMMI or Six Sigma goals worth pursuing?
  • 9. What Improved Maturity can do for your Organization? Based on data from 1300 applications, average 200,000 SLOC Source: Master Systems, Inc., Data obtained from QSM Database, QSM, Inc. Presented by: Rodger C. Blair, Pittsburgh PMI Chapter, April 12, 2001 0.93M $0.52$ $0.73M 80 person months 15 7 3 $1.7M $0.96M $1.3M 143 person months 18.5 12 2 $100+M $1.8M $5.5M 600 person months 30 61 1 Highest Cost Lowest Cost Median Cost Level of Efforts Calendar Months Defects Shipped CMM Level
  • 10. What Improved Maturity can do for your Organization? (2) * Cost per unit is measured in dollars (median cost) per source line of code ($ per SLOC) produced. ** Programmer productivity is measured in number lines of code produced per programmer per month (SLOC per programmer per month). 3.5 defects every 1000 SLOC (1.00) 2500 (7.5) $3.75 (1.00) 3 7.5 defects every 1000 SLOC (2.14) 1399 (4.2) $6.5 (1.73) 2 30 defects every 1000 SLOC (8.58) 333 (1.00) $27.5 (7.3) 1 Average Defect Density Average Programmer’s Productivity ** Average Unit Cost * CMM Level
  • 11. Case Study 1: Raytheon
    • Business Need: Raytheon concluded “their processes
    • weren’t adequate to deal with the
    • diverse needs of customers.”
    • Proposed Solution: CMM Level 3
    • Source: Robert .B. Grady, Successful Software Process Improvement, Prentice-Hall, 1997.
  • 12. Case Study 1: Raytheon Savings due to CMM level 3 SPI Efforts! | | | | | | | | | | | | | | | | | | | JAN MAY SEP JAN MAY SEP JAN MAY SEP JAN MAY SEP JAN MAY SEP JAN MAY SEP 1987 1988 1989 1990 1991 1992 0 5 10 15 20 25 30 35 40 45 50 Percentage of Total Project Cost Cost of Rework $15.8 Million Saved on $2.05M SPI Investment Start of SPI Initiative 41% 11%
  • 13. Case Study 1: Raytheon (Cont..)
    • Raytheon SPI Results show:
      • 7.7 to 1 ROI; achieved SEI/CMM Level 3.
      • Two-fold increase in productivity.
      • Cost of rework reduced from 41% to 11% of total project cost.
      • Eliminated $15.8M in rework due to reducing error-rate at a $1,281 SPI cost per engineer per year.
  • 14. Case Study 2: SAIC Health Care Technology
    • Business Need: SAIC recognized ”that to remain
    • competitive and retain its customers, it
    • needed to develop products faster and
    • improve the quality of the delivered
    • products.”
    • Proposed Solution: CMM Level 2
    • Source: J. Lane and D. Zubrow, “Integrating Measurement with Improvement”, Proc. Of 19th IEEE International Conference on Software Engineering, May, 1997.
  • 15. Case Study 2: SAIC CMM Level 2 SPI Results 20% 40% 60% 80% 100% V4.1 V4.2 Established Baseline Achieved CMM Level 2 Percentage Improvement x Cost dropped 30% x Cycle-time dropped 46% B x Error-rate dropped 90%
  • 16. Objectives of Software Process Improvement Efforts
    • Reduce rework
      • Each defects costs
      • Higher number of defects results into very high rework cost (and unsatisfied clients also)
    • Increase productivity
      • What is the productivity of your developer? Do you have statistics?
    • Remove bottlenecks
      • The efficiency of development team depends on the process bottlenecks
    • Improve visibility
      • Do you know the accurate project status at any point of development?
  • 17. SPI Example 1: Software Process without Inspections Requirements Design Code Unit Test Integration Testing Systems / Acceptance Test Rework Rework 100 + 100 + 100 + Production Rework Rework Rework Rework Rework Rework 100 ++
  • 18. SPI Example 1: Software Process with Inspections Requirements Inspection Rework Design Inspection Rework Code Inspection Rework Unit Test Integration Testing Systems / Acceptance Test Requirements Design Code 1 1 1 Production
  • 19. Cost of SPI Efforts
    • For US organizations, the average cost per year per Software Engineer is $1,700 or within 5% range with 300 Software Professionals in 2001. *
    • * Sources:
    • Rodger C. Blair, Pittsburgh PMI Chapter, April 12, 2001
    • R. Dion, “Process Improvement and the Corporate Balance Sheet”, IEEE Software, Sept. 1994, pp. 23-30
    • A. Carleton, et al ., Benefits of CMM-Based Software Process Improvement: Initial Results, Tech. Report CMU/SEI-TR-94-013, Carnegie Mellon University, 1994
    • W. Lipke and K. Butler, “Software Process Improvement: A Success Story”, Crosstalk, Nov. 1992, pp. 29-39.
  • 20. Cost of SPI Efforts (cont…)
    • For Pakistani organizations, the average cost per year per Software Engineer can be as follows:
    2k – 3k 50-100 3k – 4k 25-50 4k – 5k 10-25 SPI Cost per Software Professionals per month (Rs.) Organization Size (Number of Software Professionals)
  • 21. Cost of SPI Efforts (cont…) 2 4 6 8 10 12 14 16 18 20 Cost of Defect Removal (Rs. in 000) Defect Removal Stage Req. Analysis Design Code Test Acceptance Operations Code Defects Design Defects Analysis Defects Req. Defects
  • 22. Cost of SPI Efforts (cont…)
    • Cost of internal defects may be between Rs.500 to Rs.10,000
    • Cost of post-deployment defects may be between Rs.5,000 to Rs.100,000+
    • How many defects (bugs) you had in your last project? You can calculate ROI on SPI Cost.
    • ROI of SPI efforts usually range from 2:1 to 9:1
  • 23. How to have Successful SPI Program
    • Get services of a good SPI coach. Don’t follow do it yourself approach unless you have the required expertise.
    • Confirm executive level (CxO) sponsorship and commitment.
    • Treat SPI as a project. Develop plan, outline key success factors and provide resources.
  • 24. Common Reasons for the Failure of SPI Efforts
    • Lack of executive-level (CxO) sponsorship and commitment.
    • Lack of middle and 1st-line management commitment.
    • Organizational culture unwilling to change -- e.g., “Hero-developer” culture.
    • Lack of commitment to continuous SPI improvement.
    • Do it yourself approach.
  • 25. Your Options!
    • Continue with the software industry’s historical record.
    • OR
    • Transform your company into an efficient and mature organization with higher profits
  • 26. Thank you! You may find this presentation at: