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4 steps to calculating ROI in Software Development

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4 steps to calculating ROI in Software Development

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Calculating Return On Investment (ROI) for a Software Development project is challenging but, in today’s world where stakeholders want extra reassurance prior to approving investment, solid justification is a must.
In this short SlideShare we will take you through the 4 key steps required to enable you to calculate the ROI for your Software Development project.

Calculating Return On Investment (ROI) for a Software Development project is challenging but, in today’s world where stakeholders want extra reassurance prior to approving investment, solid justification is a must.
In this short SlideShare we will take you through the 4 key steps required to enable you to calculate the ROI for your Software Development project.

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4 steps to calculating ROI in Software Development

  1. 1. 4 steps to calculating ROI in Software Development August 2014
  2. 2. Why bother with Software Development ROI? It enables the real success of the project to be fairly judged Helps justify future development projects It enables Finance to ensure the organisation gets value for money
  3. 3. How to measure a ROI for your software project In this document we will take you through four steps that we believe both IT and Finance Directors can follow to guarantee an accurate assessment of the value of a software project; aiding the decision-making process, regarding whether or not to invest.
  4. 4. Step 1: Interrogate the project Understanding ROI means understanding the nature of the project. What ‘type’ of project is it? Cost saving investments? Revenue growth investments? The answer to this won’t impact the information gathering but, it will make a difference in terms of assessment period
  5. 5. Step 2: Agree on a timeframe Real ROI can only be truly understood if it’s measured at key points over time until the project ends Cost saving investments tend to have a set timeframe Revenue growth investments tend to be projected over the longer term Either way agree the timeframe and set regular milestones to track real ROI
  6. 6. Step 3: Decide how to measure costs The biggest area of consideration for ROI on software development is cost Consider the different measurements that are used for assessing both cost saving and revenue growth investments. These include: Total cost of ownership (TCO) Cost saving investments Revenue growth investments Added value from unlikely sources (e.g. R&D Tax Credits)
  7. 7. Step 4: Choose the right supplier Do you undertake the project in-house or engage a software development company? If you do put out a tender for the project ensure: The supplier understands your ROI measurement criteria and can deliver against them That Finance & IT are fully aligned on goals before you go out to tender This alignment will more likely result in a successful and long-term software development project
  8. 8. Find out more about Software Development Services from MSM twitter.com/msmsoftware msmsoftware.com/blog Company Page – MSM Software

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