Types of costs to consider when calculating software ROI
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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.
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Types of costs to consider when calculating software ROI
- 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