1) This document discusses methods for determining the return on investment (ROI) from software process improvement initiatives. It explains options for assessing ROI and presents sample ROI scenarios. 2) Factors like productivity, quality, predictability, and risk affect project performance. The CMMI maturity levels describe opportunities for improvements in these factors from level 1 to level 5. Industry studies provide metrics on expected improvements. 3) The document models optimistic, likely, and worst case ROI scenarios over 5 years for a process improvement initiative with a $65 million annual budget. All scenarios show positive ROI, with the optimistic scenario yielding a 28% internal rate of return and $27 million net present value.

1. Software Process Improvement ROIHow It Can Be Assessed By David Slater, MSSE, PMP 1

2. Objectives Discuss options for determining process ROI Explain the methods employed in this ROI model Present sample scenarios Recommend an approach for monitoring results 2 Note: The ROI principles presented here can be used to assess other process initiatives such as ITIL.

3. What factors affect Project Performance? Factors Productivity  Quality Predictability Risk Metrics Function Points, Lines of Code Defects, usefulness Schedule, cost Surprises, failures 3

5. Technology Change Mgt

8. Process Definition

9. Training Program

10. Integrated S/W Management

11. Product Engineering

12. Intergroup Coordination

14. Project Planning

15. Project Tracking & Oversight

16. Subcontract Management

17. Quality Assurance

20. Low Cost

21. High Productivity

22. High Quality

24. High Cost

25. Low Productivity

26. Low Quality

27. Slow Cycle TimeLow Level 1 to Level 5 Productivity Increase:11.02 x Level 1 Rework Reduction: 82% less than Level 1

31. Proficiency uptake

32. Process compliance7

33. Three ROI Scenarios Modeled optimistic, likely, worst case scenarios Only varied budget coverage factors – all other variables are the same 8

34. Optimistic Scenario 9 Return on Investment NPV: $27,126,008 IRR: 28% Breakeven: $11,344,926

35. Likely Scenario 10 Return on Investment NPV: $22,903,305 IRR: 25% Breakeven: $10,163,869

36. Worst Case Scenario 11 Return on Investment NPV: $18,680,603 IRR: 20% Breakeven: $8,982,812

37. ROI Model – Variables 12

38. Benefit and Cost Categories 13

39. ROI Measures 14

41. Rework

42. Quality

43. Predictability

45. Metric analysis

46. ROI performance reporting

47. Sr. Management review and guidance15

48. Thank You Software Process Improvement ROIHow It Can Be Assessed By David Slater, MSSE, PMP 16