Measuring the ROI of Software Process Improvement.

Software process improvement (SPI) has been on the agenda of both academics and practitioners. Many companies have invested large sums of money in improving their software processes, and several research papers document SPI's effectiveness. SPI aims to create more effective and efficient software development and maintenance by structuring and optimizing processes. SPI assumes that a well-managed organization with a defined engineering process is more likely to produce products that consistently meet the purchaser's requirements within schedule and budget than a poorly managed organization with no such engineering process. Like any change in an organization, SPI is an investment for which the benefits should exceed the cost. One frequent argument in software practice is that measuring SPI's benefits is impossible, or at least difficult. Organizations find it relatively easy to measure cost by measuring effort but have trouble measuring benefits. However, this is owing to a serious misunderstanding of cost measurement: costs are much broader than effort alone. Making explicit return on investment (ROI) calculations is therefore crucial for SPI because it's an investment with significant cost and sometimes invisible benefits. The ROI should therefore be visible as well to avoid incorrect intuitive evaluations.