Spi Cost Roi

Software Process Software Process

Improvement (SPI)Improvement (SPI)

Cost and ROICost and ROI

Ikram Ahmed KhanBusiness Beam (Pvt.) Limited

[email protected]

mailto:[email protected]

© Business Beam (Pvt.) Limited

An Eye Opening An Eye Opening Experience!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)


Quotes by Some Software Quotes by Some Software Industry “Gurus”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!”


More Quotes by Some More Quotes by Some Software Industry “Gurus”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!”


Hallmarks of Our IndustryHallmarks 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?


Common (Mis)conceptions Common (Mis)conceptions about Software Processabout 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.


Realities about Software Realities about Software ProcessProcess 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.


Questions about SPIQuestions 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?


What Improved Maturity can What Improved Maturity can do for your Organization?do for your Organization?

CMM Level

Defects Shipped

Calendar Months

Level of Efforts

Median Cost

Lowest Cost

Highest Cost

1 61 30 600 person months

$5.5M $1.8M $100+M

2 12 18.5 143 person months

$1.3M $0.96M $1.7M

3 7 15 80 person months

$0.73M $0.52$ 0.93M

Based on data from 1300 applications, average 200,000 SLOCSource: Master Systems, Inc., Data obtained from QSM Database, QSM, Inc.Presented by: Rodger C. Blair, Pittsburgh PMI Chapter, April 12, 2001


What Improved Maturity can What Improved Maturity can do for your Organization? (2)do for your Organization? (2)

CMM Level

Average Unit Cost *

Average Programmer’s Productivity **

Average Defect Density

1 $27.5

(7.3)

333

(1.00)

30 defects every

1000 SLOC (8.58)

2 $6.5

(1.73)

1399

(4.2)

7.5 defects every

1000 SLOC (2.14)

3 $3.75

(1.00)

2500

(7.5)

3.5 defects every

1000 SLOC (1.00)

* 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).


Case Study 1: RaytheonCase 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.

Case Study 1: Raytheon Savings Case Study 1: Raytheon Savings due to CMM level 3 SPI Efforts!due to CMM level 3 SPI Efforts!

| | | | | | | | | | | | | | | | | | |

JAN MAY SEP JAN MAY SEP JAN MAY SEP JAN MAY SEP JAN MAY SEP JAN MAY SEP1987 1988 1989 1990 1991 1992

0

5

10

15

20

25

30

35

40

45

50

Per

cen

tag

e o

f T

ota

l P

roje

ct C

os

t

Cost of Rework

$15.8 Million Savedon

$2.05M SPI InvestmentStart of SPI Initiative

41%

11%


Case Study 1: Raytheon Case Study 1: Raytheon (Cont..)(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.


Case Study 2: SAIC Health Case Study 2: SAIC Health Care TechnologyCare 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.


Case Study 2: SAIC CMM Case Study 2: SAIC CMM Level 2 SPI ResultsLevel 2 SPI Results

20%

40%

60%

80%

100%

V4.1 V4.2Established Baseline Achieved CMM Level 2

Per

cen

t ag

e Im

pr o

v em

e nt

x Cost dropped 30%

x Cycle-time dropped 46%

B

x Error-rate dropped 90%


Objectives of Software Objectives of Software Process Improvement EffortsProcess 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?


SPI Example 1: Software SPI Example 1: Software Process without InspectionsProcess without Inspections

Requirements

Design

Code

Unit Test

IntegrationTesting

Systems /Acceptance Test

Rework

Rework

100+

100+

100+

ProductionRework

Rework

Rework

Rework

Rework

Rework 100++


Requirements

Inspection

Rework

Design

Inspection

Rework

Code

Inspection

ReworkUnit Test

IntegrationTesting

Systems /Acceptance Test

Requirements

Design

Code

1

1

1

Production

SPI Example 1: Software SPI Example 1: Software Process with InspectionsProcess with Inspections


Cost of SPI EffortsCost 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.


Cost of SPI Efforts (cont…)Cost of SPI Efforts (cont…)

For Pakistani organizations, the average cost per year per Software Engineer can be as follows:

Organization Size (Number of Software

Professionals)

SPI Cost per Software Professionals per month

(Rs.)

10-25 4k – 5k

25-50 3k – 4k

50-100 2k – 3k



2

4

6

8

10

12

14

16

18

20

Co

st o

f D

efec

t R

emo

val (

Rs.

in 0

00)

Defect Removal Stage

Req. Analysis Design Code Test Acceptance Operations

Code Defects

Design Defects

Analysis Defects

Req. Defects



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


How to have Successful How to have Successful SPI ProgramSPI 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.


Common Reasons for the Common Reasons for the Failure of SPI EffortsFailure 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.


Your Options!Your Options!

Continue with the software industry’s historical record.

OR

Transform your company into an efficient and mature organization with

higher profits

Thank you!Thank you!

You may find this presentation at:

www.businessbeam.com

Spi Cost Roi

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