Business and IT Leaders, faced with goals to reduce costs and increase profits need to figure out how to measure business value; return on investment, ROI, for the delivery of software products in support of the business goals.
A couple of decades ago technology investments were classified as “cost of doing business”, a cost center/centric view. In today’s world, the new paradigm is a 180 degree turn-around from the previous. Technology is a profit center; adding business value through the delivery of software and software products to the market place. It is indeed an integral part of a company’s competitive advantage and differentiator. Naturally, the standard measurements that are in place to gauge profit center performance now applies to the delivery of the technology, or in our case software products/applications.
Investments in technology require the establishment of sufficient business rationale in order to determine the value that this investment is going to bring to the business and thus justify required expenditures and resource allocations. Call it a business case, business justification; we anchor our business technology investments to meet the business goals/objectives. Communicating how quality objectives (see blog #1) are in direct support of the business and are validated through testing is the message you need to articulate. These goals can be qualified and/or quantified, but regardless, we need to identify the value and benefits the investments have contributed to the business.
If you have not produced a business rationale justifying the investment in quality, (test process improvements, test/requirements management tools, and test automation tools) you are falling short on your responsibility to document the business value of testing. Do not get bogged down by the financial calculations, seek out guidance from your finance department as they really can help technology professionals in this area. Instead concentrate on the information you need to validate/substantiate your business case.
Some general guidelines to follow:
ïƒ¼ Understand the business rationale, quality goals, & success criteria – discuss this with stakeholders such as marketing and finance to ensure full understanding
ïƒ¼ Know what you want from this initiative and how it will contribute to fulfilling your success criteria
ïƒ¼ Quantify as many of your objectives/goals as possible – reach out to people in your finance department for financial data and for a better understanding of financial benefits
ïƒ¼ Identify all the processes in support of the goals and business rational
ïƒ¼ Set thresholds and targets
ïƒ¼ Numbers can say whatever you want; don’t use ROI calculations to confirm a bad investment