I will be writing an ongoing series in this blog entitled “On helping software succeed,” in which I will examine pertinent and timely topics relating to the success of software. After all, software is unique, unlike other businesses. It is much more malleable than most physical businesses – there are only so many things you can do with machinery, real estate or other hard assets. But software, like putty, can become whatever it is designed to do. And to complicate matters, most software is dependent on other software:
There are tools for creating, compiling, testing, debugging, and managing software applications.
There are operating systems, external applications and functions required my many software applications to run.
In short, software is a world of multiple unexpected and unanticipated moving parts unto its own. At PreEmptive (link), we produce software for both Java and .NET that helps organizations protect, manage and monitor their software applications. Our unique honor, as the only 3rd party application shipping inside of Microsoft’s Visual Studio development environment, gives us a unique perspective: a true insider’s view into the software development process.
As just one example, we surveyed (link) 300 software application developers at Fortune 1000 and other leading companies and found that just 42% of companies calculate return-on-investment of the applications they develop. In addition, just 7% of respondents say they measure the return against a well-defined set of metrics and success criteria.
Software is unlike other businesses, but it does not mean, that with a little effort, its business impact can’t be measured. For example, before companies commit to spending billions on machinery, real estate or other hard assets, they calculate the expected return on investment. Few companies do this with software. It adds up to a huge expenditure that is rarely measured as a genuine asset or balance sheet line item. As the economy tightens, companies will want to know how to measure the business impact and the return on their investments in applications.
Here are some starting suggestions for creating an effective system for measuring application ROI:
- Invest in developing meaningful and consistent usage and impact metrics.
- Tie these metrics to development, support and maintenance investment strategies. Usage and impact metrics must translate into smarter application portfolio management decision-making and development resource utilization.
- Incorporate application ROI management into broader business performance management practices. Success can only be assured when application asset management is fully integrated into operational and business performance management.
Your thoughts? Comments?