Types of costs to consider when calculating ROI August 2014
Types of costs to consider when calculating software ROI
Jun 15, 2015
In this slideshare we delve deeper into the types of costs that you should consider when working on your software development project forecast.
It’s important to not just include the obvious elements such as people working on the project and additional equipment required but, to also think of other potential direct or in-direct costs.
It’s important to not just include the obvious elements such as people working on the project and additional equipment required but, to also think of other potential direct or in-direct costs.
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Types of costs to consider when calculating ROI
August 2014
How can you measure costs?
In this document we will take you through the different measures that can be used for ‘cost’ when working on ROI calculations for your Software Development project.
1. Total cost of ownership (TCO)
Helps determine both the direct and indirect costs of a system
Be aware that TCO can vary significantly between off-the-shelf and bespoke software
If your software project is a cost saving or revenue growth project costs must be calculated as TCO
2. Cost Saving Investments
With any software development there are 4 key cost measurements
People - think about the cost of those that currently support the system and those that may be required for development
Equipment & Hardware – think about current costs including maintenance or management fees
Running costs – what is required and what are the existing costs? e.g. servers, storage, network infrastructure
Efficiency – think about operational efficiency in terms of productivity and scalability
3. Revenue growth investments
These should be measured consistently at key points over the lifetime of the software
When using this option consider:
Opportunities for growthIncorporating organisational circumstances, sector status, scalability, new product development and speed to market
Measuring new revenue Include the revenue that is judged to have been created as a direct result of the new software development project
4. Added value from unlikely sources
Make sure you consider not just internal savings but direct commercial benefits too
Here are some examples of potential commercial benefits:
Application for R&D Tax Credits . This is where in essence the Government rewards organisations for innovation based on a set criteria
If the project is a success why not think about licensing it to others?
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