Tools R/I = B/C = f(CALMS)

ROIsnip In case you were wondering what this complicated equation is, this was the answer to a question our friend Dinesh had in Chow #29!

The question of justifying a tool investment based on a traditional ROI model is tough to answer.

While the conventional approach is to calculate a return on an investment over a fixed period, with tooling and automation, this model would run into limitations.

These include questions such as:

? how do I assess or value some intangibles? or rather qualitative benefits?

? what is a reasonable period over which I can calculate this

A better approach is to just look at a cost – benefit [or should it be benefit/cost?] model to accommodate the quantitative and qualitative aspects.

Borrowing from the DevOps movement, the CALMS approach is a good framework to do this.

This approach also helps teams and organizations that may not have current performance metrics or benchmarks that can be used to baseline both current state and set aspirational goals.

Let us look at what these would imply:

Culture: the impact of culture is probably the most significant. While a tool may be introduced, unless there is willingness to use the tool effectively, which also includes reviewing the current practices and streamlining. A toll, many times, can be the rallying point for a team to come together. Since tool related decisions are sometimes very subjective and could have associated emotional angles, this needs to be taken up cautiously

Automation:  The direct impact of the tool is automation. This is already considered as a dimension in improvement – and this is what we are attempting to justify!

Lean: This is probably the most significant theme that runs across all of CALMS. While tools help , the first step is to look at the value chain and remove all non-value adding activities. Along with that, simplification of the processes, wherever possible, will help in identifying the automation opportunities as well.

Measurement:even if past metrics are not available, it is good to put in place some simple measurements around key metrics that are of significance to the product quality and customer. Over a period of time, this can be used to understand the progress on the improvement journey

Sharing: This – may also be considered as part of culture – will generate a multiplier effect of the benefits of tooling. If one has a model of sharing tools across projects in a hosted environment – subject to the licensing norms for the specific tool – the benefits reaped by any one project may be more easily replicated across teams

In this context it would be evident that the Investment needed for realizing the benefits of tools would be more than just the cool cost.

Also, some of the returns [or benefits] would take time to be visible. But, this would be the first step – to streamline processes and align practices around the updated processes, automate, measure, and have a culture of sharing and collaboration – on the journey of excellence for a project

So, it is best to shift a discussion on ROI to a Cost benefit [or should it be Benefit/Cost or B/C?] model.

Hence the title for this post, to be read as: Tools ROI is equal to the cost benefit from tooling and automation, which is a function of the CALMS dimensions.

 

If you have any experience in justifying investment in tools and automation for your projects, please share for all our benefit.

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