A Recipe for Quantifying the ROI on Improving Process Maturity

Posted By Jitendra on September 23, 2009 | Technical Debt

Types of Process Frameworks

1.What should I do? — Process Definition Frameworks (Associated Metric Type = Objective or End-Result, or Benefit)

• ITIL
• MOF
• ISO, etc.

2. How well am I doing it? – Control/Audit/Maturity Frameworks (Associated Metric Type = Operational Level or Quality Indicator)

• BS 15000
• CMMI, etc.

3.How can I improve it? – Process Improvement Frameworks (Associated Metric Type = mix of above two metric types)

• Six Sigma
• TQM
• Lean, etc.

A Recipe for Quantifying the ROI on Improving Process Maturity — the bang for the buck on improving the repeatability and quality of processes:

1.Define the end-result metric (e.g. support cost per year in $)
2. Define the process performance metric (e.g. defect injection rate)
3. Quantify the end-result metric as a function of the process performance metric — e.g. support cost per year = f(defect injection rate)
4. Define processes and break down process activities (e.g. testing process)
5. Define activity maturity levels — what it means to be at maturity level 1, level 2, etc.
6. Quantify the change in performance metrics due to change from one maturity level to another.
7. Use (3) to calculate the benefit of moving from one maturity level to another.
8. Quantify the cost of moving from one maturity level to another (one-time and ongoing cost categories are: organizational change, business process change, software licences, productivity loss, administrative costs)
9. Divide (7) by (8) to calculate the ROI of process maturity improvement

Tags: metrics, process maturity improvement, ROI