Jama Software Unplugged

Is Requirements Management a smart investment right now? What’s the expected ROI for an RM tool? Does your executive team view RM as a “must have” or a “nice to have” solution?

I find myself having conversations on these topics with customers almost every day so I thought I’d write about the analysis we do to help answer those questions. These are great discussions and with any enterprise software purchase, it’s a good practice to assess the total cost of ownership and determine the anticipated return on investment (ROI). And, especially in a tough economy, this is even more critical.

The good news is that in the field of requirements management, there’s a pretty thorough model that exists. We use an ROI model developed for Software Quality Engineering (Stickyminds.com) by Richard Denney, a software and process management consultant. This model has been used by many in the industry to assess the value of requirements management.

It helps quantify the tangible cost savings and benefit-to-cost ratio for these 4 key benefits of RM:

1. Improved team efficiency
2. Avoiding lost requirements
3. Avoiding unnecessary work
4. Reducing requirements defects

On average, the cost savings we’re seeing for companies range from $300k – $400k per year for a team size of 20 though there are a handful of variables to consider to customize the analysis to your team.

That being said, getting a good return assumes commitment and from the team and that the requirements tool isn’t shelfware.

We’ve seen that it’s easier to be successful when the development process matches team dynamics and the tools selected have team buy in.

If you are thinking about the value of requirements management or how to quantify a requirements management solution, let me know. I’ll share our version of the spreadsheet and ROI doc. Email me at kthomson@jamasoftware.com.