What’s the value of requirements management in a down economy?

John Simpson | November 18, 2008

You open a newspaper, turn on the TV, surf the Web – the news is dominated by the economic downturn.  Is it a worldwide financial crisis? Is it a bona fide recession?  How long will it last?  Who knows.  All I know is that you can’t escape it.  In one way or another, it affects us all.

As a smart business, the bigger questions are:  How can you thrive during tough times?  Do you cut spending? Do you freeze budgets?  Do you take a wait and see approach? Isn’t that what other companies are doing?

If you listen to the financial wizard Warren Buffett or follow the contrarian path of several innovative companies, they do just the opposite.  It makes sense really.  When others are cutting back because of economic fears, they see this as an opportunity to create value by increasing investments in areas that can fuel growth and create operational efficiencies for their businesses – from technology to processes to new product development.

As Mr. Buffett likes to say, “Be fearful when others are greedy, and be greedy when others are fearful.”

So, how does this relate to our world of software product development?  More specifically, what’s the value of requirements management – or any tool for that matter – in a down economy?

In theory, an investment in a requirements management tool will create efficiencies, eliminate costly errors and ensure higher quality products.  But is that just theory, or does it hold up in the real world?  The only way to find out is to explore it for yourself.

To help though, we’ve done the math using an ROI model developed for Software Quality Engineering (Stickyminds.com) by Richard Denney, a well-respected industry expert.  Based on a team of 10 active users and 10 stakeholders, with 2,500 requirements (500 of which are implemented in the 1st year) and industry averages for a few
other variables, the model shows you can achieve $300,000 in cost savings with a requirements management tool in the first year versus not using one at all; creating a 4:1 cost-to-benefit ratio.

Now, requirements management won’t make headline news, but the return on investment both immediate and long-term can be significant – if done well.  And, if you think about it, that’s exactly the kind of unsexy, penny-wise investment that a Mr. Buffet-like investor might consider.

Make the penny-wise case for RM at your company:

Download the Requirements Management ROI Analysis (.pdf)

Learn about the Jama and how to save 40%

Note: If you’d like the Excel version of the ROI model to play with the variables, just email me.