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Establishing Performance Levels

Producing an effective cost-per-function-point measure requires the establishment of a baseline level of performance. Performance levels are commonly discussed in terms of delivery (productivity, quality, cost, and effort). In each of these categories, function points can be used as the base measure. The use of function points provides two benefits. First, because function points are applied in a consistent and logical (not physical) fashion, they are considered a normalizing metric. This allows for comparisons across technologies, business divisions, and organizations. Second, an extraordinary amount of industry baseline data can be used to compare performance levels among various technologies and industries and then compare internal baseline levels of performance to best-practices performance levels.

Table 1 shows examples of industry data points for productivity levels. The values are expressed in hours per function point as a rate of delivery. By converting hours to dollars, a cost-per-unit-of-work measure can be readily obtained. These data points are from the International Software Benchmarking Standards Group (ISBSG), one of numerous sources of industry benchmark data. Table 2 depicts similar rates by business area.

Table 1

Rates of Delivery (Hours per Function Point) by Size and Technical Platform

Function Point Size

Mainframe

Client/Server

Object-Oriented

225

9.1

11.4

12.5

400

10.4

13.0

14.3

625

12.2

15.2

16.7

875

14.6

18.3

20.1

1125

18.3

22.8

25.1

Table 2

Delivery Rates by Lines of Business

Business Area

Rate of Delivery

Accounting

11.3

Manufacturing

6.3

Banking

12.0

Telecom

2.0

Insurance

27.4

Engineering

8.1

Looking at these data points, the advantage of using function points for comparative purposes becomes obvious. Organizations can compare themselves to industry performance levels and use these values to evaluate the performance of their outsource provider.

Baselining an organization's level of performance has become a standard industry practice, particularly in companies in which IT organizations are required to track and improve their delivery of products and services relative to improved time to market, cost reduction, and customer satisfaction. Creation of an IT performance baseline (often referred to as benchmarking) gives an organization the information that it needs to properly direct its improvement initiatives and monitor progress of outsourcing contract.

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