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This chapter is from the book

Return on Investment

The simple way to look at the ROI is the net gain from the requirement divided by the cost of discovering, verifying, building, and operating the requirement:

  • % ROI = { (benefits – costs) / costs} * 100

Suppose you discovered and implemented a requirement for your Web site to recognize long-term customers and award them loyalty discounts. Then you find out orders from the Web site are up 5% because of these loyalty discounts. Let's say the cost of finding the requirement is $1,000, the cost of implementing it is $100,000, and the profit to the business because of the increased orders from that requirement is $250,000 in the first year. Assuming the correct requirements are implemented as specified, the ROI of the requirement (147% in the first year) is pretty good.

It would be very difficult, and time consuming, to establish the cost of a single requirement. As we progress, we will look at "units of requirements" (product use cases, business use cases, tasks, products) we can measure. Similarly, the benefit can be a saving as a result of installing the requirement or income generated by the requirement's existence.

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