Our customers confirmed, that the investment in Cost Xpert always resulted in a ROI factor of at least 2.5!

Usually, an amortization within six months is not the exception, but the rule.

Especially in terms of investment protection and in times of small budgets, it is important to know that investment in Cost Xpert will be at least neutral to your annual budget.

Extending the financial view over several years, our customers get even higher benefit, rather than just focusing to the first year. The TCO computations of our customers confirmed this even more. Investment protection and increase of value proposition could not be proved better.

Cost controlling gathers extensive statistics and characteristic numbers for the detailed cost analysis and total capital planning. They create the reference to all numbers upon completion, which allows deriving specific control and regulation measures. During the project it is important that they are ongoing monitoring the cost spending and giving the management the complete economy facts (amortization, profitability, margin etc.) once the software project is finished. Due to the specific complexity of software projects, cost controlling has to gather very extensive data and characteristic numbers, but ensure beyond all complexity of the project that a high degree of transparency is given of any individual cost factor.

Thereby the identification of the individual cost factors of the project is just as important as the consideration of the indirect costs.
 

Analyzing the economy of the software projects, problems might occur by using computing methods like the classic ROI (Return On Investment) or TCO (Total Cost of Ownership). Of course, the ROI should always be higher than the interests. Meanwhile, banks only grant credits, if companies are able to proof receiving a Return on Investment of at least 20%, while raising the productivity.

The formula for classic ROI is:

This approach of the ROI must be modified however for being used for software projects. Following formula applies for calculating the first year of investment (further details could be found at source reference):

The decision pro or contra an investment will be always made for economic reasons. The ROI or the interest on investment is a fundamental factor.

Actually the ROI itself is simple to compute. Much more important for the enterprise is however the corresponding gain of productivity which will be achieved and enable the enterprise being lastingly more productive. The following diagram represents this descriptive:

As can be seen regarding to the formula, the initial costs have a subordinated influence on the ROI. One recognizes on the lower diagram that realizing a small productivity increase of approximately 20% the ROI is much higher that 50%.

In order to extend the status of information, the model of Total Cost Of Ownership (TCO) is used, since it allows more easily to reveal the assumptions and boundary conditions as well as the underlying model used for the ROI analyses.

The TCO is a total cost calculation. The cost controller must carry thereby a huge effort, in order to achieve the necessary high degree of details. For computation the cost structure must be analyzed first, the cost breakdown must be made, the relevant data identified and the level of cost calculated, because this approach considers the initial costs and all aspects for the later use as well. A good operating cost analysis detects the "hidden" or obviously not seen operating cost, which could be easily ignored doing planning for budgets.

Important cost categories in the context of the cost calculation considering software project are, e.g.:

Therefore, the cost controller has to realize being stressed by using various computation models und cost categories while working on determination of the economy of software projects.