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Software Architect

The ROI variable

Book: 97 Things Every Software Architect Should Know
Publisher: O’Reilly Media
Author: Richard Monson-Haefel
97 Things Every Software Architect Should Know – 64/97

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Every decision we make for our projects, be it technology, process or people related, can be a viewed as a form of investment. Investments come associated with a cost, which may or may not be monetary, and carry trust that they will eventually pay off. Our employers choose to offer us salaries in the hope that this investment will positively affect the outcome of their venture. We decide to follow a specific development methodology in the hope that it will make the team more productive. We choose to spend a month redesigning the physical architecture of an application in the belief that it will be beneficial in the long run.

One of the ways of measuring the success of investments is by rate of return, also known as return on investment (ROI). For example, “we anticipate that by spending more time writing tests we will have less bugs in our next production release”. The cost of the investment in this case is derived from the time spent writing tests. What we gain is the time saved from fixing bugs in the future, plus the satisfied customers experiencing better behaved software. Let’s assume that currently 10 out of 40 working hours in a week are spent fixing bugs. We estimate that by devoting 4 hours a week to testing we will reduce the amount of time spent on fixing bugs to 2 a week, effectively saving 8 hours to invest in something else. The anticipated ROI is 200%, equal to the 8 hours we save from bug fixing divided by the 4 hours we invest in testing.

Not everything need directly translate in monetary gains, but our investments should result in added value. If for our current project, time to market is essential to the stakeholders, maybe a bulletproof architecture which requires a lengthy up front design phase will not offer ROI as interesting as a swift alpha release. By quickly going live, we gain the ability to adapt to audience reactions that can form the deciding element to the future direction and success of the project, whereas not thoroughly planning can incur the cost of not being able to scale the application easily enough when the need arises. The ROI of each option can be determined by examining its costs and projected profits and can be used as a base for selection between what is available.

Consider thinking of architectural decisions as investments and take into account the associated rate of return, it is a useful approach for finding out how pragmatic or fit for purpose every option on the table is.

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By Swatantra Kumar

Swatantra is an Open Source evangelist, a technologist and researcher. Professionally, he does software development, software architecture, server administration and project management. When he's not writing software, he enjoys building web entities and servers, reading about and working with new technologies, and trying to get his friends to make the move to open source software. He's written, co-written and published many articles in international journals, on various domains/topics including Open Source, Networks, Computer Organization, Mobile Technologies, and Business Intelligence. He made a proposal for an information management system at University level during graduation days.

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