ROI

Finally, there are two ways to increase the payback (or Return On Investment) on a software project:

• lower the cost or
• increase the value.

Lower costs can be accomplished with offshore development. Understandably, corporate executives are unhappy with paying high dollar rates for poor quality software built locally. Instead they reduce labor costs by moving projects offshore. Offshore programming gets low-cost, & talented programmers to produce the same poor quality software as before. Reducing cost increases payback.

An alternative way to increase payback is to increase project value. This can be realized by savings of time to market, closer understanding of the real customer requirements, and customer goodwill by providing defect free applications. Lean Software Development provides the business case for this approach. Extreme Programming provides the most popular way to implement Lean Software Development.

A closing thought. In the 1980s Japanese Lean Auto Manufacturers established engineering and production facilities in the U.S.. Did they move development off-(Japanese)-shore for lower U.S. labor rates? No way! They now build cars in Ohio and Michigan, in order to be closer to the customer, to ship quicker and to understand more deeply. They moved closer to customers to produce more profitably.

The same occurs in companies that adopt Lean Software Development. Offshore may be less expensive, but when software is business critical, locally built Lean Software Development with short cycle times and low defects are the cost effective, high value option.