ROI calculator - Performance Engineering

[Shikhar Puri]

Hi,

Has anyone worked / referred ROI calculator for performance engineering engagements. Any pointers, help, document, reference would be of great help.

Thanks
Shikhar

[Koby BILLER]

Shikhar,

I came to the Forum in order to start a discussion, but it looks like you have already started it.

I don't believe it is possible to make a general purpose ROI calcilator, because ROI is a marketing concept when you try to sell, and since there are several techniques to calculate the ROI, every one will naturally choose the one suited for him/her.

Please have a look at http://www.disklace.com/ROI.htmlwhere I put some techniques trying to encourage the use of "Preventive Maintenanace Optimization" in order to reduce expenditures in organizations.

We have gathered all the techniques, because we are trying to sell a managing and control software in the area of disks and storage, and although every method shows a remarkable ROI, we are have a wonderful program product but low sales.

The reason is, that ROI is probably a good excuse for not buying, but not enough to sell, because more elements has to be taken into considerations.

Koby Biller
http://www.disklace.com

[David Collier-Brown]

The general case is hard, but some special cases are easy (;-))

When doing capacity planning, the usual question is "what's the payback
period and ROI if I buy the board you recommended?"

Assume you know the average load is 100 TPM, the board costs $1,000.00 and
the lack causes 5% of the transactions to be abandoned (ie, it can handle 95
TPM right now). The board would give you ~120 TPM.

The customer doesn't actually know how much a transaction makes him (unless
this is the main app of a publicly traded company (;-)), but will be able to
tell you if your guess at the value of 1 TP is wrong, so we arbitrarily say
1 TP = $0.01

Now the board will bring us in $0.01 * 5 TPM * 60 minutes * 8 hours * 30 days =
$7,200 per month, The payback period is about 4 days, and the ROI for the
first month is $6,200 and for subsequent months $7,200.

You stuff that in a spreadsheet and sit down with the customer and make some
more guesses about what a transaction is worth, and decide on a number
he'll use in his presentation to the budgeting committee.

--dave

[Pat Crain]

See "The Economics of Software Performance Engineering" at http://www.perfeng.com/papers/hanson.pdf

[nilesh gajjar]

Shikhar

Look at the Forester Report "Performance-Driven Software Development", that talks about the economy benefits of bringing in performance engineering expert early in software development life cycle.

Other way of looking at the benefits of Performance Engineering are:

- Poor web site performance would result in to customer moving to your competitor site
- Website downtime (due to lack of capacity or scalability issues) would result into loss of biz
- Such issues would also affect the Brand or Reputation in the market

You can google for following reports/white paper for more details:

- Is a poor website damaging your reputation?
- Poor performance 'cost e-tailers £300m' over Christmas
- Retail Website Performance: Consumer Reaction
- The cost of poor quality software
- The cost of poor website performance

-nilesh