Improving ROI by Valuing Features

by Jim Highsmith

In today's economic climate, "bang-for-the-buck" is critical to many IT organizations. Projects are closely scrutinized for reasonable returns and rapid payback periods. One of the identified benefits of agile methodologies has been improving return on investment (ROI) through the earlier capture of benefits. First, iterative development can result in early features deployment. In a 10-iteration, 10-month project, there could be enough functionality by, say, iteration four, to begin implementation. Rather than having projects in which 10 months of costs precede any benefits, benefit income (reduced operating costs, revenue enhancements, etc.) can begin in iteration four and grow over the next six iterations as new functionality is implemented. This can have significant impact on both ROI and payback periods.