How to determine if a Customization will generate savings?
One important activity is to evaluate the return on investment of the effort required
to perform a Customization. The cost of a Customization should be lower than just
applying all the changes manually throughout the code.
The cost of applying a manual change is a value that, unfortunately, cannot be generalized
due to the different possible EWIs and the varying skill and experience of the person
performing the work. A recommendation for determining this effort is to convert
a small module or portion of the application, and measure the actual time required
for each fix. The average time required for these fixes can be used as a starting
point for the analysis. This number, however, should be adjusted to include the
tiem required for other activities such as the actual time to apply the change,
testing activities, the project management effort, and a contingency with additional
time used to fix any new issue related to human error in places where the manual
change was applied.
Once the cost for a manual change is determined, the following formula determines
the savings of a Customization:
- CC: Estimated cost of the customization in US dollars
- ET: Average time required to fix one occurrence of a Manual Change
- OC: Total occurrences of the Customization Opportunity.
- IC: Cost of an hour of work in US dollars
For a customization to be cost effective, and generate savings for the project,
the following formula:
should give you that the Estimated Cost of the customization (CC) is less than the
cost of performing all the equivalent manual changes.