Financial analyses of a DFTS process are meant to provide visibility and control for effective decision-making. Equally, various nonfinancial control mechanisms are needed in this regard. These analyses should not, however, lose sight of customer requirements.
Sound financial return is one of the desired outcomes of a DFTS initiative that is designed to meet customer requirements while also meeting the software developer's internal objectives. It is just that the focus is on customer requirements.
The idea that improved quality can improve cost-effectiveness is not totally new. It has been gaining ground only in recent years, following the enormous success of Six Sigma, DFSS, and Lean.
Cost of quality (CoQ) analysis is important, because it reveals how much you expend on prevention, appraisal, inspection, discovering, analyzing, scrapping, and correcting defects, faults, and errors.
CoSQ can be defined as the total cost of conformance and nonconformance to the customer's quality requirements. It consists of various direct and indirect expenses incurred when preventing, appraising, testing, discovering, analyzing, and fixing software faults, including maintenance.
Determining CoQ is a first measure in identifying and removing the root causes of failure.
Monetary evaluation of not performing quality tasks is challenging, because many intangible and competitive factors come into play. Often, conservative estimates are the only way.
Self-debugging can detect and fix faults. Failure costs can escalate if this is not done.
Given the growing emergence of reusable software, one particular project doesn't need to recover all the costs the first time it is used. ABC can be used to identify the correct cost of use, just as in manufacturing.
Three conditions must be met before ABC is initiated: indirect and overhead costs must be substantial and poorly accounted for by traditional means, cost objects must exist that management cares about, and repetitive activities must exist to serve as the basis for cost mapping.
CoSQ requires a new line of thinking: from cost of initial release to a mind-set of life-cycle cost, from an orientation toward testing and inspection to focusing on customer requirements and design, and from an approach based on corrective actions to a strategy of prevention.
QLF shows that a reduction in variability about the target leads to a disproportionate decrease in various losses and a subsequent increase in quality.
ROQI emphasizes return on quality investment following initial introduction. This is inadequate, so due emphasis should be given to other financial metrics, such as cash flow, sales growth, productivity gains, and ROE. Equally important are nonfinancial metrics with regard to customer satisfaction, process improvement, and leadership development.
