How to measure ROI for SOA projects? A Tollway Approach
Guest post by
Prasad Jayakumar, Technical Lead, Oracle Practice, Enterprise Solutions, Infosys Technologies Ltd.
Early morning I was hitting I-94W to meet my client in Milwaukee. I wish I had my I-PASS; toll varied from 25 cents to little more than a dollar. I was wondering "Why not the government builds the infrastructure out of tax collected and let us free?" Immediately I realized my ignorance. My discussion topic with client was "How to measure ROI for SOA Projects?" It was a meeting to see if we can present benefit of SOA in a tangible way to business. I was wondering if the toll way could answer the question.
Please note: All values are notional. Click on image to enlarge.
The whole idea of SOA ROI by toll way approach is based on Throughput Accounting.
Throughput (T) = Daily transactions priced at some notional $ value
Investment (I) = SOA Infrastructure Setup
Operating Expense (OE) = Development Cost + Maintenance Cost
Return on Investment = (T-OE) / I
There could be a day where IT paybacks some business unit (Service Provider), of course getting from other business unit (Service Requester). What else could motivate business better than dollars? I am not sure if business would be interested on asset/service reuse [it is presumed to be IT thing] unless we position it differently. Tollway approach can go beyond measuring ROI if embraced by business and IT.
Comments
This is a very interesting concept. In fact in one of our projects a similar thought had come to my mind when we were trying to get the client to agree to paying a high upfront development cost for a setup automation project. Since it was difficult to quantify the ROI of the project it was difficult to justify the upfront investment. An alternative was to charge a nominal development cost upfront and then charge on a per record setup basis for the next two-three years through this tool to recover the cost of implementation. It would have worked for both parties but I guess clients are not yet ready for such radical pricing models.
Posted by: Jaideep Vijayakar | March 16, 2011 3:16 PM