13/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
The CMMISM and theBottom Line
presentation to the
CMMISM Technology Conferenceand User Group
Denver, CONovember 12, 2002
Jeffrey L. DuttonTechnical Director
Engineering Performance Improvement Center
23/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
What is NOT Included
• Selection of quality model (CMMI, ISO,etc.)
• Selection of CMMI model(s) orapproaches– Domain models– TSP, PSP– Staged or continuous representations
33/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
What IS Included
• Basic decision process for CMMI investment• Importance of quality or performance goals• Understanding of Value Domains• Understanding of Contract Types• Calculation of Return on Investment
Presentation is based on Paper which is available in Conference Proceedings.
43/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
Basic Decision Process
SpecifyOrganizational
Quality andPerformance
Goals
SpecifyOrganizational
Quality andPerformance
Goals
Decide whichengineering
quality model is appropriate
Decide whichengineering
quality model is appropriate
Plan structureand content ofpotential CMMI
Program
Plan structureand content ofpotential CMMI
Program
Identify levelof investment necessary to achieve CMMIcompliance
Identify levelof investment necessary to achieve CMMI
compliance
Estimate multi-year ROI for
type of contractexpected
Estimate multi-year ROI for
type of contractexpected
Is ROISufficient?
Is ROISufficient?
Yes
No
ConsiderInvestmentConsider
Investment
53/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
Importance of Quality or Performance Goals
Est
imat
ed R
OI
Focus on Organizational Performanceand Quality Goals
Level 2 Level 3 Level 4 Level 5
Opportunity Space
(For equal levels of investment)
Sharp focus on organizationalperformance and quality goals
Little or no focus on organizationalperformance and quality goals
Break-Even Line
63/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
Value Domains
Life CycleIncreased productivity, reduced time to market, higher product quality, reduced costs
Marketing"Level 3 requirement", customer perception of schedule and cost predictability
Intrinsic Value
Responsive infrastructure, highly knowledgeable employees
73/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
Value Relationship to Contract Types
Per
ceiv
ed V
alu
e
Life Cycle Marketing Intrinsic
FF
P/C
om
mer
cial
Co
st P
lus
Aw
ard
Fee
Tim
e an
d M
ater
ials
FF
P/C
om
mer
cial
Co
st P
lus
Aw
ard
Fee
Tim
e an
d M
ater
ials
FF
P/C
om
mer
cial
Co
st P
lus
Aw
ard
Fee
Tim
e an
d M
ater
ials
83/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
Introduction to Life Cycle ROI
• “Traditional” presentation ofCMM/CMMI ROI– SEI data analysis– Data and Analysis Center for Software
• Includes:– Productivity gains– Reduction in cycle time– Reduction in post-release defects– Reduction in calendar time
93/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
Life Cycle ROI
Life Cycle Marketing Intrinsic Value
FFP/Comm.
Cost Plus
T&M
Rel
ativ
e R
OI
• 9 – 67% increase In productivity• 15 – 23% cycle time reduction• 10 – 94% reduction in latent defects• Life cycle ROI of 400 to 800%
103/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
Introduction to Marketing ROI
• Increased number of opportunities– CMMI “compliance gate”– Efforts where CMM/CMMI compliance is rewarded– Compliance in specific domains
• Increased probability of win– Schedule predictability and adherence– Improved quality– Reduced costs– Faster time to completion
113/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
Marketing ROI
Life Cycle Marketing Intrinsic Value
FFP/Comm.
Cost Plus
T&M
Rel
ativ
e R
OI
Approx. 150%ROI based onbusiness caseestimates
E.G.: P(WIN)IS 80%,Contribution ofCMMI complianceest. at 25%.After win, 32%of contract profit attrib.to CMMICompliance.
123/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
Intrinsic Value
Knowledge Mgt. & Dissemination
HumanResources
Visioning & Leadership
Marketing &Business Dev.
TechnicalOperations
Mission Processes& Technologies
FinancialOperations
ProcessEngineering
InformationManagementQuality
Assurance
133/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
Intrinsic ROI
Life Cycle Marketing Intrinsic Value
FFP/Comm.
Cost Plus
T&M
Rel
ativ
e R
OI
• Reduced turn- over measurable• Contributions to marketing and engineering performance
143/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
Calculation of Final ROI
• Actuarial plan needed– Investment amortized over time frame– Life cycle, marketing, and intrinsic ROI applied to
appropriate phase
• Calculate individual ROI• Apply against investment across time frame• Sum ROI from all Value Domains across time frame
153/05/00EPIC
Engineering Performance Improvement Center
Advanced Systems GroupCMMI Tech Conf & User Group
Sample “Bottom Line” Investment vs ROI
Do
llars
Year 1 Year 2 Year 3 Year 4 Year 5
CMMI Investment
FFP Software Contract
Reduced Turn-Over
Marketing ROI
Life cycle ROI
CPAF Systems Engr. Contract
