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The Business Value of Agile Software Methods by Saya Sone, Hasan Sayani, David Rico

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19

Return on Investment of Agile Methods

The return on investment (ROI) of agile methods refers to the economic business value of using nontraditional methods to create new software products. An accounting valuation method, ROI measures the efficiency of an investment or a number of competing investments. Although ROI is a simple ratio of benefits to costs, expressed as a percentage, costs are first subtracted from the benefits. For instance, if one invests $1 and gets $10 in return, then the ROI is 900%; that is, ((10 -1) ÷ 1) × 100%. Because ROI is extremely simple to understand, it is a popular measure.

The basic idea behind ROI is that the benefits of an investment must be larger than its costs. If the benefits of an investment are large, ...

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