Saturday, December 1, 2007

Two soft concepts

This may be an interesting article on ROI. ROI is both hard and soft. For an automation hard costs could be a savings of man hours...very calculable and very predictable. Soft ROI numbers should be discounted 60% to 90% according to Tom Pisello.

I jacked this from the Tyner Blain blog: It's where another soft concept is introduced, the concept of utility:
"Agile software proponent Kent Beck argues that people don’t know what they want when you ask them. There may be some scientific support for his argument based on some research cited by Barry Schwartz in The Paradox of Choice: Why More is Less. Schwartz references psychologist Daniel Kahneman’s studies of how people remember events, in an explanation of how people measure and assess utility. To sum up, here’s the flow of events: A person has an experience, and recognizes some satisfaction from it. This is known as experienced utility. This is the function that economists reference when defining the indifference curve. When remembering the event later, a person will remember incorrectly. Their memory of their level of satisfaction is their remembered utility. The problem is that the remembered utility never precisely matches the experienced utility. This poses an interesting problem. Even if we find people who have experienced exactly what we’re trying to analyze, they will be unable to correctly tell us how much satisfaction they derived in the past."

Here's the Tyner Blain blog conclusion:
"The value of a requirement or feature is a function of user satisfaction and the financial benefit of having that requirement implemented. The user satisfaction can not be quantified in advance because we have no framework for reliably predicting satisfaction - even based on past experiences. "

That is very interesting, as much as user's demand certain features without being able to provide a cost justification for their demands.

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