The real world is ridden with constraints of various degrees. The constraints curb our options and sometimes close doors on various opportunities. Let us look at some examples where value was provided by breaking these very constraints. The postal letters allowed geographically distributed people to communicate without having to physically meet. But one could not have conversations using those, they were lagged. The telephone broke this constraint and one could converse with someone in a remote place. However, it could only relay voice. So came the video phone where even pictures could be transmitted. Pretty effective, but it put a burden of huge investment which was then broken by the Web. Each of these instances kept enhancing communication and provided additional value by breaking constraints. So much so that the world seems impossible without them today. Such is the conviction of their values that many do not have to think twice to realise their Return On Investment (ROI).
ROI Through Constraints
As a software professional I have found presenting this value or convincing the customer of the ROI a difficult task, sometimes futile too. This was the first thing I realised can be resolved when I was introduced to Theory Of Constraints (TOC). If a software can be shown to break a constraint for a user, or rather a business constraint assuming that you would want to treat every user as business, then its ROI could be made apparent and convincing, as in the cases mentioned earlier.
Software As A Solution
Breaking a constraint should be used to solve the underlying problem. To be able to take a constraints approach, software has to be viewed as a solution rather than a product. The difference between a solution and a product is that solutions are customized and also include the usage. One of my friends always says this – software itself does not provide value, its right usage does.
The example mentioned in the book Necessary But Not Sufficient is apt. A company took half a month to do certain calculation manually and hence was restricted to doing it only once a month. Once they bought a software which automated it, the constraint was broken. However it still did not benefit a lot because they still kept on calculating once a month. Benefit for the business would have been if they had used the faster calculation time to calculate the data more frequently. Here the problem was less frequent calculation of the data caused by the constraint of doing it manually. The ROI of the software was in using the software the right way.
I have witnessed two approaches. The first one is where a business buys a popular software because it is known to solve problems of their likes. Then try make optimum use of the software. The second is where initially the constraints and problems are identified. As a solution a software is selected. This approach has a way of identifying ROI before buying the software, and this requires identifying software as a solution.
The benefit of treating software as a solution is that it eliminates the
The simplest example I can cite right now is my own. Before I started blogging, my circle for discussion on software development was physically limited. Blogging has broken that constraint and now I can reach anyone in the world and find people having common interests. My blog is not just a piece of software, it is a solution for me which includes WordPress, my writings and contributions from my readers.
Identifying Constraints for ROI
What this means is that ROI of the software can be easily shown if it can prove that it breaks some constraint and solves problems for a business. Sometimes this ROI can be in terms of finance, sometimes in productivity or sometimes in terms of saved time and effort. In whatever form, the ROI should speak for the bottomline justification.
While dealing with a customer, identifying the constraints can help in convincing the ROI of the software. For this, the focus should be exclusively on the business and business processes. Sometimes the problems can be tied down within the processes and breaking the constraint might involve re-engineering of the process. A discussion and study of the customer’s existing system is required to identify these constraints.
To come to think of it coming with ROI and then convincing the customer about it is not easy. The best way is to express in business terms. Every business knows its constraints, or if it does not, identifying them will help. If any software can break the constraint then it can definitely make an impact on the bottomline justification and provide the ROI.