The document discusses the need for a software methodology at a software development company. It finds that without a clear methodology, the company experiences low morale, missed deadlines, high turnover, and defects. Statistics show finding and fixing defects late in the process can be 100-200 times more expensive than early on. Applying these costs to the company's own defect data shows implementing a methodology could save $18-31 million by catching defects earlier.

1. “ A Financial Justification for Instituting a Software Methodology” by Terry Ehrhard June 8, 2000

3. Problem Definition Has some processes in place but lacks a clearly defined robust software methodology. This, in turn, causes many adverse effects…

5. Problem Detail Statistics has shown that finding defects later in the process are considerably more expensive than than finding those same defects earlier in the process. Defects found in post-release have proven to be 100 to 200 times more costly than if the same defects were found during requirements definition. Therefore, a software process which emphasizes quality in the earlier stages will benefit in many degrees.

6. Cost-to-fix Defects over Project Life (Boehm 1981) Relative cost-to-fix as defects are found later in the project life

7. Cost-to-fix Defect Ratios (Boehm 1981) This table shows the relative impact of finding defects at a particular stage versus finding the defect in the requirements stage. Cost-to-fix Ratio Stage to Defect Found Stage 1:100 to 1:200 Requirements – Post-Release 1:50 Requirements – Acceptance Test 1:20 Requirements – Development Test 1:10 Requirements – Code 1:5 Requirements – Design 1:1 Requirements – Requirements

8. Defects from Jan 1999 to Present This table shows the number of defects found in the product at each process stage for the last 18 months. (Defect Tracking Software) 10% 85% 5% N/A N/A N/A % of Total Defects Stage 489 Post-Release 4162 Acceptance Test 231 Development Test Not Tracked Code Defects Not Tracked Design Defects Not Tracked Requirements Defects

9. Defect Severity from Jan 1999 to Present (Defect Tracking Software) This table shows the severity level of all the defects found during the 18 month period. 2% 9% 9% 42% 16% 12% % of Total Defects Severity 90 Suggestion 473 Low 1,063 Medium 2,187 High 823 Critical 632 Missing Function

10. Cost-to-Fix Applied to Defect Analysis (Defect Tracking Software), (Boehm 1981) Assuming that each defect found in the requirements stage would take one hour to resolve and taking into account the statistics of finding defects later in the process, it can be shown how 4,882 hours can balloon to 260,000 to 310,000 hours in the case. Impact Ratio Defects Stage 489 4,162 231 N/A N/A N/A 48,900 to 97,800 208,100 4,620 N/A N/A N/A 100x- 200x 50x 20x 10x 5x 1x Post-Release Acceptance Test Development Test Code Defects Design Defects Requirements Defects

11. Cost-to-Fix Applied Summary If a dollar value is applied to the hours you can see the value to be gained from catching defects earlier in the process… Low Range Savings - $18-26 million** High Range Savings - $21-31 million** ** Based on $70-100 per hour