Chapter 62

Cost Justification

Randolph G. Bias
Austin Usability

Deborah J. Mayhew
Deborah J. Mayhew and Associates

Dilip Upmanyu
Tivoli Systems

 

Outline

Justification, of Cost Justification

The Return on Investment Is What It Is

The Empirical Approach to User-Centered Design

To Whom Do Benefits Accrue?

Quantifying the Costs (Easy!)

Quantifying the Benefits (Harder)

The Value of Money — Various Financial Methods

Raw Dollars

Payback Period

Internal Rate of Return

Net Present Value

Not “If” But “Which"

Why a Cost-Justification Approach Is More Important for Web Interfaces

A Spreadsheet Model for Custom-Building Your Own

Cost-Justification Tool

Savings to the Customer

Increased Conversion Rates

Some Final Points

What of the Not-For-Sale, Internal-Use Software or Web Site?

Are We Worried About Achieving a Particular Return on Investment, or About Avoiding a Disaster (and a Law Suite)?

The “Developers Are Users” Inhibitor — How Shall We Learn Not to Depend on Our Own Intuitions?

Finding the Stakeholder in Which the Cost and Benefit Lines Cross- What to Do When the Costs Outweigh the Benefits for a Particular Suborganization

Net Present Value

Conclusions

References