Return on investment

Abstract

This article focuses on the significance of return on investment (ROI) policy in the computer software industry <!--[if gte mso 9]> Biblioteca de Ciencias y Tecnología Normal Biblioteca de Ciencias y Tecnología 2 0 2006-05-25T22:33:00Z 2006-05-25T22:33:00Z 1 154 847 UCLA 7 1 1000 11.6360 <![endif]--><!--[if gte mso 9]> Clean Clean 21 6 pto 2 2 false false false MicrosoftInternetExplorer4 <![endif]--><!--[if gte mso 9]> <![endif]--> <!-- /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0cm; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} span.medium-normal1 {mso-style-name:medium-normal1; mso-ansi-font-size:10.0pt; mso-bidi-font-size:10.0pt; font-family:Arial; mso-ascii-font-family:Arial; mso-hansi-font-family:Arial; mso-bidi-font-family:Arial; font-weight:normal; font-style:normal;} @page Section1 {size:612.1pt 792.1pt; margin:4.0cm 3.0cm 3.0cm 3.0cm; mso-header-margin:35.45pt; mso-footer-margin:35.45pt; mso-paper-source:0;} div.Section1 {page:Section1;} --> <!--[if gte mso 10]> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Tabla normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} <![endif]--> This article focuses on the significance of return on investment (ROI) policy in the computer software industry. On the contrary, ROI analysis aim to achieve clarity in the decision-making process. A robust economic and strategic analysis can help answer these questions. If a firm strategy to achieve competitive advantage based on higher customer satisfaction at corresponding higher prices, then it can argue for a certain level and type of investment in quality. A competitive strategy based on lower production costs and low prices might lead to targeting the investment in quality to specific parts of the software product or service. In this way, the value of increasing software quality is framed in terms that senior management can understand and use to make informed decisions. The ROl calculation organizes a project's costs and benefits, into a useful profitability measure. But this measure alone doesn't capture two essential ingredients of any serious economic analysis: time and risk.

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