Software can create enormous value for businesses, but software projects also represent significant financial investment and risk. To succeed, software organizations must create value efficiently (deliver more value than the costs they generate) and manage risks effectively. It is easy to understand a project's value once it has shipped and starts generating revenues, but to make sound investment decisions, an organization must assess how much value a project will deliver before it has shipped and understand how likely a project is to deliver its predicted value.
Our Approach
Financier is a tool that offers key insights into how much value an incomplete project is likely to provide over time, the odds that a project will deliver its predicted value, and the risks to that value. Financier offers three novel capabilities:
- Automatically computes the predicted value of a project. Using data about a project's development costs, maintenance costs, and actual or projected revenues, Financier computes the project's Net Present Value (NPV). Unlike traditional approaches that use NPV, Financier's computations are based on best case, worst case, and expected case numbers. Financier computes a distribution of NPV values for the project, identifies the most likely result, and shows the project manager how likely the project is to achieve a given value within the distribution.
- Identifies relative value and risks of different projects. Financier shows program managers how the predicted value and risks of multiple incomplete projects compare with one another. Its unique "bubble plot" diagram clearly reveals the relative potential benefits and risks of each project, allowing program managers to choose investments that balance amount of risk with potential value to the organization.
- Provides simple, intuitive interfaces. Financier's input templates and output formats simplify the project manager's difficult and time-consuming task of entering financial data and understanding the results. S/he can see computed value projections after just a few clicks, and watch those projections change as s/he adds more information. The program manager can evaluate a large collection of projects together using a single, intuitive view, or examine the details for any of the projects individually.
Benefits
Project managers can better understand the potential value and risks of their projects and take action to manage the risks to the project.
Program managers can evaluate the relative value of multiple projects and the risks they pose, helping them make better investment decisions for the organization.
Financier Team
Technical Lead: Paul Matchen, Watson Research Center (Hawthorne)
Jacquelyn Martino, Watson Research Center (Hawthorne)
Dharmashankar Subramanian, Watson Research Center (Yorktown Heights)
Segev Wasserkrug, Haifa Research Laboratory
Clay Williams, Watson Research Center (Hawthorne)