Cost Avoidance/Savings Measurements
I'm currently involved in validating our existing defect cost avoidance measurement formulas, and am interested in finding out how other organizations are reporting the cost avoidance associated with defect discovery in testing rather than production. Below is one example of how we currently identify cost avoidance.
Example: Defects discovered for a Major Business Application in Performance Testing:
6 Critical and Major Defects found in October
IT Support: 6 FTEs $23,760.00 6 defects x6 FTEs x $60.00 per hour x 11 hours)
Impacted Users(40% NMT 2000): 2000 FTEs $1,584,000.00 (6 defect x 40% x 11 hour x 2000 FTEs x $30 per hour)
Impacted Users (30% NMT 2500): 2500 FTEs $1,485,000.00 (6 defect x 30% x 11 hour x 2500 FTEs x $30 per hour)
Impacted Users(30% NMT 3000): 3000 FTEs $1,782,000.00 (6 defect x 30% x 11 hour x 3000 FTEs x $30 per hour)
Total Cost Avoidance: $4,874,760.00
40% of applications have NMT 2000 users, 30% have NMT 2500 users, 30 % have NMT 3000 users
Average defect resolution = 11 hours
Customer and Business impact, ie. negative perception, investment loss, commissions, etc. are incalculable, but expected to be substantial
Only Critical & Major defects are reported...Critical & Major are defects that would have caused a production outage or major impact.
Actual hourly rates are used to identify resource costs such as Operations, Application Development, Testing, and Software Distribution to correct the issue. FTEs are employees....this application went to 7500 employees.
Does anyone track similar information, and if so, would you be willing to share what you have?