ReliaSoft’s Reliability ROI

R3OI

ReliaSoft's Reliability Return on Investment(RRROI or R3OI)metric was

First, traditinal Return On Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. In general to calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; and the result is expressed as a percentage or a ratio.

[math]\displaystyle{ ROI=\frac{Gain\,from\,Investment\,-\,Cost\,of\,Investment}{Cost\,of\,Investment} }[/math]

In this formula "gains from investment", refers to the revenue or proceeds obtained the investment of interest. Return on investment is a very popular metric because of its versatility and simplicity. That is, if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken.

Relibility ROI, is similarly computed by looking at the investement as the the investment in improving the reliability.

To illustrate consider the case of ACME's Widgets. The current design has had an average reliability perfromance in the field, yielding ACME a 10% market share. To stay competitive ACME offers the same warranty as it's competitors (2 years) and prices the product simlarly.