Return on Investment in Human-Centered Design
In business, everything, and I mean everything, comes down to money. As much as it pains us to admit it, the essential business question boils down to ‘Will investing in human centered design (HCD) pay off, or not?’ Well, it’s time to wise up; HCD can make (or save) you some serious cash.
A little bit of time and money on the front end will create tremendous savings later in the development and product release phases. Over the past thirty years, source after source, and study after study (Mantei & Teorey, 1988; Bias & Mayhew, 1994; Rajanen, 2003; Conklin, 1991; Karat, 1993, 1994; Mauro, 1994) have provided qualitative and quantitative support for investment in HCD. Bias and Mayhew’s Cost-Justifying Usability is particularly distinguished in this category, and their conclusions are clear: you will not believe how much money HCD can save you.
So let’s recap some of the benefits of integrating HCD into your business. Various experts in the Return On Investment (ROI) of UX have published theories on how this stuff works, but it can be difficult to keep track of it all. Fortunately, Mikko Rajanen (University of Oulu, Finland) has compiled their cost-benefit models for us. In his 2002 and 2003 papers, Rajanen helped synthesize the benefits of each model into one comprehensive format, which can be found here. It should be noted that Bias and Mayhew actually compiled the models in their book Cost-Justifying Usability, but Rajanen provided the synthesis of what we will discuss below. We will see that the benefits of HCD extend into various parts of the business.
A key principle of HCD is to work iteratively. We make some progress, test it out, and apply what we learn in the next iteration. This means that the decisive initial stages of a product’s evolution are revisited early and often. This is a good thing. The feasibility of any feature, requirement, or characteristic is evaluated well before significant resources are expended on that detail. In effect, HCD is extraordinarily efficient; the good ideas continue to grow while the bad ones get shot down. No harm done. We not only save on budget, but use less time getting the product to market.
The process speeds development because HCD takes less time to identify and fix problems. Let’s say that Company A deploys its product into the market, and the time required to fix the average problem takes 30 hours of patching. Because Company A’s computer programmers make about 50 bucks an hour (probably a low estimate, but a round number), the ~15 changes the programming team makes will cost about $22,000. Now, had Company A employed iterative HCD from the very beginning, each of those 15 changes may have only cost, say 10 hours to correct on average, if that. Even if those same $50/hour programmers were doing that work, the bugs will cost only $7,500 total to fix. I’m no math whiz or anything, but $7500 is less than $22,000. If you want to ignore the scale, feel free to call that a 66% cost reduction. Fine by me.
Refer to the image below for a great representation of cost savings here:
If you’d like to see this idea from another perspective, a hypothetical (but totally realistic) scenario demonstrates these savings in this video. Usability engineering does add time and money on the front end, but as Susan Weinschenk shows, that investment pays off very quickly.
Or perhaps you aren’t a huge fan of hypotheticals. Well, there are many documented instances that demonstrate the savings HCD can enable. According to Harrison et al., (1994), American Airlines was able to reduce the cost of development fixes by 60-90%. For a company of that scale, the savings surely would have been in the multi-millions of dollars. Likewise, Rhodes (2000) discusses a case study in Sun Microsystems that showed how $20,000 could yield a savings of $152 million (Bias & Mayhew, 2005). Because of evidence like this, the cost-benefit rule of thumb is that every dollar spent on usability in the development stages could end up saving anywhere from $10 to $100 in the long run (Gilb, 1988).
Not too shabby, huh? Well buckle up! That’s just the start.
Marketing and Sales
Rajanen found that gaining a competitive edge over other companies was consistently reported by the models. It’s simple; a system that is user-friendly will attract more users. Why would someone willingly use a product that causes frustration and wastes time when a perfectly good alternative is available elsewhere?
HCD helps to generate positive customer satisfaction, which sets off a whole series of events. Easy-to-use systems typically lead to customer satisfaction. Customer satisfaction yields more return customers. And you know what? Return customers mean increased sales. HCD puts more money in your company’s pocket because the product is better.
The better product brings revenue. Wixon and Jones (1995) investigated a software product that, due to HCD interventions, grew in revenue by more than 80% between the first and second generations. On top of that, according to the study, the improvements led to revenues 60% higher than were projected (Bias & Mayhew, 2005), which is a remarkable testament to how underrated HCD truly is, if implemented correctly. Even the companies who already invest in HCD can be surprised from time to time.
While a strong user experience does not guarantee success, a bad user experience all but guarantees failure. A product won’t succeed unless people can use it effectively and efficiently. Those who have adopted HCD know this to be true. Bias and Mayhew mention Charles Schwab & Co, Inc. as an example. In their eyes, ease of use has quickly become the differentiator for business giants (Kalin, 1999; Bias & Mayhew, 2005). Look at two of the most successful companies in the world, Apple and Google. Why are they at the top? Because they were some of the first to invest heavily in a culture of HCD, that’s why. Everyone uses those brands because their products are incredibly easy to use and their earnings show it, bigtime.
When a system is easier to use, the potential to just hand it over to the user (as is) improves. If HCD methods are performed correctly, the system you’ve designed should be as independent and autonomous as possible, which means fewer people providing support for the system’s operations.
Significant quantities of time and money can be dumped into creating training manuals, walkthroughs, and even live training events, especially when it comes to using highly complex systems at a corporate scale. There is obviously a wide spectrum here, but regardless of scale, the more user-friendly the system is, the less time is required to teach users how to use it.
The same concept can be applied to longer term support. Not only is training of the system much less necessary, customers have more successful experiences with the product on a day-to-day basis. As was mentioned previously, human-centered engineering allow developers to catch sources of user error in the development stages, way before they would show up for real users. If the system is as autonomous and usable as it ought to be, user confusion is diminished because the pain points have already been identified. What this means is that user support is also much less necessary. Overhead costs in the form of customer support staff are drastically reduced because customers don’t need as much assistance using an intuitive and efficient product. Fewer problems for the users equals fewer customer service resources.
The benefits under the customer support heading also directly apply to the end users. Not only is the company sparing resources, but the most important people in the equation are benefitting too: the end users.
As has been established, systems that employ human-centered design strategies yield a product that requires less training, and that time savings can really add up. Suppose Company B has a group of about 2500 insurance workers who are about to learn a brand-new database system. Company B’s employees at that paygrade make, on average, $23 dollars an hour. According to the maker of the new database system, the training required for learning how to use it will take somewhere between 4-6 hours per employee. Let’s do the math. 2500 employees at $23/hour will cost roughly $287,500 if the training uses up an average of 5 hours per worker.
Now what would happen if the database system only took, say, 1 hour to learn? The total cost of $57,500 would provide a savings of $230,000 right off the bat. Maybe that’s a lot of money or maybe it’s just petty cash to Company B, but cutting down on costs at that high of a percentage has got to be attractive. What could you do with an extra $230K? Can you say “End of year bonus!”, Mr. CEO?
Again, that was just for training! What about how much it costs for the employees to use the system? Day in and day out, pain points the end users find will add up, too. If the system can be designed to make the customer’s life as comfortable, productive, and efficient as possible, workers will flourish. As Kalin (1999) put it: “A usable system means a productive system.”
The users are also going to spend a heck of a lot less time on customer service websites and helplines. Each time an employee calls the helpdesk, it might set them back a couple minutes or a few hours, and that is 100% lost time if those workers cannot complete their normal tasks.
As a last note, HCD does more than minimize training and customer support costs. Human-centered techniques make the product more efficient. This pays off especially well for products used by larger companies, ones that reach thousands of people per day. Karat (1994) cites a major computer company that spent $20,700 on improving employee’s interactions with a sign-on procedure. The efficiency of improvements saved the company $41,700 the first day (Karat, 1994; Bias & Mayhew, 2005). Even something as mundane as a sign-in procedure can be made more efficient by HCD. And as can be seen by the numbers, the change started saving them huge percentages in no-time-flat.
The benefits of human-centered engineering are all over the place, and they all translate to savings in one way or another. The product development cycle becomes more efficient with a human-centered approach; potential sources of user error are discovered early and can be remedied without much trouble. The effect is a better product, which not only minimizes the need for customer support, but also boosts the productivity of the end user.
Errors are reduced. Customers come back. Time is saved. The need for training decreases. Many companies, large and small, have discovered the enormous gain associated with human-centered engineering practices. While some benefits may be difficult to measure, calculating the return on investment helps us to show its value.
If you would like to read further on the Return on Investment in UX, we encourage you to check out the following sources that helped inform the creation of this post.
Blog and Internet Articles (more recent)
Impact Brand & Design
Formal literature (less recent)
Bias, R. G., & Mayhew, D. J. (Eds.). (2005). Cost-justifying usability: An update for the Internet age. Elsevier.
Conklin, E. J., & Yakemovic, K. C. (1991). A process-oriented approach to design rationale. Human-Computer Interaction, 6(3), 357-391.
Gilb, T. (1998). Impact estimation tables: Understanding complex technology quantitatively. Crosstalk.
Harrison, M. C., Henneman, R. L., & Blatt, L. A. (1994, January). Design of a human factors cost-justification tool. In Cost-justifying usability (pp. 203-241). Academic Press, Inc..
Kalin, S. (1999). Usability: Mazed and confused. CIO Web Business Magazine.
Karat, C. M. (1993). Cost benefit and business case analysis of usability engineering. In Tutorial presented at the ACM SIGCHI Conference on Human Factors in Computing Systems. New Orleans, LA, April.
Mantei, M. M., & Teorey, T. J. (1988). Cost/benefit analysis for incorporating human factors in the software lifecycle. Communications of the ACM, 31(4), 428-439.
Mauro, C. L. (1994, January). Cost-justifying usability in a contractor company. In Cost-justifying usability (pp. 123-142). Academic Press, Inc..
Mayhew, D. J., & Bias, R. G. (Eds.). (1994). Cost-justifying usability. Academic Press.
Pressman, R.S. (1992). Software Engineering: A Practitioner’s Approach. McGraw Hill, NY.
Pressman, R. S., Lewis, T., Adida, B., Ullman, E., DeMarco, T., Gilb, T., … & Johnson, R. (1998). Can internet-based applications be engineered?. IEEE Software, 15(5), 104.
Rajanen, M. (2003). Usability cost-benefit models–different approaches to usability benefit analysis. In Proceedings of the 26th information systems research seminar in Scandinavia (IRIS26), Haikko, Finland.
Rhodes, J. S. (2000). Usability can save your company. Retrieved on October, 10, 2001.
Wixon, D., & Jones, S. (1995, June). Usability for fun and profit: A case study of the design of DEC RALLY version 2. In Proceedings of a workshop on Human-computer interface design: success stories, emerging methods, and real-world context: success stories, emerging methods, and real-world context (pp. 3-35). Morgan Kaufmann Publishers Inc..