The Basics of ROI in Human-Centered Design

Return on Investment in Human-Centered Design

In business, everything comes down to money.  As painful as it is to admit, 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.

With that in mind, 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.

Product Development

A key principle of HCD is to work iteratively.  Make progress, test it out, and apply what we learn in the next iteration. This means that the initial stages of a product’s evolution are revisited early and often – a good thing. The feasibility of any feature, requirement, or characteristic is evaluated before significant resources are expended. In effect, HCD is extraordinarily efficient – the good ideas continue to grow while the bad ones do not. This saves time and money getting the product to market.

Because HCD takes less time to identify and fix problems the process speeds development. Let’s say, Company A releases a product to market, and the time required to fix a problem takes 30 hours of patching. If Company A’s computer programmers make $50 an hour and there are 15 issues, that will cost $22,000 to fix. Had Company A employed iterative HCD from the beginning, each change may have taken 10 hours to correct. With the same programmers, the problems would have cost $7,500 to fix. 

human-centered design roi

Refer to fig.1 for a great representation of cost savings.

From another perspective, a hypothetical scenario demonstrates these savings in this video. Usability engineering does add time and money up front, but as Susan Weinschenk shows, that investment pays off.  

There are many instances that demonstrate the savings of HCD. According to Harrison et al., (1994), American Airlines was able to reduce the cost of development fixes by 60-90%. 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 every dollar spent on usability in the development stages could end up saving $10-$100 in the long run (Gilb, 1988).  

Marketing and Sales

Rajanen found that gaining a competitive edge over other companies was consistently reported by the models. A system that is user-friendly will attract more consumers. Why would someone willingly use a product that causes frustration 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 products bring in more 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.

Customer Support

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 for the system much less necessary, but customers also have more successful experiences with the product on a day-to-day basis.  As was mentioned previously, human-centered engineering allows 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 users equals fewer customer service resources.

End Users

As established, systems that employ HCD strategies yield a product that requires less training, and those savings really add up. Suppose Company B has a group of about 2,500 insurance workers who are about to learn a new database system. Company B’s employees make, on average, $23 dollars an hour. According to the maker, the training required for learning the system will take 5 hours per employee. Let’s do the math. 2500 employees at $23/hour will cost roughly $287,500. Now, what would happen if the database system took 1 hour to learn? The total cost of $57,500 would provide a savings of $230,000.

Again, that was just for training! What about the costs to use the system? Pain points will add up. 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 less time on customer service websites and helplines. Each call to the helpdesk is time workers cannot complete their normal tasks.

As a last note, HCD does more than minimize training and customer support costs. HCD techniques make products more efficient which pays off especially well for products of 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 on the first day (Karat, 1994; Bias & Mayhew, 2005). Even something as mundane as a sign-in procedure can be made more efficient by HCD.  

Conclusion

To summarize, 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)

Experience Dynamics

https://www.experiencedynamics.com/blog/2014/07/making-strong-business-case-roi-ux-infographic

Telepathy Business

http://www.dtelepathy.com/blog/business/the-roi-of-ux-convert-the-skeptics-with-this-infographic

Usability.gov

https://www.usability.gov/what-and-why/benefits-of-ucd.html

Headspring

https://medium.com/headspring-ux-team/the-roi-of-ux-in-enterprise-software-part-1-7ef30b2a1845

Whitespace

http://whitespace.ch/can-you-calculate-the-roi-of-ux/

Impact Brand & Design

https://www.impactbnd.com/blog/roi-ux-how-to-calculate-and-prove-the-value-of-user-experience-design

MeasuringU

https://measuringu.com/ux-roi/


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..

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[…] position. If the organisation is not willing to invest in user-centred design (which given the ROI of taking a UCD approach is invariably a mistake) then they should not be putting unrealistic expectations on the product […]

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[…] Wixon and Jones (1995) investigated a software product that, due to HCD interventions, grew in reven… […]

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