Often software engineering projects and products are not precise about the targets that should be achieved. Software requirements are stated, but the marginal value of adding a bit more functionality cannot be measured.
The “Good Enough” Principle
The result could be late delivery or too-high cost. The “good enough” principle relates marginal value to marginal cost and provides guidance to determine criteria when a deliverable is “good enough” to be delivered. These criteria depend on business objectives and on prioritization of different alternatives, such as ranking software requirements, measurable quality attributes, or relating schedule to product content and cost.
The RACE principle (reduce accidents and control essence) is a popular rule towards good enough software. Accidents imply unnecessary overheads such as gold-plating and rework due to late defect removal or too many requirements changes. Essence is what customers pay for. Software engineering economics provides the mechanisms to define criteria that determine when a deliverable is “good enough” to be delivered. It also highlights that both words are relevant: “good” and “enough.” Insufficient quality or insufficient quantity is not good enough.
Agile methods are examples of “good enough” that try to optimize value by reducing the overhead of delayed rework and the gold plating that results from adding features that have low marginal value for the users (see Agile Methods in the Software Engineering Models and Methods KA and Software Life Cycle Models in the Software Engineering Process KA). In agile methods, detailed planning and lengthy development phases are replaced by incremental planning and frequent delivery of small increments of a deliverable product that is tested and evaluated by user representatives.
Friction-Free Economy
Economic friction is everything that keeps markets from having perfect competition. It involves distance, cost of delivery, restrictive regulations, and/or imperfect information. In high-friction markets, customers don’t have many suppliers from which to choose. Having been in a business for a while or owning a store in a good location determines the economic position. It’s hard for new competitors to start business and compete. The marketplace moves slowly and predictably. Friction-free markets are just the reverse. New competitors emerge and customers are quick to respond. The marketplace is anything but predictable. Theoretically, software and IT are frictionfree. New companies can easily create products and often do so at a much lower cost than established companies, since they need not consider any legacies. Marketing and sales can be done via the Internet and social networks, and basically free distribution mechanisms can enable a ramp up to a global business. Software engineering economics aims to provide foundations to judge how a software business performs and how friction-free a market actually is. For instance, competition among software app developers is inhibited when apps must be sold through an app store and comply with that store’s rules.
Ecosystems
An ecosystem is an environment consisting of all the mutually dependent stakeholders, business units, and companies working in a particular area. In a typical ecosystem, there are producers and consumers, where the consumers add value to the consumed resources. Note that a consumer is not the end user but an organization that uses the product to enhance it. A software ecosystem is, for instance, a supplier of an application working with companies doing the installation and support in different regions. Neither one could exist without the other. Ecosystems can be permanent or temporary. Software engineering economics provides the mechanisms to evaluate alternatives in establishing or extending an ecosystem—for instance, assessing whether to work with a specific distributor or have the distribution done by a company doing service in an area.
Offshoring and Outsourcing
Offshoring means executing a business activity beyond sales and marketing outside the home country of an enterprise. Enterprises typically either have their offshoring branches in lowcost countries or they ask specialized companies abroad to execute the respective activity. Offshoring should therefore not be confused with outsourcing. Offshoring within a company is called captive offshoring. Outsourcing is the result-oriented relationship with a supplier who executes business activities for an enterprise when, traditionally, those activities were executed inside the enterprise. Outsourcing is site-independent. The supplier can reside in the neighborhood of the enterprise or offshore (outsourced offshoring). Software engineering economics provides the basic criteria and business tools to evaluate different sourcing mechanisms and control their performance. For instance, using an outsourcing supplier for software development and maintenance might reduce the cost per hour of software development, but increase the number of hours and capital expenses due to an increased need for monitoring and communication. (For more information on offshoring and outsourcing, see “Outsourcing” in Management Issues in the Software Maintenance KA.)
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Published on : 30-May-2018
Ref no : DTC-WPUB-000090
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