Integrated Modeling of Business Value and Software Processes

Abstract. Business value attainment should be a key consideration when designing software processes. Ideally they are structured to meet organizational business goals, but it is usually difficult to integrate the process and business perspectives quantitatively. This research uses modeling and simulation to assess process tradeoffs for business case analysis. A model for commercial software enterprises relates the dynamics between product specifications, investment costs, schedule, software quality practices, market size, license retention, pricing and revenue generation. The system dynamics model allows one to experiment with different product strategies, software processes, marketing practices and pricing schemes while tracking financial measures over time. It can be used to determine the appropriate balance of process activities to meet goals. Examples are shown for varying scope, reliability, delivery of multiple releases, and determining the quality sweet spot for different time horizons. Results show that optimal policies depend on various stakeholder value functions, opposing market factors and business constraints. Future model improvements are also identified.