Simulation for business value and software process/product tradeoff decisions

ABSTRACTBusiness value goals should be considered when making software process and product decisions, but it is usually difficult to integrate the perspectives quantitatively. This research uses simulation to assess product/process tradeoffs for economic business case analysis. A system dynamics 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. It 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 business goals and product criteria. Applications are demonstrated 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.