Book description
"This pioneering book highlights critical, overlooked skills needed by true software professionals."
Steve McConnell
CEO and Chief Software Engineering
Construx Software
"It's about time someone took this stuff seriously."
Steven Mellor
Chief Scientist
Embedded Systems Division
Mentor Graphics Corporation
Co-Author of Exploring the Role of Executable UML in
Model-Driven Architecture and six other books
"Despite the fact that engineering economics is considered a core area of any engineering field, virtually no books have been written in the area of software engineering economics. Steve Tockey's Return on Software nicely fills this gaps by providing a comprehensive introduction to software engineering economics accessible both to students and to new software professionals."
Donald J. Bagert, Ph.D., P.E. Director of Software Engineering and Professor of Computer Science & Software Engineering Rose-Hulman Institute of Technology
"The elements of this book are useful not only in making decisions but also in understanding why and how other people and organizations make decisions"
Shari Lawrence Pfleeger
Senior Researcher, RAND
Co-author of Security in Computing and eight other software
engineering titles
"This just what the doctor ordered to help software programs solve the problem of how to introduce engineering economics and business decision-making into their curricula. The economics of software development should not only be part of any computing curriculum they are an essential element of recent accreditation and certification recommendations.
This book is an accessible and relevant text for any student of software engineering. The style is clear and straightforward and the software examples will be appealing to students and faculty alike. I can't wait to use it in class!"
Thomas B. Hilburn, Professor
Department of Computer and Software Engineering
Embry-Riddle Aeronautical University
Is your organization maximizing the return on its investments of money, time, and personnel? Probably not, because most software professionals don't know how to consider the business aspects of their software decisions. Most don't even know that it's important to do so. Business consequences should play a critical role in all software technical choices—from choosing which projects to do, selecting software development processes, choosing algorithms and data structures, all the way to determining how much testing is enough.
Return on Software: Maximizing the Return on Your Software Investment is about making choices: software technical choices in a business context. It helps software professionals appreciate the business consequences of the decisions they make. This primer will prove a valuable reference for making the important decisions the typical software organization faces both today and down the road. Inside, you'll learn how to:
Estimate how much each proposed software technical decision will cost, and how much it will return.
Weigh the time frames for a software decision's costs and benefits against each other to reveal when there might be a more important factor than schedule.
Attach a value to quality and produce a rational answer to the question, "How much testing is enough?"
Account for risk and uncertainty in software technical decisions, such as when considering a new technology.
Communicate your decisions in a way that speaks to the all-important bottom line.
Each chapter contains a set of self-study questions designed to help you apply the featured concepts and techniques. An enhanced online index allows you to quickly and easily search the entire text for specific topics.
Table of contents
- Copyright
- Quick Reference Guide
- Quick Reference Guide
- PRAISE FOR RETURN ON SOFTWARE
- Acknowledgements
- Foreword
- Preface
-
INTRODUCTION AND FOUNDATIONS
- Return on Software: Maximizing the Return on Your Software Investment
- Business on Purpose
- The Fundamental Concepts of Business Decisions
-
The Business Decision-Making Process
- Introducing the Business Decision-Making Process
- Understand the Real Problem
- Define the Selection Criteria
- Identify All Reasonable Technically Feasible Solutions (the Proposals)
- Evaluate Each Proposal Against the Selection Criteria
- Select the Preferred Proposal
- Monitor the Performance of the Selected Proposal
- Summary
- Self-Study Questions
-
Interest: The Time Value of Money
- Time Is Money
- Interest
- Naming Conventions in Interest Formulas
- Simple Interest
- Discrete Compounding of Interest
- Single-Payment Compound-Amount (F/P)
- Single-Payment Present-Worth (P/F)
- Equal-Payment-Series Compound-Amount (F/A)
- Equal-Payment-Series Sinking-Fund (A/F)
- Equal-Payment-Series Capital-Recovery (A/P)
- Equal-Payment-Series Present-Worth (P/A)
- Summarizing the Formulas
- Some Other Handy Relationships
- Summary
- Self-Study Questions
-
Other Interest(ing) Calculations
- Using Different Interest Periods and Compounding Frequencies
- The Relationship Between Cash-Flow Instances and Compounding Interval
- Continuous Compounding, Discrete Payment
- Determining Actual Interest Rates
- Paying off a Loan Through a Single, Lump-Sum Payment
- Separating Interest and Principal in Loan Payments
- Paying Off a Loan Early Through Higher Payments
- Interest Rates Might Not Be What They Seem
- Summary
- Self-Study Questions
- Equivalence
- Bases for Comparison
- Developing Mutually Exclusive Alternatives
-
MAKING FOR-PROFIT BUSINESS DECISIONS
-
For-Profit Decision Analysis
- Minimum Attractive Rate of Return (MARR)
- Before- and After-Tax MARRs
- The Basic For-Profit Decision Process
- Decisions Based on Total Versus Differential Cash-Flow Streams
- Present Worth on Incremental Investment
- IRR on Incremental Investment
- Comparisons Based on Total Cash-Flow Streams
- Rank on Rate of Return
- Summary
- Self-Study Questions
- Planning Horizons and Economic Life
- Replacement and Retirement Decisions
-
For-Profit Decision Analysis
-
ADVANCED FOR-PROFIT DECISION TECHNIQUES
-
Inflation and Deflation
- Inflation and Deflation
- Price Indices: Measuring Inflation and Deflation
- Popular Price Indices
- The Inflation Rate
- Purchasing Power and Inflation
- Accounting for Inflation
- Actual Dollar Versus Constant Dollar Analysis
- Mr. Kinkaid's Adventure in Actual and Constant Dollars
- Planning a Retirement
- Summary
- Self-Study Questions
-
Depreciation
- Introduction to Depreciation
- Actual Depreciation
- Depreciation Accounting
- Value-Time Functions
- Book Value
- Depreciation Methods
- Depreciation Methods Before 1981
- Declining-Balance Depreciation
- Accelerated Cost Recovery System (ACRS), 1981–1986
- Modified Accelerated Cost Recovery System (MACRS), 1987 and Later
- Units-of-Production Depreciation
- Depletion
- Other Aspects of Depreciation Accounting Not Discussed Here
- Summary
- Self-Study Questions
- General Accounting and Cost Accounting
- Income Taxes and After-Tax Cash-Flow Streams
-
The Consequences of Income Taxes on Business Decisions
- Interest Expenses and Income Taxes
- Interest Income and Income Taxes
- Depreciation Method and Income Taxes
- Depreciation Recovery Period and Income Taxes
- Capital Gains and Losses for Corporations
- Gain or Loss When Selling or Scrapping Depreciable Assets
- Comparing Financing Methods in After-Tax Cash-Flow Terms
- After-Tax Analysis of Replacements
- Summary
- Self-Study Questions
-
Inflation and Deflation
- MAKING DECISIONS IN GOVERNMENT AND NONPROFIT ORGANIZATIONS
-
PRESENT ECONOMY
- Break-Even Analysis
-
Optimization Analysis
- Introducing Optimization
- Optimizing a Single Alternative with a Single Decision Variable
- Optimizing Multiple Alternatives with a Single Decision Variable
- Optimizing a Single Alternative with Multiple Decision Variables
- Optimizing Multiple Alternatives with Multiple Decision Variables
- Summary
- Self-Study Questions
- ESTIMATION, RISK, AND UNCERTAINTY
- MULTIPLE-ATTRIBUTE DECISIONS
-
SUMMARY
- Closing Remarks
- Software Project Work Breakdown Structures
- Interest Tables
- Linear Interpolation
- Derivatives
- Introduction to Probability and Statistics
-
Answers to Selected Self-Study Questions
- Chapter 1 Self-Study Questions
- Chapter 2 Self-Study Questions
- Chapter 3 Self-Study Questions
- Chapter 4 Self-Study Questions
- Chapter 5 Self-Study Questions
- Chapter 6 Self-Study Questions
- Chapter 7 Self-Study Questions
- Chapter 8 Self-Study Questions
- Chapter 9 Self-Study Questions
- Chapter 10 Self-Study Questions
- Chapter 11 Self-Study Questions
- Chapter 12 Self-Study Questions
- Chapter 13 Self-Study Questions
- Chapter 14 Self-Study Questions
- Chapter 15 Self-Study Questions
- Chapter 16 Self-Study Questions
- Chapter 17 Self-Study Questions
- Chapter 18 Self-Study Questions
- Chapter 19 Self-Study Questions
- Chapter 20 Self-Study Questions
- Chapter 21 Self-Study Questions
- Chapter 22 Self-Study Questions
- Chapter 23 Self-Study Questions
- Chapter 24 Self-Study Questions
- Chapter 25 Self-Study Questions
- Chapter 26 Self-Study Questions
- Chapter 27 Self-Study Questions
- Glossary
- References
- Index
Product information
- Title: Return on Software: Maximizing the Return on Your Software Investment
- Author(s):
- Release date: August 2004
- Publisher(s): Addison-Wesley Professional
- ISBN: 9780321228758
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