Return on Software : Maximizing the Return on Your Software Investment

Rating:
Summary: The Latest on Software Economics
Review: There are hundreds of books on topics relevant to various aspects of software engineering. However, when we analyze what went wrong with so many of our large practical software projects, one of the leading culprits is a misunderstanding of the business, economic and financial aspects of the projects. Where are the books and courses to help us with this major problem?
University engineering programs often have a course such as Fundamentals of Engineering Economy. What Steve Tockey has done with his book is to apply these general engineering economics topics specifically to the field of Software Engineering and set a standard for the subfield of Software Engineering Economics. His is not the first such book (see, e. g., Barry Boehm, Software Engineering Economics, Prentice Hall, 1981 or Leon Levy, Taming the Tiger - Software Engineering and Software Economics, Springer-Verlag, 1987) but it is the most thorough and up-to-date one that I know. It is an excellent book on a very important subject. Every professional software engineer, whether CTO, group manager or programmer in the trenches, will benefit considerably from reading this book.
Return on Software is divided into several major parts: general concepts of business decision-making, interest and the value of money, and cash flow streams; business decision-making at for-profit companies; decision-making at government and not-for-profit organizations; estimation, risk and uncertainty; and decision-making based on criteria other than money such as reliability, quality, speed, and other important features (strict economists might argue that all of these other criteria could be equivalenced to money considerations but I think considering these other criteria on their own seems more natural to me).
Judging from the topics listed above, Steve believes business decision-making to be the key ingredient of successful software engineering. I could not agree more. The crucial chapter in the book is #4: The Business Decision-Making Process. The key topics in this chapter include understanding the real problem, defining the selection criteria, identifying all reasonable technically feasible solutions, evaluating those proposals, selecting the preferred proposal, and monitoring its performance. The remainder of the book is an elucidation of those topics.
Each chapter closes with a summary and a set of self-study questions supporting the book to being used as a textbook. My university will offer a course around "Return on Software" in the spring quarter for our Master of Software Engineering students and I expect the course to be offered regularly. The last time I checked, Steve's company was not offering a short course on his book's topic but it would not surprise me to see one soon.
To prove that I am not from the publisher's marketing department, I would like to suggest that the next edition include at least two more topics: buy-or-build decision-making and outsourcing (whether offshore or not).

Rating:
Summary: Outstanding
Review: A concise and very pointed collection of engineering economics/finance: everyone needs to read this. It is tailored towards software engineering, but all of this works just as well for any business area. There's nothing earth-shattering there, you'll learn the same info if you read two-three financial management books, but here it's all in a single book, trimmed of high-finance excesses, with minimal math, very clearly written, with no pretentious and pompous academic vapor that you'll see in a typical textbook. And while it's not cheap, it costs less than a single typical textbook too; it's absolutely worth the money.

I can't say anything bad about this book; I wholeheartedly recommend it: get it blindly, off the web, now: disappointment is impossible. A great job, my thanks go to the author, and, last but not the least, the publisher. Addison-Wesley means consistent high quality -- confirmed one more time.

Rating:
Summary: Wow !
Review: Clear and concise. A must read for all computer scientists and software engineers all over the world! Salute to the author.

Software Engineering = Computer Science + Practice +
Engineering Economy

This one piece of equation is enough to pay the price of the book.

Rating:
Summary: An Excellent Resource
Review: How I was introduced to this book:
About nine months before this book was published I was researching the return on investment of software projects. While doing my research, I was introduced to Steve Tockey who asked if I might be interested in reviewing his book.

My background:
For almost 10 years I've worked in the software and consulting industry. Currently, I work at one of the leading CRM software companies worldwide where I spent three years advising customers on how they can get the most out of their investment in our software. At the time of my research, it was imperative that our division understood how software investments are impacted by certain business decisions and related financial considerations. Today, I am responsible for planning, implementing, and measuring the outcomes of investments and projects within our marketing organization.

Comments on the book:
This book does an excellent job covering the financial aspects of investing in software systems (or really any investment) as well as covering decision-making and risk management techniques. If your career path includes the development of any business case for software systems, this book explains many of the concepts you will have to use. While the introductory portions of the book explain how financial principles generally apply to software, the book goes far beyond an introduction - honestly, it's depth in content will give it a home on my bookshelf as a trusted reference for years to come. Besides clear explanations and good fundamental examples, the accompanying self-study questions, website, and tools will help readers truly understand and use what is being taught.

If you are familiar with Steve McConnell's books on software, you will not be disappointed with this one (as Steve Tockey works at Construx Software).

Rating:
Summary: Excellent book on a topic all SEs should understand
Review: The processes and decisions that surround the intellectual content of software historically have been sadly neglected and there has been relatively little cross-polination from other disciplines. The book is a milestone for the software industry because it introduces time-tested techniques from other engineering and business contexts for making objective decisions based upon systematically comparing quantified costs and benefits.

The book covers a wide variety of techniques; more than I have ever seen discussed in one place -- even in B-School texts and non-software contexts. This book is the most comprehensive I have seen and would be a suitable textbook for cost/benefit analysis in any realm of engineering. (The only thing that makes it special to software are the examples.) The examples are clear and quite real, taken from a variety of software contexts.

Perhaps more important, this book is very well written. Novices will have no trouble following and applying the principles described. It is the clearest description of the subject matter that I have ever seen in a text book. I would rank it in the top ten of all text books for readability.

The only weakness I see in this book is that Tockey ran out of space. Unfortunately the subject matter is enormously complex and applying the principles effectively is dependent on other subject matters, like data collection and quantification, that are not explicitly covered here. I sincerely hope that Tockey or someone else provides a supporting sequel because this sort analysis is essential to making software development an engineering discipline.

Rating:
Summary: Excellent resource for serious software professionals
Review: This book has been long overdue. It provides an excellent, comprehensive overview of the main techniques used for reasoning about the value of software projects and making project decisions. Its focus in mostly at the project management level, but the techniques discussed apply equally to technical decisions. It would make a great text for a course on software economics as well as invaluable self-reading for software professionals and managers of all types of technology projects. It is easy to understand, practical, accessible to all, self-contained and full of illustrative examples. I especially liked the sections on estimation of uncertainty and decision-making techniques (Decision Tree Analysis, value of information, multiple-attribute decision making), which were presented in a pragmatic, to-the-point manner.


Rating:
Summary: Great book, as easy to read as it gets on a detailed subject
Review: This book is the only book of its kind. It covers everything you need to know to make intelligent financial decisions about software projects. Too many software projects are started with detailed work plans but without any plan about how the project will make money for the company. Naturally, too many of these projects then fail to return any value to the organization that did them. This is horrible for the company that wastes the money and it is discouraging for the programmers who waste their time on those projects. If you read this book, you'll learn how to avoid these situations.

This book covers some complicated topics and you will have to think and pay (more) attention in some chapters. However, it starts easily, taking a few chapters to build up to basic concepts such as the time value of money. What I really like is that the author doesn't just unload a bunch of financial calculations on us; he tells us how to make decisions based on the information these calculations can provide.

This is a wonderful book and if you are in a position where you influence the choice to do particular projects, how long a project runs, or how to manage a project then you owe it to yourself to read this book. More importantly, you owe it to your team and your organization to read this book.