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Unless the business model that governs software production adjusts to new technology, it is unlikely that an investment in the technology will result in real productivity benefits. Commercial development always takes place in the context of a business model, and in that context an understanding of how business constraints influence commercial software development is imperative. As software markets become more competitive and business pressures shorten software development cycles, improved software development productivity continues to be a major concern in the software industry. Many believe that new software technology, such as object-oriented development, provides a breakthrough solution to this problem. Unfortunately, there is little quantitative evidence for this belief. In this paper we explore the relationship between the business model and the productivity that a software development methodology can achieve in a commercial environment under that model. We first examine empirical data from several commercial products developed using object-oriented methods. The results indicate that object-oriented development may not perform any better than “procedural” development in environments that lack incentives for early completion of intermediate project tasks. We then model and simulate the impact of the software task-completion incentives and deadlines on the productivity that might be expected from a technology with high-performance potential. We show how and why some common business practices might lower project productivity and project completion probability. We also discuss to what extent poor software process control and (im)maturity of the technology compounds the problem.
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