The Economic Impact of Software Development Process Choice -- Cycle-Time Analysis and Monte Carlo Simulation Results

IT executives initiate software development process methodology change with faith that it will lower development cost, decrease time-to-market and increase quality. Anecdotes and success stories from agile practitioners and vendors provide evidence that other companies have succeeded following a newly chosen doctrine. Quantitative evidence is scarcer than these stories, and when available, often unverifiable. This paper introduces a quantitative approach to assess software process methodology change. It proposes working from the perspective of impact on cycle-time performance (the time from the start of individual pieces of work until their completion), before and after a process change. This paper introduces the history and theoretical basis of this analysis, and then presents a commercial case study. The case study demonstrates how the economic value of a process change initiative was quantified to understand success and payoff. Cycle-time is a convenient metric for comparing proposed and ongoing process improvement due to its easy capture and applicability to all processes. Poor cycle-time analysis can lead to teams being held to erroneous service level expectations. Properly comparing the impact of proposed process change scenarios, modeled using historical or estimated cycle-time performance helps isolate the bottom line impact of process changes with quantitative rigor.