Software Engineering Economics

Software Engineering Economics

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Valuating service development

People Involved

Brendan Tansey

Eleni Stroulia


Business decision making often relies on model-based estimation of the costs and benefits involved with alternative courses of action. Today, organizations increasingly attempt to innovate by offering competitive value-added services, as opposed to goods, and frequently they do so by evolving their software infrastructure. Therefore, business decisions are frequently motivated by the economic trade-offs related to the evolution and management of software.

We are interested in estimating the return, in terms of business revenue, of a particular software-evolution investment. Our objective is to develop an economic model for the evolutionary development of software-based B2C services. We have developed an economics-modeling framework for software applications, developed in the service-oriented architecture style and methods for estimating both the cost of developing a new service by incrementally modifying the existing software application, and also the value generated by introducing the service to the market, in terms of the actual revenue generated by the new service and the value of potential future services that it may enable.