Software economics

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Abstract
The fundamental goal of all good design and engineering is to create maximal value added for any given investment. There are many dimensions in which value can be assessed, from monetary profit to the solution of social problems. The benefits sought are often domain-specific, yet the logic is the same: design is an investment activity. Software economics is the field that seeks to enable significant improvements in software design and engineering through economic reasoning about product, process, program, and portfolio and policy issues. We summarize the state of the art and identify shortfalls in existing knowledge. Past work focuses largely on costs, not on benefits, thus not on value added; nor are current technical software design criteria linked clearly to value creation. We present a roadmap for research emphasizing the need for a strategic investment approach to software engineering. We discuss how software economics can lead to fundamental improvements in software design and engineering, in theory and practice.

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