Home > Articles > Programming > Windows Programming

Improving Software Economics, Part 1 of 7: From Software Development to Software Delivery

In part 1 of this series, Walker Royce discusses the economic changes inherent in moving from the software development model to the software delivery model.
Like this article? We recommend

The world is becoming more dependent on software delivery efficiency and world economies are becoming more dependent on producing software with improved economic outcomes. What we have learned over decades of advancing software development best practice is that software production involves more of an economics than an engineering discipline. This series of articles provides a provocative perspective on achieving agile software delivery and the economic foundations of modern best practices.

Improvement in software lifecycle models and software best practices has been a long slog that accelerated in the 1980s as the engineering roots of software management methods continued to fail in delivering acceptable software project performance. IBM's Rational team has partnered with hundreds of software organizations and participated in thousands of software projects over the last 25 years. Our mission has been twofold: first, to bring software best practices to our customers; and second, to participate directly on their diverse projects to learn the patterns of success and failure so that we could differentiate which practices were best, and why. The Rational team didn't invent iterative development, object-oriented design, UML, agile methods, or the best practices captured in the IBM® Rational® Unified Process. The industry evolved these techniques, and we built a business out of synthesizing the industry's experience and packaging lessons learned into modern processes, methods, tools, and training. This series of articles provides a short history of this transition by looking at the evolution of our management principles. It presents our view of the Top 10 principles in managing an industrial-strength software organization and achieving agility at any scale of business challenge.

Most organizations that depend on software are struggling to transform their lifecycle model from a development focus to a delivery focus. This subtle distinction in wording represents a dramatic change in the principles that are driving the management philosophy and the governance models. Namely, a "software development" orientation focuses on the various activities required in the development process, while a "software delivery" orientation focuses on the results of that process. Organizations that have made this transition—perhaps 30–40% by our estimate—have recognized that engineering discipline is trumped by economics discipline in most software-intensive endeavors.

Table 1 provides a few differentiating indicators of successful transformation from conventional engineering governance to more economically driven governance.

Table 1 Differentiating Conventional Engineering Governance from Economically Driven Governance

Software Development: Engineering Driven

Software Delivery: Economics Driven

Distinct development phases

Continuously evolving systems

Distinct handoff from development team to maintenance team

Common process, platform, and team for development and maintenance

Distinct and sequential activities from requirements to design to code to test to operations

Sequence of usable capabilities with ever-increasing value

Phase- and role-specific processes and tools

Collaborative platform of integrated tools and process enactment

Collocated teams

Evolving precision as uncertainties are resolved

Early precision in complete plans and requirements

Governance through measurement of incremental outcomes, and progress/quality trends

Engineering discipline: Precisely define requirements/plans completely, and then track progress against static plans and scope

Economic discipline: Reduce uncertainties, manage variance, measure trends, adapt and steer with continuous negotiation of targets

Success rates in applying engineering governance (a.k.a. waterfall model management) have been very low; most industry studies assess the success rate at 10–20%. Where waterfall model projects do succeed, the project usually has been managed with two sets of books. The front-office books satisfy the external stakeholders that the engineering governance model is being followed, and the back-office books, where more agile techniques are employed with economic governance, satisfy the development team that they can predictably deliver results in the face of the uncertainties. The results of the back-office work are fed back to meet the deliverables and milestones required for the front-office books. "Managing two sets of books" has been expensive, but it is frequently the only way for developers to deliver a satisfactory product while adhering to the stakeholder demand for engineering governance. Advanced organizations have transitioned to more efficiently managing only one set of honest plans, measures, and outcomes. Most organizations still manage some mixture of engineering governance and economic governance to succeed.

Let's take a minute to think about engineering vs. economics governance—i.e., precise up-front planning vs. continual course correction toward a target goal—in terms relatable even to those outside the software industry. This hypothesis may be thought-provoking: Software project managers are more likely to succeed if they use techniques similar to those used in movie production, compared to those used conventional engineering projects, such as bridge construction. [1, 2] Consider this:

  • Most software professionals have no laws of physics or properties of materials to constrain their problems or solutions. They are bound only by human imagination, economic constraints, and platform performance once they get something executable.
  • Quality metrics for software products have few accepted atomic units. With the possible exception of reliability, most aspects of quality are very subjective (such as responsiveness, maintainability, and usability). Quality is best measured through the eyes of the audience.
  • In a software project, you can seemingly change almost anything at any time: plans, people, funding, requirements, designs, tests. Requirements—probably the most misused word in our industry—rarely describe anything that is truly required. Nearly everything is negotiable.

These three observations are equally applicable to software project managers and movie producers. These are professionals that regularly create a unique and complex web of intellectual property bounded only by a vision and human creativity. Both industries experience a very low success rate relative to mature engineering enterprises.

The last point above is worth a deeper look. The best thing about software is that it is soft (i.e., relatively easy to change), but this is also its riskiest attribute. In most systems, the software is where we try to capture and anticipate human behavior, including abstractions and business rules. Most software does not deal with natural phenomena where laws of physics or materials provide a well-understood framework. Hence, most software is constrained only by human imagination; the quality of software is judged more like a beauty contest than by precise mathematics and physical tolerances. If we don't carefully manage software production, we can lull ourselves into malignant cycles of change that result in massive amounts of scrap, rework, and wasted resources.

With the changeability of software being its greatest asset and greatest risk, it is imperative that we measure software change costs and qualities and understand the trends therein. The measure of scrap and rework is an economic concern that has long been understood as a costly variable in traditional engineering, as in the construction industry. While in the software industry we commonly blow up a product late in the lifecycle and incur tremendous scrap and rework to rebuild its architecture, we rarely do this in the construction industry. The costs are so tangibly large, and the economic ramifications are dire. In software, we need to get an equally tangible understanding of the probable economic outcomes.

A lesson that the construction industry learned long ago was to eliminate the risk of reinventing the laws of construction on every project. Consequently, they enforced standards in building codes, materials, and techniques, particularly for the architectural engineering aspects of structure, power, plumbing, and foundation. This resulted in much more straightforward (i.e., predictable) construction, with innovation mostly confined to the design touches sensed by its human users. This led to guided economic governance for the design/style/usability aspects, with standardization and engineering governance driving most of the architecture, materials, and labor. When we innovate during the course of planned construction projects with new materials, new technology, or significant architectural deviations, it leads to the same sorts of overruns and rework that we see in software projects. For most products, systems, and services, you want to standardize where you can, and not reinvent.

Economic discipline and governance is needed to measure the risk and variance of the uncertain outcomes associated with innovation. Most software organizations undertake a new software project by permitting their most trusted craftsmen to reinvent software capabilities over and over. Each project and each line of business defend the reasons why their application is different, thereby requiring a custom solution without being precise about what is different. Encumbered with more custom developed architectures and components than reused ones, they end up falling back on the waterfall model, which is easy to understand. But this approach is demonstrably too simplistic for uncertain endeavors such as software.

The software industry has characterized new and improved software lifecycle models using many different terms, such as spiral development, incremental development, evolutionary development, iterative development, and agile development. In spirit, these models have many things in common, and as a class they represent a common theme: anti-waterfall development. However, after 20–30 years of improvement and transition, the waterfall model mindset is still the predominant governance process in most industrial-strength software development organizations. By my estimation, more than half of the software projects in our industry still govern with a waterfall process, particularly organizations with mature processes. Perhaps geriatric could be used as an explicit level of process maturity, one that should be recognized in software maturity models to help organizations identify when their process has become too mature and in need of a major overhaul.


[1] Royce, Bittner, Perrow, The Economics of Iterative Software Development: Steering Toward Better Business Results, Addison-Wesley, 2009.

[2] Royce, Walker, "Successful Software Management Style: Steering and Balance," IEEE Software, Vol. 22, No. 5, September/October 2005.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020