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This chapter is from the book

Framing the Problem

It is now possible to construct a framework for the problem on how to run a software development organization like any other business that is accountable to its officers and its stockholders. This framework will elevate software development to the point where practical, fact-based, executive decisions can be made about investment in new products, investment in people, and investment in tools, equipment, and facilities for those people.

Using General Systems Thinking and Throughput Accounting to calculate Net Profit and ROI, only three metrics are required from the business: Throughput, Investment, and Operating Expense. Two of those variables are under direct control of the software development business—Operating Expense and Investment. However, the value of Throughput (T) must also be known before proper decisions can be made. Determining the value of Throughput for different types of software businesses is explained in Chapters 15, 16, and 17. The remainder of Section 1 explores and explains how to go about metering a software development organization to report the three metrics, T, I, and OE, and how to use these to accurately control software development, that is, deliver working code on time, within budget, and with agreed function whilst meaningfully reporting progress to senior management, that is, demonstrating delivery of the desired financial results for NP and ROI.

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