The Potential of Portfolio Analysis in Guiding Software Decisions
Authors: S. Butler, P. Chalasani, S. Jha, O. Raz, and M. Shaw
Position Paper for First Workshop on Economics-Driven Software
Engineering Research (EDSER-1), affiliated with the 21st International
Conference on Software Engineering (ICSE'99), May 1999.
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Abstract
Developing a complex software system involves decisions about how to
allocate a limited resource budget among a collection of costly
software alternatives (such as technologies or analysis techniques)
that have uncertain future benefits. Very little quantitative
guidance is currently available to make these decisions. We suggest
that these allocation problems are naturally viewed in the powerful
portfolio selection framework of financial investment theory. We view
each software activity as an investment opportunity (or security), the
benefit from the activity as the return on the investment, and the
allocation problem as one of selecting the "optimal" portfolio of
securities.
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