Component Economics

The economic rationale and advantages of using CBD that accommodates reusable "off-the-shelf" component expertise.

A discussion between the CFO and the CIO...

CFO: "You say you have improved your efficiency and productivity.

You provide me stats on the number of modules, bubbles in a data-flow diagram, function points and lines of source code. But every year the business line managers ask for more functionality to support their business process, and you in turn, ask for more budget for people and development tools. And every year the requests for functionality and money seem to go up in parallel.

It appears that there is absolutely no scalability to your spend. You've not leveraged the money you've been given to build the software quicker, better, faster and I'm not getting my return on investment. It would be better to stick your budget in the bank and at least earn six percent!

Now you want to 'assemble' applications based on buying and using 'open market' components. Why should I believe it will pay off?"

CIO: "Component-based development (CBD) hasn't delivered the promised ROI because it totally relied on reusing internally built components and other internal development artifacts. It takes years of effort in most instances to stock sufficient numbers and types of components to fully support a CBD process to the point of substantially increased efficiency. The elapsed timeframe for realizing the benefits typically extends beyond the current fiscal year, and your project approval guidelines require me to show positive return on IT projects with in the first two quarters of the investment. Tapping into the component offerings available in today's 'open market' collapses the time frame required making CBD a viable investment."

CFO: "What do you mean by 'open market'?"

CIO: "These are commercially available reusable components that may be purchased 'off-the-shelf'... 'Open market' software components are generally defined as software that is:

• An encapsulation of specific expertise distributed in compiled form.
• Interoperable with other components from other publishers.
• Compliant with one of the following industry standards: .NET/COM, J2EE/Java, VCL/CLX or CORBA.

Components built to standards such as CA's COOL:GEN, or SAP and PeopleSoft are considered proprietary in that these pieces of software logic only function within the runtime framework of the application supplier. They are not interoperable within a common platform like components built to 'open market' standards."

CFO: "How can you trust the quality?"

CIO: "Component-Based Development using 'open market components' in a 'Reuse before you Buy before you Build' approach, offers our developers the ability to choose expert-built 'off the shelf' reusable software components for any platform from multiple component publishers and combine them with our own in-house components to build an application. Mature component platforms and development tools now available on the market enable a widely acknowledged, best-of-breed component-based approach to application development. Choice and competition in the market force quality improvement in components or the product fails to be commercially viable.

You can try before you buy via downloadable evaluation versions of the component. Being sold and reused over and over again by thousands of developers, 'open market' components are tried-and-tested. Designing and building applications using this approach allows our developers to build specific components that support our unique business processes and differentiate our industry position."

CFO: "How do you measure it?"

CIO: "I can apply data from Donn DiNunno's META Group series: IT Performance Engineering & Measurement Strategies that demonstrates that reused code averages 25 percent of the defects found in new code, and reusable components enable the final product to be delivered 40 percent faster. Given the size of our development organization and the mix of development platforms we have the tangible, measurable benefit to us is development man-time displaced through the use of internally or externally acquired software components."

CFO: "Be specific. What's this in terms of money?"

CIO: "OK. I've got 100 developers on staff that cost me fully loaded about $10,000 per month. About 75% of our application development effort is on platforms that use components. And, at a minimum, 25% of development effort on those platforms can be fulfilled with components. Doing the math, we apply the reductions in bugs, shorten the development time and free up $100,000 in man-time out of a total effort on CBD platforms of $800,000."

CFO: "That's a 12.5% increase in productivity, or the ability to fund one new 10 month project per month... When do you start buying components?"