Return on Software: Maximizing the Return on Your Software Investment.
Charles Ashbacher · The Journal of Object Technology · 2005
Even though there is not a single line of code in this book, it is one that all people who are involved in the process of managing software development should read.In most cases, investment professionals will have an easier time understanding it than software developers will.The decision to invest organization resources in a software development project is treated as an investment and the point of the analysis is to determine if it is a sound one.Part one starts with the fundamental concepts of how business decisions are made.Cash flow diagrams are used to illustrate how the flow of money relative to your organization can be visually modeled.Entire chapters are devoted to the various ways interest can be computed, the formulas used to compare the net worth of two different proposals and how to develop mutually exclusive alternatives.A large number of formulas are used, so if you are unfamiliar with the mathematics of finance, you will probably have a difficult time understanding them.Parts two and three deal with how to make decisions in for-profit companies.Decision analysis, economic life, replacement decisions, salvage value, factoring in inflation/deflation, depreciation, cost accounting, and the impact of income taxes on business decisions are all examined using formulas, charts and diagrams.At times it gets very technical.To give you some idea, here are the titles of some sections:• Calculating after-tax cash-flow streams.• Inflation and after-tax cash-flow streams.• Gain or loss when selling or scrapping depreciable assets.• Comparing financing methods in after-tax cash-flow terms.Part four deals with making decisions in government and nonprofit organizations.This is a very short section, less than twenty pages in length.Since these organizations generally