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System dynamics modeling applied to software outsourcing decision support

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System dynamics modeling applied to software outsourcing decision support

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Abstract

Requirements in the software market for reduced costs, reduced development cycle time, as well as shortages of software developers, have motivated software organizations to outsource product development processes or components. The primary objective of this research is to determine whether software organizations can improve their software outsourcing strategies and processes in response to these forces. This research utilizes simulation modeling to explore the dynamics of outsourcing relationships, including both positive and negative outcomes, as well as to provide potential decision support for strategic outsourcing decisions. The model's current implementation, applicability and usefulness are demonstrated with an example use case and analysis of simulation results. We also present suggestions for future research directions on software outsourcing strategies and processes. Copyright © 2000 John Wiley & Sons Ltd

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... productivity, motivation, error rate, whose values are affected by the project's perceived status (schedule pressure) and the penalty-reward structure of the organisation. • software outsourcing [RCH+00], and ...
... The primary objective of the research of Roehling et al. is to determine how software organisations can improve their software outsourcing strategies and processes [RCH+00]. This research utilises System Dynamics simulation modelling to explore the dynamics of outsourcing relationships, including both positive and negative outcomes, as well as to provide potential decision support for strategic outsourcing decisions. ...
... McCray and Clarke Jr (1999) used system dynamics to anticipate the organisational impacts of outsourcing. Roehling et al. (2000) used system dynamics modelling to explore the dynamics of outsourcing relationships, including both positive and negative outcomes, as well as to provide potential support for strategic outsourcing decisions. ...
... Cluster 6 size 5 127 Adler (2000), Alexander and Young (1996), Anderson (1997), (Journal of Accountancy (1996), Management Accounting (1997), Works Management (1999, Management Accounting-London (1999), Anthes (1991), Bers (1992), Bergsman (1994), Bakker and Jones (1995), Ashe (1996), Aubert et al. (1996), Chemical Week (2000), Arnold (2000), Avery (2000), Baden-Fuller et al. (2000), Bright (1993), Brandes et al. (1997), Blumberg (1998), Burzawa (1994), Champy (1996), Chu et al. (1996), Brown (1997), Bryce and Useem (1998), Carayannis (1998), Cole-Gomolski (1998), Collinson (2001), Dubbs (1992), Drtina (1994), Drew (1995), DiRomualdo and Gurbaxani (1998), Daniels et al. (1999), Dickey (1999), Earl (1996), Dykeman (1998), Dunford (2000), Elliot (1995), Fan (2000), Gibson (1993), GAO (1997), Ferris (1999), Gilbert (1999), Fontes (2000), Graham (1996), Gordon and Walsh (1997), Walsh (1996), Green (1995), Hill (1994), Hendry (1995), Hiebeler (1997), Greengard (1998), Griffiths and Boisot (1998), Hines and Rich (1998), Hubbard (1993), Jones (1993), Iyer and Kusnierz (1996), Jorgensen (1996), Jennings (1997), Jennings (2002, Kelleher (1990), Katz (1995), Kriss (1996), Kakabadse and Kakabadse (2000a), Klainguti (2000), Klopack (2000), Prahalad and Hamel (1990), Nonaka (1991), Laabs (1993a, b), LaRock (1993), Meyer and Utterback (1993), Nemeth (1993), Lee (1994), Long and Vickers-Koch (1995), Nonaka and Takeuchi (1995), Pinnington and Woolcock (1995), Leavy (1996), Mullin (1996), Peltier (1996), OECD (1997), Post (1997), Prencipe (1997), Mans (1998), Meckbach (1998), Mehling (1998), O'Dell andGrayson (1998), Old (1998), Lankford and Parsa (1999), Large (1999), Lewis (1999), Ngwenyama and Bryson (1999), Paoli and Prencipe (1999), Pitt and Clarke (1999), Krizner (2000), Lafferty and Roan (2000), McAdam and Reid (2000), Quinn (2000), Lee (2001), Quinn et al. (1990a, b), Quinn and Hilmer (1994), Richardson (1997), Razzaque and Chen (1998), Riesenberger (1998), Roberts, V. (2001), Sheehan (1993), Simpson (1994), Willcocks et al. (1995), Unland and Kleiner (1996), Walsh (1996), Widger (1996), Willis (1996), Sherter (1997), Skinner and Bond (1997), Willcocks and Currie (1997), Tefft (1998), Roodhooft and Warlop (1999), Rothwell and Lindholm (1999), Sage and Rouse (1999), Schwyn (1999), Vining and Globerman (1999), Roehling et al. (2000), Smith and Waymack (2000), Story (2000), , Schulz and Jobe (2001) It is also important to note that most studies do not consider the distinct position of non-profit organizations when it comes to outsourcing practices. Non-profit organizations do not typically have cost reduction as a primary objective. ...
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Purpose – The purpose of this study is twofold. The first is to provide a structured review of the vast amount of outsourcing literature that has accumulated in the past two decades using a decision support framework. The second purpose is to statistically analyze the contents of the studies to identify commonalities as well as gaps, in order to suggest directions for future research. Design/methodology/approach – The contents of more than 200 publications are analyzed using a variety of approaches. A decision support framework is used to first classify whether the studies address outsourcing benefits, risks, motivations or factors. Next, each classification is further described by the type of benefits, risks, etc. Additional relevant contents such as type of organization, and the location of the outsourcing practice are also considered. Multivariate analyses consisting of cross tabulations, chi-square testing and cluster analysis are used for categorizing the studies with the aim of identifying relationships among the studies which are not apparent when they are considered individually. Findings – A number of trends and relationships are identified. For example, most studies focus on US for-profit organizations and are typically theoretical, discussing benefits, risks and motivators. On the other hand, the research on outsourcing practices of non-profit organizations, where objectives for outsourcing are typically politically driven, is found to be scarce. Furthermore, the results of the cluster analysis indicate that the studies can be grouped into six clusters where the five small clusters are characterized by strong relationships with a few variables while the large cluster is characterized by variables that are not addressed in the studies. Practical implications – Outsourcing has become commonplace in today's businesses. In addition to outsourcing in profit seeking organizations, there is considerable outsourcing effort in governmental and non-profit organizations also. It is not easy for managers who are exploring outsourcing opportunities for the very first time and academicians who want to build upon existing studies to search the literature to find what they are looking for. This study addresses this difficulty by providing different classifications of the literature based on a variety of research criteria. Originality/value – This study is a first attempt to organize the outsourcing literature using statistical as well as decision support tools. Using cluster analysis and discriminant analysis to explore the relationships among the contents of the studies is a new approach.
... Requirements analysis, an early phase of the systems development lifecycle (SDLC), is one of the most crucial phases for the success of a systems development project. Drawing on empirical (Abdel-Hamid, 1988, 1990Abdel-Hamid andMadnick, 1989a, 1989b) • Software development process (Lin and Levary, 1989;Barros et al., 2002;Chatters et al., 2000;Choi et al., 2006;Häberlein, 2004;Lee and Miller, 2004;Lehman and Ramil, 1999;Madachy and Tarbet, 2000;Martin and Raffo, 2000;Roehling et al., 2000;Ruiz et al., 2004;Wernick and Hall, 2002;Luna-Reyes et al., 2005;Madachy, 2008;Otto and Belardo, 2002) • Software project management (Rodrigues and Williams, 1997) • Software development cost estimation (Boehm et al., 2000) • Open source software development modeling Focus on IS development output • Enterprise data modeling (Wang and Yi-Ming, 1998) • Requirements engineering (Williams, 2001;Loucopoulos and Prekas, 2003) • UML (Unified Modeling Language) and SD (Tignor, 2003) • Unifying SD and business objects in DSS development (Gregoriades and Karakostas, 2004) • Developing IT standards for the system dynamics community (Diker and Allen, 2005) • DSS evaluation (Marquez and Blanchar, 2006) • IS use and productivity (Kanungo, 2003) • Internet growth and telecommunications (Dutta, 2001b;Dutta andRoy, 2003, 2004b) • Management support systems (Clark et al., 2007;Clark and Jones, 2008) • Strategic decision making, mental models and ERP (Ritchie-Dunham, 2001) ...
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Catering to the growing community of scholars and practitioners who research information systems (IS) with system dynamics (SD), this article sketches IS research with SD as a genuinely transdisciplinary area that studies the design, implementation, management and effects of IS on people, organizations and markets. A preamble to a fascinating collection of five applied-research contributions to this System Dynamics Review (SDR) special issue, the article charts IS research and places these contributions in their proper context of IS research with SD. The article outlines criteria and themes for future high-quality IS research with SD, emphasizing the value of the SD modeling process for IS research. By integrating IS research with SD, this special issue might serve well as a prototype for future SDR special issues, which will further integrate SD with research and practice in other social sciences, and thereby help identify new, exciting opportunities for future research. Copyright © 2008 John Wiley & Sons, Ltd.
... This model has been used to investigate a wide range of areas in software development including software cost and schedule estimation [Abdel-Hamid 1990, 1993aAbdel-Hamid and Madnick 1983], the economics of the quality assurance function [Abdel-Hamid and Leidy 1991], project staffing [Abdel-Hamid 1989;Abdel-Hamid et al. 1994;Sengupta et al. 1999], software reuse [Abdel-Hamid 1993b] and project control with fallible information [Abdel-Hamid et al. 1993;Sengupta and Abdel-Hamid 1996]. More recently, SD modeling has been used extensively in research on the software development process [Madachy 2007] including requirements engineering [Stallinger and Grünbacher 2001], reliably control [Rus et al. 1999], outsourcing [Dutta and Roy 2005;Roehling et al. 2000], information security [Dutta and Roy 2008], knowledge management [Peters and Jarke 1996], and system acquisition activities [Choi and Scacchi 2001]. To the best of our knowledge, our work is the first to apply SD simulation to model essential aspects of agile software development. ...
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Changes in the business environment such as turbulent market forces, rapidly evolving system requirements, and advances in technology demand agility in the development of software systems. Though agile approaches have received wide attention, empirical research that evaluates their effectiveness and appropriateness is scarce. Further, research to-date has investigated individual practices in isolation rather than as an integrated system. Addressing these concerns, we develop a system dynamics simulation model that considers the complex interdependencies among the variety of practices used in agile development. The model is developed on the basis of an extensive review of the literature as well as quantitative and qualitative data collected from real projects in nine organizations. We present the structure of the model focusing on essential agile practices. The validity of the model is established based on extensive structural and behavioral validation tests. Insights gained from experimentation with the model answer important questions faced by development teams in implementing two unique practices used in agile development. The results suggest that due to refactoring, the cost of implementing changes to a system varies cyclically and increases during later phases of development. Delays in refactoring also increase costs and decrease development productivity. Also, the simulation shows that pair programming helps complete more tasks and at a lower cost. The systems dynamics model developed in this research can be used as a tool by IS organizations to understand and analyze the impacts of various agile development practices and project management strategies.
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