1. Methods: Deciding What to Design In-Young Ko iko.AT. icu.ac.kr Information and Communications University (ICU) iko.AT. icu.ac.kr Fall 2005 ICE0575 Lecture #20 Business Value Concepts II

2. Fall 2005 2 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Announcements EVRs EVRs For the Business Unit (December 6 th ) For the Business Unit (December 6 th ) CSTB: Digital Dilemma CSTB: Digital Dilemma Perrow: Normal Accidents Perrow: Normal Accidents Weinberg: General Systems Thinking (Sangjin Han) Weinberg: General Systems Thinking (Sangjin Han) For the Engineering Unit (December 13 th ) For the Engineering Unit (December 13 th ) Vincenti: What Engineers Know (Hyung-Choul Kim) Vincenti: What Engineers Know (Hyung-Choul Kim) Cusumano / Yoffie: Internet Time (Il-Seok Suh) Cusumano / Yoffie: Internet Time (Il-Seok Suh)

3. Fall 2005 3 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Picture of the Day: From PIT to CMU PIT Airport CMU Get out of the PIT terminal (to bus stops) Get out of the PIT terminal (to bus stops) Take the bus 28x (Airport Flyer) Take the bus 28x (Airport Flyer) Pay $2.25 (Prepare for the exact cash) Pay $2.25 (Prepare for the exact cash) Get off the bus at 5th & Craig St. (in front of SEI) Get off the bus at 5th & Craig St. (in front of SEI)

4. Fall 2005 4 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Plan for this Unit Internationalization Internationalization Data Privacy Data Privacy Basic business concepts: Value and the elements that define it; applications to software design Basic business concepts: Value and the elements that define it; applications to software design Utility: Value of outputs, tradeoffs in producing outputs Utility: Value of outputs, tradeoffs in producing outputs Competition and intellectual property: EVR reports Competition and intellectual property: EVR reports Group reports: How business and policy issues affect your designs Group reports: How business and policy issues affect your designs The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

5. Fall 2005 5 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Multidimensional Cost Analysis Different factors in a problem are appropriately measured in different ways Different factors in a problem are appropriately measured in different ways It ’ s tempting to convert everything to dollars, but this can lead to … It ’ s tempting to convert everything to dollars, but this can lead to … Loss of information related to different properties Loss of information related to different properties Errors by converting nominal, ordinal, or interval scales to a ratio scale Errors by converting nominal, ordinal, or interval scales to a ratio scale Loss of flexibility by early choice of conversion Loss of flexibility by early choice of conversion Confusion of precision with accuracy Confusion of precision with accuracy Many analysis techniques require a single cost unit, but you should delay the conversion as long as possible Many analysis techniques require a single cost unit, but you should delay the conversion as long as possible The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

6. Fall 2005 6 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Properties of Resources Divisibility/granularity: available increments Divisibility/granularity: available increments Continuousbattery power remaining Continuousbattery power remaining Discrete but dense currency Discrete but dense currency Discrete but sparsesystem version, app choice Discrete but sparsesystem version, app choice Fungibility: convertibility to other resources Fungibility: convertibility to other resources Completecommon currency Completecommon currency Partialbandwidth vs CPU (compression) Partialbandwidth vs CPU (compression) Nonecalendar time vs staff months Nonecalendar time vs staff months Measurement scale: appropriate scale & operations Measurement scale: appropriate scale & operations Nominal, ordinal, interval, ratio Nominal, ordinal, interval, ratio The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

7. Fall 2005 7 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Measurement Scales and Scale Types ScaleIntuitionPreservesExampleLegitimate transformations NominalSimple classif-Differences Horse, dog, catAny one-to-one remapping ication, no order OrdinalRanking accordingOrderTiny, small, Any monotonic increasing to criterion medium, largeremapping IntervalDifferences are Size of Temperature in Linear remappings with meaningfuldifferenceCelsius or offset (ax+b) Fahrenheit RatioHas a zero pointRatios of Absolute Linear remappings without values are temperature offset (ax) meaningful (Kelvin), values in currency units The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

8. Fall 2005 8 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University More Properties of Resources Economies of scale: how much scale matters Economies of scale: how much scale matters Superlinearpurchase with volume discount Superlinearpurchase with volume discount Linearpurchase without volume discount Linearpurchase without volume discount Sublinear adding staff to project (cf Brooks) Sublinear adding staff to project (cf Brooks) Perishability: lost if not used Perishability: lost if not used Perishablebandwidth Perishablebandwidth Nonperishabledisk space Nonperishabledisk space Rival: use by one person precludes use by another Rival: use by one person precludes use by another Rivalmoney, labor, bandwidth Rivalmoney, labor, bandwidth Nonrivalinformation goods Nonrivalinformation goods The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

9. Fall 2005 9 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Value Based on Design But we don ’ t have the code during early design, so we have to predict what those properties will be if d is implemented by method m V(d, ө) = B(x, ө) – C(d,x,m) for { x : F(d,x,m) }, where x = P(d,m) Let d be a designin some appropriate notation x be in R n an open-ended vector of capabilities v be in V n a multidimensional value space m be in some notationa development method B express benefitspredicted value of x to user C express costscost of getting x from d with method m P predict capabilitycapabilities x that m will deliver for d The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

10. Fall 2005 10 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Algorithmic Complexity Analysis of algorithms tells you how running time will scale with problem size Analysis of algorithms tells you how running time will scale with problem size A sort algorithm might be O(n log n) A sort algorithm might be O(n log n) This assumes implementation that is not only correct but also competent This assumes implementation that is not only correct but also competent In this case In this case d, the design, is the pseudo-code of the sort algorithm m, the development method, is a programming technique P is the prediction that runtimes will be as expected x, the capabilities, is O(n log n) [a slight abuse of the model] C is the cost of O(n log n) execution time v, the value space, describes scalability The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

11. Fall 2005 11 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Value with Implementation Prediction Further, cost depends on design and implementation method V(d, ө) = B(x, ө) – C(d,x,m) for { x : F(d,x,m) }, where x = P(d,m) The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University. Let d be a designin some appropriate notation x be in R n an open-ended vector of capabilities v be in V n a multidimensional value space m be in some notationa development method B express benefitspredicted value of x to user C express costscost of getting x from d with method m P predict capabilitycapabilities x that m will deliver for d

12. Fall 2005 12 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Early Design Model of COCOMO II Some factors are properties demanded of product Some factors are properties demanded of product x =, x in {XL,VL,L,N,H,VH,XH} x =, x in {XL,VL,L,N,H,VH,XH} d is size, from function point counting d is size, from function point counting v is value space v is value space m is encoded in the adaptive factors m is encoded in the adaptive factors COCOMO then predicts the cost element of v COCOMO then predicts the cost element of v PM = A (Size) E Π i EM i where E = B + 0.01Σ j SF j and A, B are calibrated to 161 projects in the database V(d, ө) = B(x, ө) – C(d,x,m) for { x : F(d,x,m) }, where x = P(d,m) The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

13. Fall 2005 13 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Client-focused Value Most significantly, value can only be reckoned relative to the needs and preferences (utilities) of a stakeholder – in this case, the client or user V(d, ө) = B(x, ө) – C(d,x,m) for { x : F(d,x,m) }, where x = P(d,m) Let d be a designin some appropriate notation x be in R n an open-ended vector of capabilities v be in V n a multidimensional value space m be in some notationa development method ө express user prefa multidimensional utility space B express benefitspredicted value of x to user with pref ө C express costscost of getting x from d with method m P predict capabilitycapabilities x that m will deliver for d The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

14. Fall 2005 14 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Poladian Dynamic Reconfiguration Emphasis on expressing time-varying user needs Emphasis on ө expressing time-varying user needs x is qualities of delivered service x is qualities of delivered service d is application configuration d is application configuration v is user utility, seq of configurations, resource use v is user utility, seq of configurations, resource use F distinguished feasible designs F distinguished feasible designs m is doing configuration m is doing configuration The tool selects a sequence of configurations d with the objective of best satisfying user ’ s personal preferences The tool selects a sequence of configurations d with the objective of best satisfying user ’ s personal preferences V(d, ө) = B(x, ө) – C(d,x,m) for { x : F(d,x,m) }, where x = P(d,m) The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

15. Fall 2005 15 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Plan for this Unit Internationalization Internationalization Data Privacy Data Privacy Basic business concepts: Value and the elements that define it; applications to software design Basic business concepts: Value and the elements that define it; applications to software design Utility: Value of outputs, tradeoffs in producing outputs Utility: Value of outputs, tradeoffs in producing outputs Competition and intellectual property: EVR reports Competition and intellectual property: EVR reports Group reports: How business and policy issues affect your designs Group reports: How business and policy issues affect your designs The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

16. Fall 2005 16 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Microeconomics 101 Actors Actors Consume and produce goods and services Consume and produce goods and services Factors Factors Material, labor, capital Material, labor, capital The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

17. Fall 2005 17 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Utility Factor A Factor B 0 10 20 30 40 50 40 30 20 10 0 For a given price, you can have some of A and some of B For a higher price, you can have more The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

18. Fall 2005 18 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Production decisions A producer can decide what product mix to make A producer can decide what product mix to make Mix of different products Mix of different products Mix of different properties (speed vs security) Mix of different properties (speed vs security) Mix of different quality (certified vs quick-and-dirty) Mix of different quality (certified vs quick-and-dirty) Clients will place different values on the products Clients will place different values on the products Different clients may have different values or willingness to pay Different clients may have different values or willingness to pay Generally, a producer does best by satisfying the clients Generally, a producer does best by satisfying the clients The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

19. Fall 2005 19 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Quality Attribute Examples Pressman: Pressman: Product Operation Attributes Product Operation Attributes Correctness, reliability, efficiency, integrity, usability Correctness, reliability, efficiency, integrity, usability Product Revision Attributes Product Revision Attributes Maintainability, flexibility, testability Maintainability, flexibility, testability Product Transition Attributes Product Transition Attributes Portability, reusability, interoperability Portability, reusability, interoperability ISO 9001: ISO 9001: functionality, reliability, usability, efficiency, maintainability, and portability functionality, reliability, usability, efficiency, maintainability, and portability Security “ gold standard ” Security “ gold standard ” AUthentication, AUthorization, AUditability AUthentication, AUthorization, AUditability The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

20. Fall 2005 20 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Making Choices Engineering design involves generating candidate approaches and choosing the most promising Engineering design involves generating candidate approaches and choosing the most promising Generating each candidate requires resources Generating each candidate requires resources So sketch alternatives, predict properties, select So sketch alternatives, predict properties, select Refine selection, evaluate, choose again Refine selection, evaluate, choose again Contrast with common software methods Contrast with common software methods Most develop a single design Most develop a single design Engineering design requires a basis for choosing Engineering design requires a basis for choosing Need a way to compare alternatives Need a way to compare alternatives Need a way to analyze tradeoffs and risks Need a way to analyze tradeoffs and risks Today: more decision methods borrowed from business Today: more decision methods borrowed from business Topics useful for both business and technical decisions Topics useful for both business and technical decisions The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

21. Fall 2005 21 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Quantitative Decision Support Economics offers quantitative and semi- quantitative methods for comparing alternative courses of action Economics offers quantitative and semi- quantitative methods for comparing alternative courses of action They can be used for software design decisions as well as business decisions They can be used for software design decisions as well as business decisions Design spaces Design spaces Utility theory and linear programming Utility theory and linear programming Real options Real options The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

22. Fall 2005 22 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Design Spaces Identify independent design decisions Identify independent design decisions Treat them as orthogonal axes in N-space Treat them as orthogonal axes in N-space Design can be viewed as searching this space Design can be viewed as searching this space Design methods should take you to parts of the space where reasonable solutions are denser Design methods should take you to parts of the space where reasonable solutions are denser The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

23. Fall 2005 23 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Simple Design Space: Image Compression Bit image Group 3 raster Display Group 4 list raster 100 5 1 0.2220 Space factor Relative display time for engineering drawing Application: maps, engineering drawings The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

24. Fall 2005 24 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Image Compression: Special Considerations Image characteristics Image characteristics Regularity improves compression factor Regularity improves compression factor Structural knowledge Structural knowledge Display list has speed of Group 3, space of Group 4 Display list has speed of Group 3, space of Group 4 But you need to know where the lines are But you need to know where the lines are Tractability Tractability Often impractical to store full image Often impractical to store full image Bandwidth interaction Bandwidth interaction Bit image display may be limited by bandwidth Bit image display may be limited by bandwidth Latency and incrementality concerns Latency and incrementality concerns Group 4 depends on context from previous (possibly distant) lines Group 4 depends on context from previous (possibly distant) lines Quality issues Quality issues Lossy vs not Lossy vs not Can you add modern representations (gif, jpg, png)? Can you add modern representations (gif, jpg, png)? The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

25. Fall 2005 25 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University feasible region Graphic Interpretation of Resource Use # map lookups # emails processed 0 10 20 30 40 50 40 30 20 10 0 100 units of memory line: capacity limit based on memory 120 units of battery line: capacity limit based on battery The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

26. Fall 2005 26 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Graphic Interpretation of Utility # map lookups # emails processed 0 10 20 30 40 50 40 30 20 10 0 The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

27. Fall 2005 27 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Remark on Evaluation When someone proposes an “ evaluation ”, ask … When someone proposes an “ evaluation ”, ask … … of what? … of what? … by whom? … by whom? … for what purpose? … for what purpose? … against what criteria? … against what criteria? The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

28. Fall 2005 28 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Summary Engineering design involves judicious investment in information and flexibility Engineering design involves judicious investment in information and flexibility Information has cost as well as value Information has cost as well as value Flexibility has value as well as cost Flexibility has value as well as cost Today, examples of quantitative decision tools Today, examples of quantitative decision tools Utility theory: model N-dimensional design space constraints and user value (utility,priority), find feasible and optimal (preferred) points in space Utility theory: model N-dimensional design space constraints and user value (utility,priority), find feasible and optimal (preferred) points in space Real options theory: recognize value of flexibility to defer decisions (application to software still speculative) Real options theory: recognize value of flexibility to defer decisions (application to software still speculative) The content of this slide is adopted from the lecture materials of the Methods course (17-652) at Carnegie Mellon University.

29. Fall 2005 29 ICE 0575 – Methods: Deciding What to Design © In-Young Ko, Information and Communications University Questions??