1. CS 5150 1 CS 5150 Software Engineering Lecture 5 by Stephen Purpura Matching Process to Risk

2. CS 5150 2 Big Team vs. Small Team Risks When requirements or plan are uncertain, the minimum (engineers, modules, lines of code, tests, etc.) should be impacted by changes (that result from uncertainty). Changing the direction of a big ship requires more ocean than a small ship requires.

3. CS 5150 3 Some definitions of success are more concrete … How do you approach these definitions of success? (a)Increase market share by 3% (b)Gain 10,000 new web site visitors (c)Build a document repository web site (d)Make Windows safe from hackers

4. CS 5150 4 Let’s Start a Technology Company It is 1998. Regular consumer Internet usage is less than 10 million people. We want to start a company that will allow consumers to pay their bills using an Internet interface. We’ll call this market “online Bill payment”. What do we do next?

5. CS 5150 5 Which Option Would You Choose? Feasibility and planning Option 1: Sketch the components of the web site, make a list of modules, build budgets for building the components Option 2: Plan how you will acquire the first 1,000 users Option 3: Start building a prototype

6. CS 5150 6 Draft 1: Requirements for Acquiring 1,000 Customers Step 1: At least 1,000 potential customers must navigate to the site Step 2: Each customer must be able to: Identify themselves Establish funding information Pay a bill See status/history Troubleshoot Step 3: Profit?

7. CS 5150 7 Draft 2: Requirements for Acquiring 1,000 Customers Step 1: Sign relationship deals with 4 billers that will ask at least 25,000 customers to navigate to your web site. Step 2: Each customer must be able to: Identify themselves Establish funding information Pay a bill See status/history Troubleshoot Step 3: Profit?

8. CS 5150 8 Draft 3: Requirements for Acquiring 1,000 Customers Step 1: Sign relationship deals with 4 billers that will ask at least 25,000 customers to navigate to your web site. Step 2: Each biller can customize their customer interface Step 3: Each customer must be able to: Identify them self Establish funding information Pay a bill See status/history Troubleshoot

9. CS 5150 9 How Much Money Do We Need? The founders of a company seek $250k based on a broad plan (that seems feasible) to test whether they can acquire 1,000 Internet Bill Payment customers by leveraging agreements with 4 billers that will drive 25,000 potential users to their web site. Success = A conversion rate of 4% 1,000 happy customers with at least 1 transaction each A web site that can handle the daily load A secure system ships every day

10. CS 5150 10 What Does Success Earn You? An increase in valuation Credibility

11. CS 5150 11 The Capitalization Table of a Seed Funded Company with a $250,000 Round InvestorCommon SharesPreferred Shares% of Company Founder 130,000,00025.00% Founder 230,000,00025.00% Investor 110,000,0008.33% Investor 210,000,0008.33% Director100,0000.08% Programmer 130,0000.03% Programmer 230,0000.03% Option Pool19,840,00016.53% Authorized but Unallocated20,000,00016.67% Total100,000,00020,000,000100.00% Assuming a liquidity preference of $1:$1 for Preferred shares, if this company is sold for $250,000, how much does each programmer receive?

12. CS 5150 12 Basic Process Steps in all Software Development Feasibility and planning Requirements System and program design Implementation Acceptance and release Operation and maintenance Start with a meaningful goal! Minimum possible product driven by goals!

13. CS 5150 13 What are the technical risks? Major Risks Company will run out of money Customers don’t understand how to use site Customers can’t complete transactions Customers don’t have funding ability Web site fails under load Hackers/fraud/repudiation

14. CS 5150 14 Observations about Software Processes Completed projects should have the basic process steps but... the development process is always partly evolutionary. Risk is lowered by: Prototyping key components Frequent releases, dividing large projects into phases Early and repeated testing with users and customers. Following a visible software process Making use of reusable components TESTING! Simulations! Trial runs!

15. CS 5150 15 Matching Process to Risk Company will run out of money Customers don’t understand how to use site Customers can’t complete transactions Customers don’t have funding ability Web site fails under load Hackers/fraud/repudiation Iterative Design Modified Waterfall + Reaction Minimum Product

16. CS 5150 16 Iterative Processes: Requirements and Risk Mistakes in the requirements are the most expensive to correct. Requirements are hard to understand until there is an operational system, particularly with user interfaces Create an outline system quickly, review it with clients, test it with users, improve the understanding of the requirements Example: Start-up time of launching a complex application.

17. CS 5150 17 Contrast the Previous Example with Planning the Next Version of Microsoft Windows People buy Windows primarily because of network effects. But some upgrade because of “excitement”. What do we do next?

18. CS 5150 18 Matching Process to Risk Company will run out of money Customers aren’t excited Network effects Hackers/fraud/repudiation Application and hardware compatibility New “lock in” features Iterative Design Modified Waterfall Minimum Product

19. CS 5150 19 Application Compatibility Stability is a major feature of Windows. Recent but older applications run correctly Older web sites can be viewed in Internet Explorer Home users can use older HP laser printers How do you assure this? You test and validate every day.

20. CS 5150 20 Big Team vs. Small Team? Why can Google Chrome ship faster than IE? VersionShip DateMarket Share 1.0December 11, 200870.5% vs. 1.4% 2.0May 24, 200968.1% vs. 1.7% 3.0October 12, 200964.6% vs. 3.6% 4.0January 25, 201062.1% vs. 4.6% 5.0May 25, 201060.0% vs. 6.8% 6.0September 2, 201060.1% vs. 8.0%

21. CS 5150 21 Conclusion and Preview of Next Talk If the software isn’t written, deployed, and functioning as desired, there are unknowns in its development. To eliminate unknowns, you simulate desired production behavior. You order the creation of the simulations based on the potential cost of known unknowns and unknown unknowns. This is learned from experience. Big teams use more simulations than small teams to minimize the number of times they modify plans with cascading changes.