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\begin{document}

\bibliographystyle{ieeetr}

\title{Motivating Software Reuse}

\author{Ruth A. Malan\\
\\
Hewlett-Packard Laboratories\\
1501 Page Mill Road, Palo Alto, CA 94306\\
Tel: (415) 857-7909\\
Email: malan@hplabs.hp.com\\
Fax: (415) 857-8526\\
}
\date{}

\maketitle

\begin{abstract}
In order to achieve levels of reuse that support attainment of the
organization's objectives, a comprehensive approach to motivating
reuse among all relevant players in the organization needs to be
developed.  This position paper explores some of the issues
that arise in motivating reuse at different levels in the organization.
It posits that an integrated solution that relies on organizational
self-knowledge to align reuse incentives with reuse goals and the
organization's objectives will be more effective than isolated attempts
to eliminate the symptoms of reuse inhibitors.

\vspace{0.2in}
\noindent
{\bf Keywords:}  reuse, incentives, economics, funding models,
performance measures, organizations, management.

\vspace{0.2in}
\noindent
{\bf Workshop Goals:}  exchange perspectives on organizational and
management aspects of systematizing software reuse; networking.

\vspace{0.2in}
\noindent
{\bf Working Groups:} reuse incentives, management, organization and
economics; reuse process models; and reuse maturity models.
\end{abstract}

\newpage

\section{Background}

Under the visionary leadership of Martin Griss, HP Laboratories'
Software Reuse Department (SRD) has put together a multi-disciplinary
team to investigate the business, organizational, cultural
and technical aspects of creating effective, reuse-based Flexible
Software Factories (FSF's).  During a Summer internship with SRD in
1992, the author participated in this research program, focusing on
business issues.  Continuing this work with the SRD-FSF team,
the author is currently developing an integrated framework for
providing reuse incentives at various levels, incorporating
organizational considerations, funding mechanisms, and project and
personal performance evaluations that are consistent with reuse goals.


\section{Position}

Reuse programs that fail to ``get off the ground'' frequently share the
problem that the incentives to produce and utilize reusable
components are lacking or subverted.  For example, when project
managers are held accountable for increased costs and project delays,
they tend to avoid reuse investments.  In such an environment, an
edict to produce reusable components is not likely to be very effective
since it conflicts with project's cost/schedule performance.  Other
``knee-jerk'' responses to the symptoms of reuse inhibitors may be
misaligned with reuse goals.  For instance, cash bonuses for
component deposition may give rise to a large but worthless library.
This is not to say that cash bonuses are necessarily bad, but that unless
the overall picture is considered, the attempted ``solution'' may have
undesirable consequences.

It is generally recognized that attempting to eliminate a symptom
rarely solves the root problem, yet this is precisely what we often
observe in the case of reuse.  To be fair, high pressure, tight
development cycles make it hard to distinguish problems from
symptoms.  It is, therefore, important to invest in up-front analysis to
develop a systemic understanding of the software development
organization, it's goals, processes, people, opportunities and
challenges.  Armed with this self-knowledge, the organization is better
able to create an integrated solution to the problem of achieving levels
of reuse that are aligned with it's overall objectives.

\subsection {Getting Everyone ``On Board''}

\subsubsection {Incentives at the Software Engineer Level }

{\it Extrinsic Incentives}  \vspace{0.05in}\\
A number of companies, including Motorola  \cite{Joo92}, and
Hartford Insurance Group \cite{Joy88}, have
installed a reward system to counter low deposition and reuse rates
of library components.  An organization considering use of rewards
should assess how the reward system interacts with intrinsic motivators
such as personal objectives and performance measures.  For instance,
reuse bonuses may conflict with the disincentive created by
evaluations based solely on lines of new code developed.
Furthermore, any proposed reward system should be analyzed to
establish whether it does indeed foster behavior that is consistent with
reuse goals.  For instance, while flat rate cash bonuses make the
incentive program relatively easy to administer, they do not tie the
bonus to the value of the component (though a bonus per use at least
rewards creation of useful components).  A bonus based on consumer
savings is more likely to stimulate production of {\it valuable}
components.

{\it Intrinsic Incentives}  \vspace{0.05in}\\
Different engineers take pride and pleasure in different aspects of
reuse-related work.  Some software engineers are motivated by the
desire to produce more permanent software assets that bear their
stamp of creation through generations of products.  Others are more
happy to focus on the unique aspects of customer solutions.  Taking
into account individual preferences as well as talents when filling reuse
roles will help to align intrinsic motivators with reuse goals.

The argument that there is an inherent motivation to reuse available
components whenever doing so will save effort and time may seem
persuasive, particularly when the pressure of tight development
schedules is considered.  However, the height of this pressure comes
fairly late in the development cycle, after many of the design and
implementation decisions have already been made, so that the number
of code components that will slot into the project at that point is likely
to be severely limited.  Therefore, incentives to reuse earlier phase
work products need to be considered.  Evaluating the exploitation of reusable
work products during inspections at each phase has proved to be an effective
practice in a number of HP's pilot reuse projects.  Thus, reuse is
fostered by incorporating reuse levels in project and individual
performance evaluations.  Performance evaluations are powerful
motivators and traditional performance measures cannot be left intact
when reuse programs are initiated.  New measures must be designed to
take the reuse goals into account.  Of course, the organization is in the
business of making products, and reuse is only a means to that end.
Therefore, care should be taken to ensure that the incentive system is
designed to motivate reusable component production and utilization
where it effectively supports the organization's broader objectives.


\subsubsection { Incentives at the Project Level }

Divisions, R\&D groups, and even project groups are typically
responsibility centers and financial measures are used to evaluate their
performance and allocate rewards and corporate resources.  Where
reuse crosses responsibility center boundaries, the costs of reuse
reflect badly on the producer responsibility center if there is no
mechanism to reallocate some of the consumer's benefit to the
producer.  In such cases, even if reuse is mandated by upper
management and allowances are made to support  production of
reusable components, reuse goals tend to be subverted.  Because
production of reusable work products does not directly contribute to
current product development, it is hard for project managers to resist
raiding reuse producer resources under their control whenever
product development projects come under pressure.  While the cost of
lost opportunities for the overall organization may far exceed any lost
opportunity cost to the subgroup housing the production for reuse, it
is the latter cost that is both most apparent to product managers and
the basis for their evaluation.  Some possible resolutions to this
incentive problem are outlined below.

{\it Producer Group as a Separate Cost Center} \vspace{0.05in}\\
One way to circumvent the need to redistribute reuse benefits, is to
separate component producers and support personnel from project
teams, and make the producer and support groups cost centers.  This
approach may still encounter problems if the producer cost center is
housed in a divisional profit center when reuse of the components
crosses divisional boundaries.  This is because the division that incurs
all of the reuse investment  does not receive all of the benefit.  If this
is the case, the cost center should be placed at a higher level in the
organization.

{\it Barter} \vspace{0.05in}\\
One approach to evening out the reuse investment burden is to
allocate the development of components to members of a
``consortium'' of development projects.  This barter system has some
appeal because the exchange obviates the need to establish prices or to
restructure the organization.  However, as the pressure to get products
out rises, engineers tend to get shifted from reuse production/support
activities to more directly product-oriented activities.

{\it Transfer Prices } \vspace{0.05in}\\
Transfer pricing is one of the most frequently used mechanisms for
providing supplying responsibility centers with market-like efficiency
incentives.  Where there is an external market price, that is the most
efficient transfer price to use.  In the context of domain-specific reuse,
however, it is likely that in many cases components will be regarded as
proprietary and essential to the organization's competitive advantage,
so that no external market will exist.  There are a number of other
possible approaches to setting the transfer price.  One alternative is to
set the total transfer price equal to the producer's cost, and to charge
consumers some portion thereof.  Even this approach is not
straightforward in the reuse context, since future reuse instances are
uncertain.  Bollinger and Pfleeger \cite{BP89} identify a number of
possibilities for amortizing the producer cost, including flat rate
amortization, biased flat rate amortization, and accelerated
amortization.  Another alternative is to allow the managers involved to
bargain over the components to be delivered, and the transfer price to
be paid for them.

{\it Incentive to Utilize Reuse Components } \vspace{0.05in}\\
Product teams are responsible for the development of products best
suited to their target market segment, and high levels of reuse are
generally attained only at the expense of some degree of compromise on
individual optimization of features and performance.  The functionality
that is considered common to a group of products is frequently a
decision variable that is subject to tradeoffs between better suiting
individual customer segments, and extending the commonality and
consequent economies of scope in development and maintenance.  As
a result of the tension between individual product optimization and
product family benefit from reuse, the estimated reuse benefits and
the progress toward attaining the expected benefits should be shared
with the product teams so that they can make informed tradeoff
decisions.  Fortunately, however, this tension is somewhat ameliorated
in many markets where customers are coming to value greater
consistency in product lines because this allows them to share their
investment in training, documentation, peripherals and the like among
related products.  This enhances the software development
organization's opportunity to broaden the scope of common
functionality and retain the loyalty of customers to boot.


\subsubsection { Incentives at the Upper Management Level }

Upper management support is vital to the success of the program, not
only because the investment in reuse may be high enough to require
their authorization, but because reuse entails significant change in the
way project-organizations operate.  Organizational change typically
meets resistance, and high level leadership plays an important role in
instilling a vision that inspires and motivates those affected by the
change.  In order to actually achieve the tantalizing rewards from
reuse, projects can no longer be viewed as independent entities that
can be managed without attention to a wider network of projects that
extends not just across organizational subunits but into the future as
well.  Champions of reuse who have the power to influence all of the
affected entities in the producer-consumer network are needed to
encourage commitment to the program.

Upper
levels of management are more likely to have a strategic, long term
view than lower levels of management who generally have a more focused,
tactical orientation.  Long term commitment to the process is
particularly important, because consideration of reuse in the short
term may reveal reuse to be a drain on scarce resources that could
prompt management to regard the investments as sunk costs and bail
out of the program, while a longer term view could have shown the
expected rewards to be high.

Because management support is so central to the success of the reuse
program \cite{Gri93}, it is vital that they support
reuse when the opportunity cost of
not employing systematic reuse is high.  
Frequently, managers  
prefer to err on the side of conservatism when the  
costs, benefits, payback and risks are unclear.
Therefore, 
the opportunity cost has to
be assessed, and this analysis should
encompass a multi-project, long term view 
that identifies the reuse costs and benefits, and 
estimates those that can be quantified with enough 
confidence to remain credible.  The
revenue-side benefits of reuse (including the impact of earlier time to
market, higher quality, and opportunities to attack niche markets with
customized products \cite{MW93}) should not be ignored.  Indeed,
the strategic benefits of reuse, such as reduced time to market or
enhanced consistency in the product line, have generally been more powerful
rallying points for top HP managers than reduced costs \cite{Wen92}.


\subsection { Integration and Alignment }

All members of the organization need to be aware of, and motivated
to achieve, the elusive combination of enhanced quality, shorter 
development cycles {\it and} reduced costs that reuse makes possible.
Development projects can no longer be independently optimized.
Also, it is not good enough for upper management to issue reuse
mandates without getting the other players on board through changes
in organization, performance and incentive systems.  
Numerous decisions made at the engineering level affect whether or not
systematic reuse will be achieved, and it is vital that they 
believe that in the long-run everyone gains from the
reuse program, and are committed to it.
Alternatively, a
``grass roots'' effort that does not have management support will not
achieve its full potential for it will not have the upfront investment or
go-ahead for organizational change to enable full exploitation of
multi-project, long-term reuse opportunities.  The incentive problem
at each level should not be approached in isolation, but rather a
system solution should be designed to align reuse goals with
organizational objectives and ensure that they are achieved.


\section { Comparison }

Some of the specific issues addressed in the above discussion have
been surfaced in previous work.  For example, Bollinger and
Pfleeger's \cite{BP90} Cost-Sharing Domain Banks, and Wolff's  \cite{Wol92}
royalties are intended to address the problem  of providing an
incentive to produce for reuse through, in effect, transfer prices.
However, transfer pricing is just one alternative in a range of options
for addressing one dimension of the reuse incentive problem.  Also,
most economics of reuse models (e.g. \cite{BB91,GC92,PC93}) do not
consider the strategic, or revenue-side, benefits of reuse.  As Wentzel
\cite{Wen92} points out, the various levels of management have
different perspectives, and consideration of strategic benefits may be
less important in gaining the support of managers with cost center
responsibility, but vital to achieving strong backing by higher level
management.  The organization and it's objectives need to be
understood, and a comprehensive approach to motivating reuse among all
relevant players in the organization needs to be developed.

\bibliography{malan}

\section{Biography}

{\bf Ruth Malan} is participating in Hewlett-Packard's research
internship program, working in the Software Reuse
Department at Hewlett-Packard Laboratories for the Summer.  Her
interests span the business aspects of software reuse, including
business opportunity assessment, reuse cost -benefit analysis and
business metrics; reuse incentives, funding models and performance
measures; and reuse asset management and portfolio planning.  She
received an MBA from Virginia Tech in 1990, and an M.S. in
Operations Research from Stanford University in June, 1993.

\end{document}
