Exploring Cost Drivers in Software Development A Case Study at a Large Automotive Multinational

Knowledge of what drives costs in software development is crucial for organisations to successfully operate such divisions, yet the high speed of change in recent years makes it an area where available research is limited. Specifically, the way costs of agile development projects differ from traditional project processes has received little attention from researchers. Knowledge in the area could help managers better understand the intricacies of software development and how it differs from other project work. This study addresses the issues of cost driver identification and exploration through a case study of a software development department at a large Swedish multinational in the automotive industry. By conducting interviews with people throughout the department, cost drivers were identified and divided into 4 categories; Organisation, Staff, Code complexity and Code Quality. The 4 categories are then divided into sub-categories. These have been analysed with the help of a theoretical framework on software development and large influencing factors in it. The conclusion from the case study is that the major drivers of costs in the department are personnel turnover and complexity in the code. Recruiting new employees gives short-term learning costs, both for the new employees from the time experienced workers spend as teachers. New recruits will further make more mistakes for a time which creates more bugs and errors that take time to fix. Complexity in the code is another core driver as the legacy over the years of patching the code together and not focusing on readability and maintainability makes the code very tricky and expensive to work with. This paper’s contribution to the scientific area is twofold. First, it extends the reader’s knowledge about software development in the context of organisational growth and time pressure. Secondly, it provides an approach for identifying cost drivers within this context