TIMING OF SOFTWARE REPLACEMENT

Analogous to the replacement of an old machine, such as a car, replacing an aged softwitre may contain its escalating cost of maintenance. Prior research has assumed that increasing maintenance cost is due to the deterioration of the system maintainability. However, cost of maintenance depends also on the number of incoming maintenance requests. While software maintainability is determined by its complexity and development environment, number of maintenance requests is affected by the business environment. This distinction is significant in analyzing economic tradeoffs in software maintenance because replacement improves system maintainability but will not affect the number of maintenance requests. Unlike replacement of hardware, rewriting software takes an extended length of time, Thus, the old software must still be maintained before the new software is ready. We develop an economic model that considers the number of maintenance requests and the rewriting period explicitly. The model is an extension of Gode, Barua, and Mukhopadhyay (1990), which assumes a constant number of maintenance requests and instantaneous replacement. Our model allows us to draw some additional policy implications about software inaintenatice aild replacement. For instance, we show that in certain situations delaying a system replacement can be inore cost effective when the user environment changes more rapidly, contrary to our intuition. Moreover, it is shown that rewriting should begin earlier when the instantane(,us replacement assumption is relaxed.