Whenever a “new and improved” means for software development is adopted, managers are confronted with a new set of evaluation problems. Among these: the determination of costs and benefits – including intangibles. Traditional software development methods emphasized up-front planning and design along with some measures (however unreliable they might have been) that a manager could use to estimate both the costs and benefits of any proposed new system. Two new approaches to software development –Extreme Programming and Mob Software (the latter also known as Open Source Software) – are being adopted very rapidly by a wide range of businesses and software development providers. Both of these approaches radically alter the basic premises of how software is (should be) done and, accordingly, invalidate most, if not all, of the ways managers estimate feasibility and monitor progress. Finding new measures and metrics that can be used by software managers and developers would seem to fit the mission of managerial accounting professionals. This paper will briefly review how costs and benefits were calculated for traditionally managed software projects, summarize two new approaches to software development in order to highlight the problems they pose for managerial accounting, and speculate on some possible approaches to solving those problems.
