Advancing architecture options theory: Six industrial case studies

Systems provide value through their ability to fulfill stakeholders' needs. These needs evolve and often diverge from an original system's capabilities. Thus, a system's value to its stakeholders diminishes over time. Consequently, systems have to be periodically upgraded or replaced. Since replacement costs are often prohibitive, system adaptability is valuable. Adaptability entails the ability to modify an existing system or design of a system's architecture, such as changing, adding, removing, or replacing relevant elements as well as adjusting their reciprocal interactions. In 2008, Engel and Browning proposed a Design for Adaptability concept based on Architecture Option (AO) theory. AO fuses Financial Options and Transaction Cost theories, seeking to design systems for optimal lifetime value. They asserted that designers should balance the benefits of adaptability against its affordability. More modularity is not always better; the amount of modularity alone is an insufficient and even misleading cause of value. This follow-up paper reports on a project, aimed at enhancing the AO theory and validating its applicability within diverse industrial environments. Through interactions with practicing system developers, the AO model was simplified and a modified Black-Scholes model was adapted into the engineering domain and successfully practiced. Six case studies were conducted within: food packaging, machine tools, automotive, aerospace, communication, and optoelectronics industries. All six industrial participants estimated, among other improvements, over 15% benefits in (1) reducing systems' lifetime cost, (2) reducing systems' upgrade cycle-time, and (3) increased systems' lifespan. These results demonstrate the industrial applicability and validity of the AO theory.