Software, Growth, and the Future of the U.S Economy Report of a Symposium (2006) / Chapter Skim
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III Research Paper -- The Economics of Software: Technology, Processes, and Policy Issues--William J. Raduchel
III Research Paper -- The Economics of Software: Technology, Processes, and Policy Issues--William J. Raduchel
Pages 159-176
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From page 161... ...
Operating, maintaining and creating software is surely the largest single class of expenses other than direct labor. Enterprise Resource Planning systems determine the way that factories run.
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From page 162... ...
economy is so dependent on software in ways that we currently do not understand. Software drove the great bubble of the 1990s, which created more wealth than anything else in history.5 Software created millions of new high-paying 1"The software sector is one of the most rapidly growing sectors in OECD countries, with a relatively strong performance across all economic variables.
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From page 163... ...
Software defines the informa 6In the United States alone, more than 1.2 million jobs were created in the software sector from 1990-2001. Furthermore, "jobs in the software sector alone are only part of the contribution of software activities to total employment.
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The size of the gaming industry, valued around $35 billion, is rapidly approaching the $38 billion music industry and has already surpassed the motion picture industry and continues to grow its hold on the leisure time worldwide.11 The growth of gaming is so large that eventually we will rewrite almost all software that interacts with consumers into a gaming paradigm. Piracy is going to remain a recurring issue because the entertainment industry makes a profit by delivering content to consumers in ways that consumers do not want it.
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From page 165... ...
Bill Joy calls the spiraling complexity putting "Star Wars-scale" software on the desktop.14 The costs of maintaining and modifying software increase over time and increase with the amount of accumulated change because as modifications begin, increasing complexity is introduced and eventually, changes cannot be made at all. The biggest issues we face lie in how we administer and update our software, and we have a situation where software is sold without liability and where the markets are heavily dominated by one or two vendors.
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From page 166... ...
There are only a very limited number of software developers worldwide at this high level that end up writing the basic kernel of the software we use. The late Maurice Halstead in his book, Elements of Software Science,16 explored at length how one attribute of the human brain, modestly called Halstead 16Maurice H
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From page 167... ...
At the same time, this also means that just adding additional software developers will not necessarily create the complementarities needed to combine both systems knowledge with computer knowledge successfully. Making the task of writing applications software uniquely complicated is the reality that software is a stack composed of multiple layers of software, usually created by different teams over times for different purposes and brought together for the unique task at hand.
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From page 168... ...
The trade-offs between operation and maintenance and development and replacement are huge, with many opportunities to save near-term expense for long-term costs. Thus, from the engineering perspective, the immense difficulty of measuring or predicting "flexibility" or "maintainability" or "reusability" during development means that development managers are often unable to steer a prudent course between over-investment, which creates unused flexibility and slows down development, 18Packaged software refers to an application program or collection of programs developed to meet the needs of a variety of users, rather than custom designed for a specific user or company.
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From page 169... ...
In the case of desktop computers, lower levels of the software stack are bought and sold in the market and can be valued by their market price, although the natural monopoly aspects of these layers induces distortion. Because software is a large business, these metrics are interesting, but they do not capture at all the overall productivity implications for the economy.
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From page 170... ...
The systems design is an intangible asset whose value grows and shrinks with the operations and prospects for the business. The implementation is an intangible asset of potentially enormous value, as finding even one way to make a design work reliably at scale is not assured, but it also is a liability, for it must be maintained and evolved as the business changes over time.20 The costs of maintaining and modifying commercial software increase over time and increase with the amount of accumulated change.21 Change is required by the rapid change in the foundation platform as well as by the evolution of the environment within which the software operates, and the requirements and needs it fulfills.
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· Do public corporations properly report their investments in software and their resulting expenses? Can investors accurately understand corporate performance and outlooks without better knowledge of the software systems that operate modern corporations and products?
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From page 172... ...
These companies would then have to take responsibility for the security of these systems. The worms that have been circulating lately have the potential to infiltrate home computers and create an unstoppable attack on vital infrastructure as 10-20 million broadband connected homes would be simultaneously attacking infrastructure.
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25 If the U.S. could find a new to way to write software, it would have an enormous positive impact on the value equation for the U.S.
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A bad implementation of a great design is probably mediocre software, but a great implementation of a bad design is probably miserable software. The costs here are usually less than 10 percent of the total system cost.
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From page 175... ...
2003. "European Parliament Votes to Limit Software Patents." New York Times September 25.
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