Devnology Back to School III : Software impact

Impact of software Michiel van Genuchten Open Digital Dentistry, Switserland “Impact” series of columns published in IEEE Software since Jan 2010; see www.computer.org/software Column editors Michiel van Genuchten and Les Hatton05/10/2011 © Michiel van Genuchten & Les Hatton

05/10/2011 © Michiel van Genuchten & Les Hatton

What we know: Software is changing industries• Computer industry in the 1990’s• Mobile phone industry today• Medical and car industry next• Many more to follow• ‘Every company is a software company’ (Watts Humphrey) 05/10/2011 © Michiel van Genuchten & Les Hatton

What we do not know• At what pace are changes happening?• Is impact the same in different applications / industries?• Quantitative understanding of causes and effects?• Timing; when will it happen?• How to make money after the sw change?05/10/2011 © Michiel van Genuchten & Les Hatton

Impact series of columns• Let’s ask senior managers in various industries• Demand size and volume information• 10 columns appeared in 2010 / 2011• Products from following industries: – Car industry (Bosch and Tomtom) – Medical industry (Philips MR) – Aerospace (Honeywell) – Train control (Hitachi) – Mobile (Realnetworks) – Copiers (FujiXerox) – Workflow (Uni of Brisbane – open source)05/10/2011 © Michiel van Genuchten & Les Hatton

MR growth over time05/10/2011 © Michiel van Genuchten & Les Hatton

Honeywell Flight Management System• “The current-generation FMS supports all applications and any airframe, and every major aircraft manufacturer includes a Honeywell FMS in their cockpits. FMS installations include the world’s two largest commercial manufacturers, Airbus and Boeing, as well as major business jet manufacturers Bombardier, Cessna, Dassault, and Embraer”• Airbus and Boeing do not write their own FMS – Airbus 380 costs 300M and Boeing 787 about 150M – Honeywell has higher volume than Boeing and Airbus• Why do companies still develop low volume sw themselves?05/10/2011 © Michiel van Genuchten & Les Hatton

Real Networks• Large sw product (up to 100MLOC)• In huge volume (100 M copies year)• Combination of open and closed source• Revenue model on server and client side05/10/2011 © Michiel van Genuchten & Les Hatton

There is only one Tokyo05/10/2011 © Michiel van Genuchten & Les Hatton

Volume and size over time; Tomtom05/10/2011 © Michiel van Genuchten & Les Hatton

Some definitions• Size: KLOC’s or MLOC’s – We know issues with LOC’s – Pretty good descriptive measure• Volume: follow the money follow the license – Embedded: no of boxes – Licensed sw: ask legal or sales – Open source: no of clickthroughs – Website (eg. Search); no of unique IP addresses05/10/2011 © Michiel van Genuchten & Les Hatton

Impact Size of sw in LOC 100M Real Tokyo railway player MR copier 10M TomTom scanner 1M FMS airplane ECU 100K CAR Workflow 10K 1 100 10k 1M 100M Volume or unique users in #/year05/10/2011 © Michiel van Genuchten & Les Hatton

Definition of sw mileage• The number of new customers per year per LOC.• “Software mileage is a measure of how many new customers you gain per LOC written. If you gain lots of new customers per LOC, your code is getting excellent mileage and your software investment is reaping rich rewards.”• “If you have to write a lot of software per new customer, you need to have a high royalty per customer, or profitability is unlikely.”05/10/2011 © Michiel van Genuchten & Les Hatton

Software mileage: New customers per line of code per year Product Software mileage Electric control unit in Car 67 Multimedia player in mobile phone 10 Navigation system in car 2 Workflow 0.1 Flight management system in airplanes .001 MR system .0001 Train traffic control system < 0.00000105/10/2011 © Michiel van Genuchten & Les Hatton

How to use sw mileage?• Compare within an industry• Look to your right for trouble• Can be addressed with executive management – Tech people know size – Sales or legal people know volume – Executives are used to ratio’s like this• It worked in my industry05/10/2011 © Michiel van Genuchten & Les Hatton

Research questions / hypotheses• Comparable products have comparable size• Software mileage is higher upstream in value chain• Software mileage is PI for sw intensive business05/10/2011 © Michiel van Genuchten & Les Hatton

Conclusions• Volume is key in understanding sw industry• Software mileage is understood by managers• There is a lot we do not know yet about sw economics• But we are learning• More columns are welcome 05/10/2011 © Michiel van Genuchten & Les Hatton

Devnology Back to School III : Software impact

by Devnology on Oct 06, 2011

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Devnology Back to School III : Software impact — Presentation Transcript