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 Hatton

05/10/2011 © 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 time

05/10/2011 © 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 side

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

There is only one Tokyo

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

Volume and size over time; Tomtom

05/10/2011 © 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 addresses

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

copier

Real

player

1 100 10k 1M 100M Volume or

unique users

in #/year

100M

10M

100K

1M

10K

Size of sw

in LOC

ECU

CAR

MR

scanner

FMS

airplane

Tokyo

railway

Workflow

TomTom

Impact

05/10/2011 © 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

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 < 0.000001

Software mileage: New customers per line of code per year

05/10/2011 © 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 industry

05/10/2011 © 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 business

05/10/2011 © 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

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