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Education Programming Software The Almighty Buck

NSF Wants To Know How Much Software Really Costs 181

Posted by CmdrTaco
from the tree-fitty dept.
eldavojohn writes "It's no secret that the actual cost of software is very complicated. Sure, the companies that write software are spending money on it, but when that software is released, it doesn't stop costing money. You can probably think of a number of relatively tiny things that add up — especially if you're a system administrator — like the man-hours spent patching software to avoid a nasty infection spreading quickly. The bigger debt is that old piece of software you paid a bunch of money for back in 1998 that you're critically dependent on, but it has no support and hasn't been updated in years due to any number of reasons. Well, the National Science Foundation paid Gartner almost half a million dollars to find out what it truly costs to bring an organization to a fully supported environment. According to Gartner, this hidden liability or 'IT debt' is at $500 billion worldwide right now, and in five years it will be at $1 trillion. Along similar lines, a company called Cast that makes software quality tools reported that your average business application comes with a million in IT debt (PDF). And if that's not misapplied enough for you, they estimate that the debt is $2.82 per line of code in the application and also that it's on average higher in the government sector."
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NSF Wants To Know How Much Software Really Costs

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  • by tsa (15680) on Monday October 11, 2010 @09:35AM (#33858606) Homepage

    It could cost $5,- per game and people would still make big profits. Illegal copying drives the price up, however.

    • Re: (Score:2, Interesting)

      by AvitarX (172628)

      Yes because things like:
      like the man hours spent patching software to avoid a nasty infection spreading quickly would go away if there was no piracy.

      I would actually argue the maintenance costs are down for things people pirate, as admins with real world experience or even just familiarity from dicking around at home, are easier to find.

    • Re: (Score:3, Funny)

      by CarpetShark (865376)

      Illegal copying drives the price up, however.

      --
      There. I said it.

      No, you regurgitated the meme without any awareness that you're a memetic breeding ground.

    • Re: (Score:2, Interesting)

      I think you're ignoring about half of the equation. You see when someone wants to sell something, no matter what it is or what it cost them, they want to sell it at the highest point possible in order to make the most money, this is called the Price curve. This is only mitigated by something called the Demand curve which is what people are willing to pay for the item. Where these two points meet determines the price.

      The market has already determined what people are willing to pay for games, the cost of prod

    • by ScrewMaster (602015) * on Monday October 11, 2010 @10:10AM (#33858896)

      It could cost $5,- per game and people would still make big profits. Illegal copying drives the price up, however.

      Ha, I notice you got modded "Funny" which is appropriate in this context. This is about support costs, not sales prices, and there are very, very few companies that will provide support for unauthorized copies of their software. Do you work for the BSA, by any chance? That's the kind of out-there comment I would expect from them.

      But okay, just to roll with it: do you honestly believe that the majority of software outfits would dramatically lower their prices if (ahem!) "piracy" dropped to zero? Of course they wouldn't. It's whatever the market will bear, baby. Matter of fact, they'd probably claim increased losses due to piracy and increase their prices even further. Yeah, there's dishonestly and sleaziness on both sides of this particular issue. Now, I will agree, a certain percentage of those who acquire software products illegally might have purchased said products if they were not readily available for free. But that number is nowhere near 100%, which is one of several fundamental flaws in the arguments put forth by the RIAA, MPAA, BSA and the like.

      • Re: (Score:3, Insightful)

        by vlm (69642)

        This is about support costs, not sales prices, and there are very, very few companies that will provide support for unauthorized copies of their software.

        You meant to write:

        very, very few companies will provide support for their software

        The only "support" I get for any software is free (except my labor) from google.com. I don't need to pay hundreds/thousands for some guy in India to read me a script telling me to wipe the drive and reinstall, which after some decades of experience is all I now expect.

        • by Binestar (28861)
          You're not using the type of software they are trying to figure out the price for then. Software such as AdvantX (A medical software package) or Siriusware (A POS system used commonly by Theme parks and Ski Resorts and other places where they have ticket tracking/rentals/etc). Call either of those companies for support and you actually get quality support.
          • Re: (Score:3, Insightful)

            by ScrewMaster (602015) *

            You're not using the type of software they are trying to figure out the price for then. Software such as AdvantX (A medical software package) or Siriusware (A POS system used commonly by Theme parks and Ski Resorts and other places where they have ticket tracking/rentals/etc). Call either of those companies for support and you actually get quality support.

            Yes. You'll mostly see that in vertical-market apps which serve critical business functions, have a limited market, and cost a lot of money. They also usually have support contracts, so you're paying for that support on top of the actual cost of the software itself. Consequently, they damn well better provide good service.

      • by sjames (1099) on Monday October 11, 2010 @11:28AM (#33859642) Homepage

        More probably, they would increase the price until piracy returned.

  • That doesn't sound too bad.

    • by Gorobei (127755)

      The figure actually seems very low, though perhaps not unreasonable for medium size (400K LOC) apps.

      I estimated $3-$30 per line of code PER YEAR for one big (10M+ LOC) app at a previous job.

      • by poetmatt (793785)

        of course the importance is realizing the opposite side of the perspective - how much money is gained from these costs?

        This is the part corporations have a harder time measuring.

        • Well of course it has to make or save money somehow or there's no point.
          But we're looking at costs, not net profit/loss.

          And of course it varies by app.
          A small, simple and easy to maintain app it'd be fairly low, some software causes so little trouble that people forget it's there.
          some applications eat the majority of the time of a few highly skilled engineers to keep it from crashing and burning.

          I've fairly sure TFA is more about the average.

    • by Hotawa Hawk-eye (976755) on Monday October 11, 2010 @10:03AM (#33858834)

      Software cost = programmer's salary ...
      + the cost of the computer the programmer used to write the code ...
      + the cost of the electricity to power said computer ...
      + the cost of the software the programmer used to write the code (which may be $0) ...
      + the salary of the QA staff that test the code ...
      + the salary of the documentation staff that write the documentation for the code ...
      + the salary of the HR staff that hired the programmer, QA staff, documentation staff, etc. and ensures they receive their paychecks ...
      + the rent/mortgage payment for the office where the programmer, QA staff, documentation staff, and HR staff work ...
      etc.

      • Re: (Score:3, Insightful)

        by roman_mir (125474)

        Don't forget about the risk and about the cost of opportunity. There is always a risk associated with any endeavor (well, supposed to be, until the gov't 'insures' something against risk and crashes the economy) and there is cost of opportunity - money could be spent on other things that really could provide more benefit for the sunk costs.

      • by grapeape (137008) <mpope7 AT kc DOT rr DOT com> on Monday October 11, 2010 @10:38AM (#33859140) Homepage

        That would be nice and is how business used to be...but now its more about investor profits...then the rest of that stuff. Society has created an unsustainable monster of necessary yearly increases in revenue. Its no longer about generating a nice profit and making a decent living. I really think its a mind set that is beginning to come back to bite society in the ass though. Look at any main street in any small town and its pretty evident that we're in trouble. In the town I live the corner grocery store shut down when they just couldn't compete with the conglomo grocery store moved in less than a mile down the road, then the drug store that had been in business for over 8 years closed down when CVS and Walgreens decided to both move in right next door to each other in the same area as the big grocery store. Supporting businesses around them like the bakery/donut shop, appliance store, mom and pop book store, pet store, etc have all been replaced by big corporations down the road. The argument has been that it created jobs, but most of the jobs are paying far lower than the small stores and services paid that were vacated due to their demise. Business is supposedly booming the new "central" part of town sure has lots of familiar stores and restaurants but the funny part is the per capita income of the town has dropped significantly over the past decade or so since this change started. Do I think Wal-Mart needs to die? NO...but I do think in many instances the "convenience" the corporate world brings does more harm than good over the long term. Sadly I think its too late to really do anything about it.

      • Which all pales in comparison to....

        + the cost of managements bonuses.

      • Re: (Score:3, Insightful)

        by KingMotley (944240) *

        You forgot:
        Corporate taxes.
        The salaries for the accountants, the sales/marketing guys, managers, and executives.
        Advertisements (email, radio, tv, magazines).
        Normal office equipment (Phones, Email, firewall, desks, chairs, pens, paper).
        Website for support/advertising/patches.
        IT support staff to keep the network, email, firewalls, anti-virus, and patches going.
        Network equipment (Switches, routers, firewall, internet connection).
        401K matching, partial subsidized office perks (gym membership, etc).
        Interest paid

      • I notice that you forgot all the costs that precede writing the code -- the business analysts and subject matter experts time who goes into analyzing the business need and developing the specifications for the code -- whether well in advance of the code being written in the waterfall model or in meetings alongside developers in short iterations in agile methodologies.

        Of course, that's perhaps appropriate, because a lot of the "technology debt" is a direct result of other people neglecting the importance of

      • by dcollins (135727)

        + programmer's benefits (health, etc.; ~doubles salary)

    • Re: (Score:2, Insightful)

      If the costs ended there, that'd be great. But they don't.

      Someone has to do the requirements gathering draft up a specification. So you need a systems analyst. Then someone needs to take that specification and turn it into a real systems design. So you need a systems architect. Then someone needs to start writing code, so you need some developers. Someone needs to test all this code, so you need some testers. Someone needs to integrate all this into the existing environment and get it up and running;

  • And..? (Score:4, Insightful)

    by Thyamine (531612) <thyamineNO@SPAMofdragons.com> on Monday October 11, 2010 @09:38AM (#33858642) Homepage Journal
    I know companies that don't bother figuring out the 'hidden' cost of keeping their workstations or servers up to date. Then one day they realize they need to upgrade 30+ system all at once for some new piece of software they want. When they can't budget/manage/understand something as straightforward as hardware maintenance and upkeep, how are they going to understand something less physical like software 'debt' or whatever they are labeling it now.
    • I know companies that don't bother figuring out the 'hidden' cost of keeping their workstations or servers up to date.

      Why do companies still have servers? This issue largely goes away if you build you company in the public clouds.

      • Re: (Score:2, Insightful)

        by Anonymous Coward

        Maybe because "public clouds" are not the answer to everything?

      • Re:And..? (Score:5, Insightful)

        by Darkness404 (1287218) on Monday October 11, 2010 @09:59AM (#33858802)
        Because what happens when the "cloud" shuts down? What happens when your internet goes down and you can't even access what should be local files? What happens when the "cloud" has a major security breach and all of the files that normally wouldn't ever leave your company are now able to be downloaded to crackers everywhere?
        • by Anonymous Coward on Monday October 11, 2010 @10:11AM (#33858906)

          Wait a minute. I'm a manager, and I've been reading a lot of case studies and watching a lot of webcasts about The Cloud. Based on all of this glorious marketing literature, I, as a manager, have absolutely no reason to doubt the safety of any data put in The Cloud.

          The case studies all use words like "secure", "MD5", "RSS feeds" and "encryption" to describe the security of The Cloud. I don't know about you, but that sounds damn secure to me! Some Clouds even use SSL and HTTP. That's rock solid in my book.

          And don't forget that you have to use Web Services to access The Cloud. Nothing is more secure than SOA and Web Services, with the exception of perhaps SaaS. But I think that Cloud Services 2.0 will combine the tiers into an MVC-compliant stack that uses SaaS to increase the security and partitioning of the data.

          My main concern isn't with the security of The Cloud, but rather with getting my Indian team to learn all about it so we can deploy some first-generation The Cloud applications and Web Services to provide the ultimate platform upon which we can layer our business intelligence and reporting, because there are still a few verticals that we need to leverage before we can move to The Cloud 2.0.

          • Wow, that least informed statement I've read in a while. Reminds me of my old boss.

            Steven, is that you?

          • Wait a minute. I'm a manager, and I've been reading a lot of case studies and watching a lot of webcasts about The Cloud. Based on all of this glorious marketing literature, I, as a manager, have absolutely no reason to doubt the safety of any data put in The Cloud.

            You obviously did not have a Sidekick [techcrunch.com].

        • Re:And..? (Score:4, Interesting)

          by ScrewMaster (602015) * on Monday October 11, 2010 @10:12AM (#33858916)

          Because what happens when the "cloud" shuts down? What happens when your internet goes down and you can't even access what should be local files? What happens when the "cloud" has a major security breach and all of the files that normally wouldn't ever leave your company are now able to be downloaded to crackers everywhere?

          I agree. Frankly, I don't trust anyone to host my confidential files, especially when I find that they're stored in another country. No thanks.

        • The whole cloud concept is still being defined.. It's, um, cloudy....

          That said, there are many reasons why some companies could benefit from the idea. For example, say that you want to build a global enterprise. Up until recently, this would take lots of money in order to have a physical "presence" in many different countries. With a global internet it's possible and it doesn't matter where the physical server is located as you can make the best use of local resources. Extend this concept a bit further and

        • by mini me (132455)

          Well...

          1. Take your backups to the next cloud.
          2. While I have not seen any downtime from my ISP in several years, if by rare chance it did happen, you can jump on another provider's network. These days, many consumers already subscribe to multiple internet services (wired to home, wireless to cell, etc.), and that is not even for business purposes.
          3. While possible, I would trust the abilities of a company whose sole business is providing computer services over the company who picks up the $25,000/year sever admin t
      • Re: (Score:3, Insightful)

        Maybe your work is so super secret that you don't want it connected to a public resource.
        Perhaps bandwidth is so scarce at your location that a local server makes more sense from a performance standpoint.
        Or bandwidth is so expensive at your location that a local server makes more sense from a financial standpoint.
        Alternatively, you may be enamored with blinkenlights [wikipedia.org].

    • Re:And..? (Score:5, Interesting)

      by Technician (215283) on Monday October 11, 2010 @09:54AM (#33858774)

      Many companies are transitioning to general purpose software as the features expand. High debt software is often replaced with an off the shelf solution with a much lower cost.

      As examples, at home, I no longer use Photoshop. Gimp is the replacement. Open Office replaced MS Office. Natulus replaced Nero or EZ CD Creator. Ubuntu replaced Windows on most machines. I don't pay for expensive upgrades when possible. Many small companies are making the same move.

      Only one machine has the MS Debt software for the few things that just have to have it. I no longer upgrade high debt software on the various desktops and laptops we use.

      Ernie Ball figured this out years ago and published his story online.
      http://news.cnet.com/2008-1082_3-5065859.html/ [cnet.com]

      • Re: (Score:3, Insightful)

        by PCM2 (4486)

        High debt software is often replaced with an off the shelf solution with a much lower cost. As examples, at home, I no longer use Photoshop. Gimp is the replacement. Open Office replaced MS Office. Natulus replaced Nero or EZ CD Creator. Ubuntu replaced Windows on most machines. I don't pay for expensive upgrades when possible. Many small companies are making the same move.

        I'm sorry, but I think you'd have to be a very, very small company for such changes to make much of a difference to your bottom line. Compare $700 spent on a licensed copy of Photoshop to the $50,000 you might spend on one employee to use that software for a year. The trade-off you've made is that you've forced that employee to use the Gimp, which, being a less functional, less well-supported program that has fewer qualified professional users (potential employees) than Photoshop, incurs much more "IT debt"

    • Ya this is retarded (Score:4, Informative)

      by Sycraft-fu (314770) on Monday October 11, 2010 @10:10AM (#33858888)

      Oh you have to work to keep something up? No shit, never heard of that before. I mean our building we are in, we spend nothing on that. Well except for janitorial staff. Oh and lightbulb replacements. And roof maintenance. And new furniture. And HVAC maintenance. And elevator maintenance....

      Seriously, when you buy something the total cost is never just the up front price. You don't plunk down cash and then never again have to spend any time or money for the thing to work perfectly. In some cases it may be direct monetary costs at certain points. The roof at work is a good example, we had to have it largely replaced a couple years ago. Not because of a problem, but because the building is like 40 years old. Had to pay tens of thousands of dollars to do that, which was budgeted. Some of it is indirect, just regular maintenance you have to pay someone for. Our custodial staff is a good example. While some of what they do, like say wash windows, is just aesthetic, much of what they do is necessary upkeep to keep the building in good condition. There isn't a precise dollar figure on each job they do, it is just a general cost that is their salaries. Some stuff has just a time cost, more or less. Like yesterday I dusted off my MIDI keyboard. Needed to be done both because the dust is annoying and because excess dust can work in to the electronics and cause damage.

      Why would software be any different? Yes, you have to spend time and money above just the initial cost. You have to patch it, some software has yearly support contract cost (like say RHEL), you have to have support staff to make it work and help people with it, and so on.

      I fail to see how this is a "debt" of any sort. It is a "cost" like any other. The more software you use, the more cost ther'll be not just purchase cost but also support cost. This is surprising to nobody who understands how this shit works. This is also why the price tag on software is often not a big deal. Doesn't matter is a package costs $50,000 whereas another costs $50. If the $50,000 ones saves $100,000 in support and other costs (like lost productivity) it is worth its price easily.

      To me this sounds like the kind of thing a dumb manager would say: "You mean that price we paid for our software 6 years ago isn't the only thing it cost! Holy shit we have software debt!"

      • by Pharmboy (216950) on Monday October 11, 2010 @10:25AM (#33859004) Journal

        This is surprising to nobody who understands how this shit works.

        True, but to the average consumer (this included pointy haired bosses) the upgrades for their home computer cost $0, the software came with it new, or was a one time purchase and the updates are either free or simply not done (or both), and every few years you just buy another one and give the old one to a friend or Goodwill with all your personal information still on it.

        In the home consumer world, software IS only a one time expense for most people. Unless you are the guy who is having to get permission for upgrades, and patch all the servers in a commercial environment, this is your world view because it is your reality. It is not so shocking that average Joes and bosses don't know this.

        • Yeah, it isn't shocking. Mostly because I'm beyond being shocked by anything those idiots do.

          If it's physical, they can understand it. They put gas in their cars. They take the cars in to have the oil changed. And so forth.

          But software can't be touched. A server running the latest patches looks the same as a server without them.

          Unless there is a problem in the software that they are experiencing, they don't understand it.

        • by Rich0 (548339)

          Yeah, and in the home consumer world people don't pay their brother or cousin or friend or whoever it is that they get to deworm their computer every six months.

          If everybody made their cousin the mechanic give them oil changes every three months then car maintenance would be "free" too.

      • We run a lot of HP servers.

        HP publishes firmware / software updates.

        I'm the only person in the department that applies them to any of the servers.

        "If it's not broken, why fix it?"

        • by Dan Ost (415913)

          Don't call them "updates". Instead, say the software/firmware has been "recalled" and you've got the "fixes" from HP.

        • by jimicus (737525)

          I'm the only person in the department that applies them to any of the servers.

          "If it's not broken, why fix it?"

          And I would argue that this is exactly the right attitude to take. Unless you have a damn good reason to make any change, you don't make it. Changes to a system are more often than not the cause of breakage.

          While it's unusual for a firmware upgrade to actually break hardware, it's not unknown. How do you feel about the 5 minute downtime to reboot following such an update becoming four hours or more while you call out the field circus to replace parts when there was no good reason for the update in the fi

      • Re: (Score:3, Interesting)

        by Hognoxious (631665)

        I fail to see how this is a "debt" of any sort. It is a "cost" like any other. The more software you use, the more cost ther'll be not just purchase cost but also support cost.

        The similarity is that the costs are ongoing, like repayments on a loan.

        I seem to remember reading somewhere [1] that every dollar you spend on development costs around ten in maintenance, which is perhaps surprising: I'd wager most managers would think it's the other way round.

        [1] I don't have the reference to hand. Maybe Code Compl

      • by DragonWriter (970822) on Monday October 11, 2010 @12:17PM (#33860188)

        I fail to see how this is a "debt" of any sort.

        "Technology debt" (or "technical debt") is referred to as a debt because it has effects that are very similar to financial debt. First, it has a cost to resolve, which is analogous to the principal of a financial debt. Second, it has imposes ongoing costs until it is resolved, which works like the interest on a financial debt. Thirdly, the starting value of the cost to resolve -- the principal -- is often greater than the costs which could habe been paid out of pocket initially instead of incurring the debt, making it analogous to the various initial costs associate with many financial debts.

        To me this sounds like the kind of thing a dumb manager would say: "You mean that price we paid for our software 6 years ago isn't the only thing it cost! Holy shit we have software debt!"

        The "technical debt" terminology was invented by people who understood the technical problems and the consequences (mostly, of trying to minimize the initial costs of developing or acquiring technology-based solutions to business problems) as a means of explaining the issue to managers and executives, who generally understand financial concepts like "debt" much better than they understand technical processes.

         

    • by arivanov (12034)

      It is nice if it is just a workstation. Imagine if it is for example a small country size phone system.

      Anything that is more than 5 years old usually has unknown upgrade costs as well as unknown upkeep costs. I have never seen anything trying to deal with such a beast hit time, targets and money.

      There is the answer of "continuous upgrade" of course , however explaining that to a business is often a very difficult task especially if the 30 year old system still works and generates revenue.

    • Isn't this the whole TCO thing, all over again?

    • Then one day they realize they need to upgrade 30+ system all at once for some new piece of software they want.

      If that is the only problem, "they" may actually be doing it right. Because up to this point, the systems did all that was required. And this also puts the need to upgrade in the proper perspective:
      Do you want that one piece of software badly enough that you are ready to buy new hardware too?

  • by some-old-geek (1329305) on Monday October 11, 2010 @09:57AM (#33858794)
    The NSF wants to know something about the computer industry and they ask Gartner? Gartner, the company that advocated OS/2 and I-CASE?
    • Asking Gartner is usually a good idea. They are so consistently wrong that you can guarantee that anything that they said is the opposite of the truth. Other market research agencies are occasionally right by mistake, which makes them less useful.
    • by rijrunner (263757)

      Well, yes.. of course. How many companies can you contact that will give you the answer you are looking for without you have to spell it out?

          The NSF is restricted legally from putting the result right into the RFQ. So, you have to have a company that is savvy enough to puzzle out the answer you are looking for by reading between the lines. That takes skill and experience. Something that Gartner has spent a lot of time and effort developing.

    • by lwriemen (763666)

      OS/2 would have saved the industry a ton of money in the long run. Better robustness, a more extensible user interface, better performance, ... Even outside of OS/2, if it wasn't for the Microsoft monopoly, the computing industry would have benefited from competition in the operating system arena bringing more innovation and a better user experience. Microsoft's monopoly has set us back at least 20 years. Windows is still playing catch-up to the design of OS/2.

  • Cost-of-Decommit (Score:4, Interesting)

    by FellowConspirator (882908) on Monday October 11, 2010 @09:59AM (#33858812)

    Hehe. We had one of those IT department brainstorming sessions once (I was in research at the time) and they were talking about this shiny new platform that they were going to roll out, I simply asked what the cost was. They threw out some figures about how they priced it an it would cost X dollars to implement over Y years. So, I asked "does that include the cost of decommission?" and got blank stares all around... The notion that you estimate the cost of getting out of abandoning / migrating away from a product never occurred to them! Products tend to not be all that flexible, they change over time, and business needs and processes often diverge from the product or a better product comes along -- we have fairly good ideas on what the platform turn-over is going to look like, how open various platforms are, etc. We can estimate the CoD with some accuracy. So why don't we? We're still buying into products that are readily identified as "dead-ends" and screwed when they are no longer supported, needs change, etc.

  • It's no secret that the actual cost of software is very complicated.

    It's just a number. Calculating it is complicated.

  • Push for SAS (Score:4, Insightful)

    by roman_mir (125474) on Monday October 11, 2010 @10:04AM (#33858844) Homepage Journal

    Obviously software cost depends on what you measure it in. For example Linux kernel is estimated to cost near 1.4 billion US dollars (at the bottom) [dwheeler.com], but IF you measure [kippenjungle.nl] this in chickens [costco.com].... it could cost 35,008,752.2 chickens.

    In ounces of gold [kitco.com] it would be around 1,040,041.6 ounces. In DOW [google.com] it would cost approximately 127,186

    It is also possible to estimate its cost in terms of Libraries of Congress, man years and many such wonderful things, however note that many Keynesians say that gold has no value but what is 'speculated' to be value while they do not see the same thing about their cherished and printed fiat, so then we could argue that Linux kernel is worth nothing if 1,040,041 ounces of gold priced at current levels in USD are worth nothing.

    It's all a matter of point of view.

  • by roman_mir (125474) on Monday October 11, 2010 @10:09AM (#33858884) Homepage Journal

    I wonder why /. does not have a section on economics. Isn't it long overdue to have one?

    So many stories really belong in economics.

    We could discuss what things are worth.

    We could point out [yahoo.com] stories that appear on front pages [yahoo.com] of various portals and news sites and discuss what really is going on behind the title on them, just like the title I linked to:

    Stocks Rise on Renewed Hope for Fed Action

    - which sounds as if it is a positive for the economy that stocks rise on 'Hope for Fed Action', when in reality, those who understand can tell you that "Fed Action" means more money printing/borrowing, which implies more inflation and debt, so rising stocks (and rising gold) in this situation means that there is an expectation of yet more inflation, so stocks will go up in nominal terms, but all US holdings will lose more purchasing power.

    Isn't /. 'news for nerds' and isn't economy yet another 'nerdy' subject?

    • by Mr2001 (90979)

      which sounds as if it is a positive for the economy that stocks rise on 'Hope for Fed Action', when in reality, those who understand can tell you that "Fed Action" means more money printing/borrowing, which implies more inflation and debt, so rising stocks (and rising gold) in this situation means that there is an expectation of yet more inflation

      You say "more inflation" as if we've been experiencing high inflation already, when in fact inflation has been unusually low for quite some time (lower than the Fed's target level, and it's only just now they've considered doing anything to bring it back up).

      so rising stocks (and rising gold) in this situation means that there is an expectation of yet more inflation, so stocks will go up in nominal terms, but all US holdings will lose more purchasing power.

      Many economists believe that since the main problem with our economy now is a lack of demand, an increased money supply and higher inflation is what we need to get it moving again. In light of that, what makes you think the rise in stocks wouldn't be ab

      • Re: (Score:2, Informative)

        by roman_mir (125474)

        You say "more inflation" as if we've been experiencing high inflation already, when in fact inflation has been unusually low for quite some time (lower than the Fed's target level, and it's only just now they've considered doing anything to bring it back up).

        - well, that's why /. needs an economic section.

        The inflation is rampant. If there was no inflation, you would have seen what really happens during recessions - deflation of prices. And prices should deflate, home prices should fall dramatically, much lower than they are now, and many other things should also deflate in prices. You are observing inflation, which is what the Fed is doing - it is expanding the monetary supply.

        The inflation IS expansion of monetary supply. You are looking for price inflation

        • by Mr2001 (90979)

          The inflation is rampant.

          Uh, no. A very low positive inflation figure does not magically become "rampant" inflation just because you think the figure should actually be negative. Inflation is measured in absolute terms, not relative to your subjective expectations.

          If there was no inflation, you would have seen what really happens during recessions - deflation of prices.

          If there were no inflation, that would be zero inflation, with prices staying the same. If prices were falling, that would be deflation, not "no inflation".

          And prices should deflate, home prices should fall dramatically, much lower than they are now, and many other things should also deflate in prices.

          That would be catastrophic, so it's a good thing that isn't happening.

          Deflation is a bad thing for anyone who isn't

          • by roman_mir (125474)

            Uh, no. A very low positive inflation figure does not magically become "rampant" inflation just because you think the figure should actually be negative. - again, the Fed is expanding the money supply all the time, all the stimulus and 0% lending to banks and selling the bonds, all of this is inflation.

            If there were no inflation, that would be zero inflation, with prices staying the same. If prices were falling, that would be deflation, not "no inflation".

            - I can't make you see what you are refusing to see - in recession prices fall, the price stability that you are observing and that is unnerving the Fed is inflation of money printed canceling the deflation of prices that should happen as the bubble burst.

            Unless you were in a cave for the past number of years, you should have noticed bursting of housing bubble, the house prices must be coming down, they still must go down more.

            If you looked at the shorts in bond market, you'd see a number of US municipalities shorted right now because they are expected to implode, you'd see places like Las Vegas being shorted for the past year for example, the place is about to collapse in terms of the bond market. The recession brings prices down but you are not seeing it because there is so much stimulus and bailouts and just free money handed out.

            That would be catastrophic, so it's a good thing that isn't happening.

            - no, that's the necessary step in a bursting of an asset bubble, it's not 'catastrophic', it's excellent for starting to restructure the economy. Why do you call this catastrophic? The mortgages that were handed out to all the people who couldn't pay - that was catastrophic, that, and interest rates at 0-1% led to the overheating of the housing market.

            Prices must come down, they are blown up out of proportion. Houses need to be affordable first of all, because don't forget, houses are NOT investment, they are an expense that people take in order to live somewhere. Many people must lose their houses that they have with mortgages they can't afford and where they didnt' even put any money down, and they should go rent, and rent should be cheap in a falling asset category.

            Housing must become cheap, with jobs moving out why, how, for what reason should house prices stay so high?

            So Bernanke came out with more money printing, he believes, like you, that house prices must not only be kept at their level, but that they should be inflated. Of-course he wants to do that - the Fed, the banks, the gov't are holding toxic assets - failed mortgages.

            Deflation is a bad thing for anyone who isn't sitting on a big pile of cash.

            - no, of-course not. Deflation is a necessary step, it is a GOOD step, it brings the overheated prices down, keeps the money stronger and allows people to buy stuff cheaper, allows people to save money to restart economy by creating new businesses. Of-course people have no money to save, the gov't is incentivizing spending and it taxes income. The gov't is wrong. It's not spending that's needed but savings, savings allow people to restart economy by creating new businesses. Can't do it while being taxed on income and being pushed to spend money you don't have.

            If you have any household debt, like the average American does, deflation effectively jacks up your interest rates, since you owe the same number of dollars but those dollars are now worth more (and harder to obtain). And it certainly doesn't help a slow economy -- why would I buy a widget today for $500 if I think it might be $450 next week, or $400 the week after that?

            - and you SHOULD NOT be buying any widgets. You should be saving your money, the widget prices must fall. The household debt, well that's an excellent question - if you have a house that's falling in price to the point where it's under water (you owe more than the house is worth), leave the house. Get out of that house, leave it, don't pay.

            Leave and rent somewhere, and it'll be cheap, everybody should be leaving those underwater houses and renting them or houses like them back at much cheaper rents from whoever will be left holding them.

            That's not what inflation means. If you have to start redefining terms to make your arguments sound correct, maybe it's time to reconsider your arguments.

            - inflation means monetary expansion. You, not I believe that inflation is all about looking at prices. Inflation is looking at amount of money added to the monetary pool and the Fed is adding every day. Just look at the Fed's budget.

            Prices must be deflating, but because of inflation of money they are stable so far, the Fed wants prices to go up.

            Maybe it's a good thing Slashdot doesn't have an economics section. We ought to be listening to professional economic experts, not random contrarians who think all the experts are wrong and manage to get their theories modded up.

            - it's not 'my own' theory, though it's completely logical, this is Austrian economics.

            Businesses in the US are sitting on cash, rather than using it to expand, because they see that there isn't enough demand for what they're already producing. Producing even more stuff that customers aren't willing to buy would not help.

            - businesses in US are not producing much of anything, that's the picture drawn by the 50billion/month trade deficit, but that's only one point in time. The slope of trade deficit is very steep, go to this site and set 'From Date' to 1992 and 'To Date' leave at 2010 [tradingeconomics.com].

            The demand cannot exist without production. You cannot expect to be able to buy anything if you are not producing anything, it's that simple.

            Both. A million is surely too high, but if everybody in the country were given a more reasonable sum, that would go a long way toward restarting the economy.

            - that's one of the ridiculous believes forced upon the people in most of the so called 'educational institutions' by the so called 'economists', which the Keynesians are most surely not.

            Even better would be if that money were targeted toward the people who are most likely to spend it immediately,

            - you are completely missing the point, aren't you? What's the purpose of giving money to people who are going to spend it on trinkets? Is it to pass that money to the companies? What is money in your mind? Money is a token of exchange of GOODS. You though believe that companies what CASH from you for the sake of cash.

            No. If you are not producing THINGS than you cannot spend cash. If you are spending cash without producing, you are acting as a non-balanced part of economy, you are taking goods produced by productive part of society and exchanging it for tokens, but not for products of your labor.

            I am not talking about you specifically, I am talking about the entire society. If you split the society into 2 parts: 1 part is producing, another part is not. Then you start printing money and giving it to everybody and people from the non-productive part of society keep buying products from people in productive part of society you actually think you have an economy going on.

            You have no such thing. You have a unsustainable unbalanced equation that's about to implode by reducing the value of the tokens of exchange down to nothing, so that nobody would trade with those tokens anymore, because there is no reason why the non-productive part of society should get ANYTHING from productive part of society taking in goods and exchanging only for tokens.

            No, it leads to a complete failure of currency to give money to spend to a bunch of people who do not produce anything. Why should the productive part of society continue taking in these tokens, when what they can do instead is take other tokens, that come from other productive societies? How about gold as an example, why trade for dollars, which are given to people for free, when you can trade for gold, which keeps value during and between fiat currency failures?

            Now, the productive part of society is in Asia. The non-productive is in USA. That's all there is to it - USA is printing money and people, who are not producing anything that Asia can get for that money in form of trade, keep getting the goods from the productive Asia. This works for some time before Asia wakes up and realizes there is no value in USD, they will continue being printed and nobody from USA will exchange these dollars for anything useful to Asia.

            That's the simplified version for you, I am trying to make you see the point, no matter how much I have to simplify it. If after this you do not see it, then I think there is nothing I can do much.

            If foreign investors become less willing to invest in US debt, we'll see a rise in interest rates. But we aren't seeing that. Interest rates are as low as ever, and people keep buying US bonds because they see it as a safe investment.

            - and as I said earlier, just 6 months ago upon bad news people were selling off stocks and commodities and buying US dollars and now upon bad news they sell off US dollars because they know it will cause the Fed to come out with more money printing.

            Even the dumbest speculators have now understood this, though they can't still figure out that they shouldn't be buying US bonds either in this trade, because if US dollar is being inflated, so is the value of the bond, which is a promise to pay US dollars in the future.

            The reason WHY US can still get a low interest is because it's financing its debt in short terms loans, which gives them teaser rates and it's all variable rate, rolling over every 6 months to a year. They are not financing it in 30 year bonds because if they tried to finance the debt with those, the interest rates would skyrocket. USA cannot get a 30 year bond financing at low rates. The short rates only act as an unfortunate catalyst to take on more debt.

            You, yourself have already said that US household is in so much debt. Do you understand that you are confirming the exact reason why it is not good for USA to use the teaser - variable rates to get into more debt? Because that exactly the same thing that the household 'owners' were doing - refinancing every year because they and everybody around them THOUGHT that house prices were going up.

            You THINK that the value of US Bonds is going up, it is exactly the same pumping process as happened with every other asset class, now it's happening in the bonds.

            When it blows up, be somewhere else and not in the US and not in US dollars or bonds or stocks.

    • by Peeteriz (821290)

      Mod parent up above the +5 - quite a few of tech-related topics would fall into this category, but they are of quite separate nature and would be best served in a separate category that some users can filter out and others can put them in front page.

  • Pinkie in the cheek: "One million dollars!"

  • by NYMeatball (1635689) on Monday October 11, 2010 @10:13AM (#33858922)

    "Its okay, this project/software is using 'internal resources'"

    "Say, Jim, would you mind working a few extra hours for the next 14 weekends in a row? I know you're salary, but we'll make it up to you once this project is done..."

    And that, my friends, is how you completely ignore hidden costs and justify even the most lingering of projects.

    At least at my company, anyway.

    • Re: (Score:2, Insightful)

      by benjamindees (441808)

      That's funny, because everywhere I've worked the standard method of ignoring hidden costs was to purchase poorly-designed and ill-suited proprietary software and then pass it off to internal resources to maintain* it.

      *re-write

  • I just spent a lot of cash on the Waves Mastering Suite for Pro Tools. In fact any "multimedia" software has a crazy price. I figure they do this to milk media companies for all that they're worth.
  • If they really want to know what software costs these days they need to be calculating those prices in Rupees, not Dollars

  • by John Hasler (414242) on Monday October 11, 2010 @10:26AM (#33859026) Homepage

    The solution is obvious. Ban newlines.

    Could impact "software metrics" though. "Three months and you guys have produced only one LOC? You're all fired. We're sending the job to a guy in India who guarantees 20 LOCs per day from each programmer."

  • Absurd (Score:3, Insightful)

    by Maxo-Texas (864189) on Monday October 11, 2010 @10:46AM (#33859242)

    your cost is the salary divided by the work done.

    These kinds of studies often lead to stopping work because it's "too expensive" which leads to your staff sitting doing nothing. It's absurd.

    I've seen many small projects which would have 1 to 2 percent improvement canceled because they were not "cost effective" and then the programmers sat there doing nothing for 2 months. You should always let your programmers work on little side projects that they are enthusiastic about as long as they make the big deadlines that you want.

    • your cost is the salary divided by the work done.

      Employers wish that were true. Parts of your cost beyond mere salary include:

      • benefits, including health insurance
      • facilities cost
      • other infrastructure to support you (accounting, etc.)

      Workers in industrialized countries are expesnsive.

      These kinds of studies often lead to stopping work because it's "too expensive" which leads to your staff sitting doing nothing.

      What makes you believe this happens "often"? I've never seen this after working for a variety of emp

      • I've been in IT since 1985. A little over 20 years. I've seen this happen over a hundred times.
        Twice I've seen people sit doing *NOTHING* rather than do work which was "too expensive". Happened to me once. It was really creepy feeling.
        I like for the pipe to be loaded with work.

        It got much worse in 2000. Before then, programmers frequently sneaked in little refactorings and little fixes. After then, every line change had to be justified by a project. So you did exactly what was specified, sat around f

  • Broken record (Score:3, Interesting)

    by rbrander (73222) on Monday October 11, 2010 @10:51AM (#33859296) Homepage

    Gartner's been saying this stuff for 20 years. In practice, the news that software has ongoing costs was used to exterminate any solution except Microsoft from large organizations.

    In order to do that, non-IT departments had to be forbidden to install or choose any software at all, or they would have shown an annoying tendency to pick software that worked better for their needs. So IT had to remove all admin privileges and get Purchasing to not permit any purchase orders for software not OK'd by IT.

    The larger the organization, the better the argument works. The proportional costs actually drop through advantages of scale; but the absolute cost starts to sound appalling when multiplied by 10,000, particularly when a single, generic, (Garter-quoted) number like $1000/application/year/PC (developed by dividing the whole support budget by the number of apps) is used for all apps, including handy little graphics utilities like XnView.

    In theory, a department could prove by business case that some second (third...) solution to the same basic software category within the organization was justified by some benefit. In practice, this was made almost impossible to prove and was limited to graphics jobs being allowed Macs.

    It was used to prevent Firefox, for instance; though free, the same "administration costs" were applied to the decision. Pleas that customers could upgrade and manage it themselves by clicking the "upgrade" button were scoffed at; one or two anecdotes of users that got themselves into a mess were multiplied by 1000 PCs to claim that vast costs would be incurred.

    In short, this argument was used to take the "Personal" out of corporate PCs. Someone I know discovered there were only a few things he COULD change on his desktop; couldn't even delete the icons for Approved Corporate Software he didn't use. But he could, and did, change one icon to read "Their Computer".

    • by jimicus (737525)

      Depending on the company (and the industry in which it operates), this may not be far from the truth. Some industries are so tightly regulated that letting unknown software onto your PCs - regardless of its purpose - is a Very Big No No.

      It wouldn't be too far from the truth to describe the entire history of the PC in business as "putting computing power onto peoples desks and spending the next 20 years trying to regain the control that was lost as a result".

  • As a sysadmin, the points about maintenance and downtime really resonate with me. And then there's crap like having a team of 10 to 20 staff (many of them very senior) standing around scratching themselves due to some bug or shortcoming (often just in the UI) that would've taken an hour or two to implement. The cost of *not* writing software can be astronomical. As a more concrete example, I worked in a shop that used LDAP to authenticate a myriad of services (desktop signon, shared volumes, shell access, w

  • Louis B. Mayer once commented about the movie industry, "I realized then that movies are the only thing you can sell and still own." Mr. Mayer lived before software but I'm guessing he'd have been heavily invested in it.

  • ... by buying a copy of Applied Software Measurement by Capers Jones. There's enough data in that book to extrapolate the cost.

  • ...somebody tell them then, damn.

"It's like deja vu all over again." -- Yogi Berra

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