NSF Wants To Know How Much Software Really Costs 181
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."
Re:If no one would sopy software illegally (Score:2, Interesting)
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:Tired old argument is tired and old (Score:3, Interesting)
/The argument may not work for games software sales.
Re:And..? (Score:5, Interesting)
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]
Cost-of-Decommit (Score:4, Interesting)
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.
Re:If no one would sopy software illegally (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 production of the game does not factor into the Price vs Demand chart. Driving costs down only means more money for the producer, and possibley increased competition due to a lower entry point into the market but this would likely only open a secondary market of "cheap games" leaving the "Million Dollar" productions priced where they are.
Re:And..? (Score:4, Interesting)
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.
Re:Ya this is retarded (Score:4, Interesting)
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.
Re:Ya this is retarded (Score:3, Interesting)
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 Complete?
Re:Ya this is retarded (Score:1, Interesting)
I fail to see how this is a "debt" of any sort. It is a "cost" like any other.
The "cost", when not taken care of properly, silently becomes a "debt", usually when someone wants to do some new never-thought-of-before things with the old code. Try cutting your car maintenance cost to zero for a year or so, and you'll figure it out. Oh, you already knew that's not gonna work? Sadly, there are quite a few middle managers out there who haven't got a clue.
Re:Software cost = programmer's salary (Score:5, Interesting)
Which all pales in comparison to....
+ the cost of managements bonuses.
Broken record (Score:3, Interesting)
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".