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by James Robertson.
Original Post: Business costs and software
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Alan Cooper has a fascinating look at the way costs are accounted for in the software business. His take - we still do it the "old fashioned" way - using the rules learned in the manufacturing age. His premise: these rules don't work well at all for software development:
You and I create software, and business executives create revenue streams and profit centers. You and I measure our success by the product's quality, and business executives measure their success by their investments' profitability. They do this by applying the language of business mathematics, which recognizes fixed costs, variable costs, corporate overhead, and R&D, but, unfortunately, has no model appropriate for software or programming. Accounting is the basic language of business, and its categories are so fundamental to all business measurement and communication that contemporary executives have internalized them completely. They see programming as another corporate expense to fit into an existing category. Most simply treat programming as a manufacturing effort"a variable cost. This is the worst possible choice because it prejudices their business decision-making hopelessly
That summation certainly applies at most of the shops I've seen. I wonder if changing that perception will require the retirement of the current crop of management in most places....
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