Software as business asset (was 5.1 upgrade)

Loyd wrote:

>No offense intended, but you can use a dump
>truck for 15-20+ years.

You're right (and no offence taken!)

>I think the problem is we know enough about
>material assets to say how long they can last,
>but not software. I have a tooling machine that
>is rated X parts per hour with a duty cycle of
>Y, we can reasonably expect it to run for Z
>years until replacement. Where is this for software?

You left out maintenance, but you are absolutely right!  Where is this for
software?  Well, simply put, with the demise of large timeshare operations,
businesses running computers have not bothered to keep track.  By that, I
mean that few companies can even tell how many sheets of printer paper they
use per year, much less how many were discarded because of bugs.  If we
extend the idea to tracking CPU time, disk space and so on, we can start to
form an idea of the cost of doing business versus the cost of the
hardware/software that DOES the business.  In the old days, the timeshare
operation tracked all that stuff so they could charge the costs back to the
proper user/company.

>One can also directly attribute a material asset to
>sales and the bottom line. Again, business metrics
>for software are lacking. (Note, I am not talking
>about the "cost" to write software for sale, but
>the cost or benefit of using software in a business.)

Right, and that's exactly the point, too.  Say a delivery truck can on
average make 25 deliveries a day which is 6,500 orders a year.  The truck
costs 12,000 dollars per year in fuel, oil, maintenance, tyres, tolls and so
on (all numbers made up on the spot.) The expense of the truck is 1.85 per
order.  Profits get figured the same way as expenses.

Say a 50,000 dollar a year order entry package processes 500 orders a day,
that's 130,000 orders per year.  Few companies know even that simple number,
much less the answer to a relatively simple question like "How many
additional orders a day does this software enable us to process?"  The
expense of the software is 38 cents per order.  Even with this meagre bit of
information we can see that the software costs us less per order than the
truck does (whatever that means!)  Wouldn't we figure profit impact the same
way?

>I am not slamming, but am trying to point out
>the differences between software and other assets.

No slam at all - you are making great points!  I believe we can treat
software more like other business assets if we start measuring how it is
used.  Perhaps simplistic (it suits my binary view of the universe!) but I'd
love to see it happen...
  --buck