Code Is Not An Asset  

By Alex Bunardzic under Talk, Then they laugh at you... on 01. September 2005

Stumbled upon this at InfoWorld (it’s the Alan Cooper interview) :

One of my assertions is that code is not an asset. A lot of companies say their job is to maximize the revenue from our code base. That reflects a kind of an Old World, industrial-age thinking. What’s interesting is the open-source movement is kind of our first proof that code in fact is not an asset. What is your company’s asset is the experience and knowledge that the people who have built your code have gathered during the construction of that code. But the code itself doesn’t have a lot of value. In fact, the code kind of anchors you down. In the traditional manufacturing business 30 years ago, if you had a warehouse full of spare parts and completed products, that was an asset that you put on your books. Today if you’ve got a warehouse full of manufactured goods, that’s a huge liability. In the world of software, it’s your relationships with your customers and vendors and the knowledge of your people that are valuable. This is part of the movement from a product-centered world to a service-centered world that we’re going to. I think the open-source movement is sort of like a moon mission. They went to the moon to see if we could go to the moon, not to set up a burger stand there. People who will come after will set up burger stands there. Linux may or may not be commercially viable. But I think that the people who follow in their footsteps will find that software is service. The software itself is not of value.

Sounds kind of extreme to me, but in actuality says a lot about the value of lesscode.

Now, I’ve been a Cooper-head since 1996. I’ve spent a lot of my brain cycles over the years honing my interaction design skills. And I firmly believe that Alan is absolutely right in his assertion that only desirable products and services make any sense.

As we already know (and agree), lesscode is all about agility. Since software code is not an asset, but rather a liability, the more we can reduce the deadwood, the better off we are. A side-by-side comparison of the code written in RoR with the code doing the same thing in Java or .NET reveals striking discrepancy in size. It is definitely possible to deliver high level of functionality, interactivity and sophistication by utilizing only a portion of code that would normally be used if we stick to the old school (morecode, or more LOC). And that’s a desirable thing.

12 Responses to “Code Is Not An Asset”

  1. 42:

    Code Is Not An Asset [@lesscode.org]

    Interesting viewpoint Code Is Not An Asset [@lesscode.org]. Makes some sense to me. Certainly it always has seemed much less work for us when we can use Open Source tools and get any extras commited to the standard source code

    trackback at 01. September 2005

  2. Matt Ingenthron:

    Interesting thoughts. However, “deadwood” is hard to trim. Changing the interface from a mass of code only slightly may have small, or large, ripples through the other code that depends upon it. Right?

    The Java 5 team did some testing with “major” applications like Tomcat before they released Java 5 to see what, if anything, broke. Tomcat, a project other engineers at Sun played a hand in designing and Sun continues to contribute to, broke. In diagnosing the breakage, it turned out that it was trimmed dead wood. Tomcat had used reflection assuming certain behaviors where there was no public interface. So, Sun had to leave the dead wood in, or face public perceptions that Java had been broken by Sun (something they didn’t want to re-live from previous major upgrades.

    That doesn’t address the asset-or-not quesiton. One extreme though could be that assets are measured by what people are willing to pay (where pay may not necessarily be money) to gain access to a product. Maybe it just proves the book is dated, but the age-old Mythical Man Month argued that it was always cheaper to buy a hunk of code than build it, if you had the opportunity.

    In any event, thanks for the food for thought. :)

    comment at 03. September 2005

  3. Danno:

    I don’t think code necessarily ISN’T an asset. It can certainly be like industrial equipment that allows a company to do a certain job.

    And I think that the brand that really good code can establish is an asset (like, the credibility of the code, the general acknowledge level of user satisfaction, that sort of thing).

    But I agree with the sentiment in general that code often gets treated like an asset prematurely and ignorantly.

    comment at 03. September 2005

  4. drishakamusabarashango:

    I think you are wrong.

    Google has code — very special code — that makes them money. Nobody else has this code. It is the crown jewels. True, they could lose the code and remake it (as long as they had the brains), but it would be so much work, and they’d lose money in the meanwhile.

    Google’s relationships with their vendors and customers are purely transactional — there is no loyalty. The day the M$ has a better search engine, all those customers/advertisers that google has will disappear, and so will their cash cow.

    Similarly, a bank or insurance company with code that allows them to better price or manage the risk of their contracts has a competitive advantage over their competitors. Because they are a transactional business, customer/vendor relationships mean very little.

    comment at 05. September 2005

  5. Anona:

    If code isn’t an asset, how did MSFT make billions off of it?

    comment at 05. September 2005

  6. Aristotle Pagaltzis:

    drishakamusabarashango: do you think if Google gave you their code, you could replicate their business 1:1? That’s hardly likely, is it? Google’s assets are the petabytes of data they have collected, their infrastructure and the infrastructure know-how. The code is meaningless if you cannot reproduce those.

    Anona: shrinkwrap software has very different rules from in-house software. See Five Worlds.

    comment at 05. September 2005

  7. alexbunardzic:

    Let’s take a bank as an example:

    A bank has certain amount of money, be it in banknotes or in gold bars etc. It also owns certain infrastructure — buildings, furniture, equipment, etc. All these things are bank’s assets.

    Now, if I were to somehow become the owner of these assets, I would indeed become wealthy overnight (or at least I’d become well off).

    But, if I were to somehow become the owner of the code that the bank is using for its operations, would I become rich overnight? I’m not so sure. The code that the bank is using to run its operations is pretty much useless by itself. Other assets (the money and the infrastructure) are not useless by themselves.

    Four years ago I worked for a company that had spent 3 years and 15 million dollars to build a top of the line product. Due to the 9/11 disaster, the company owner decided to close the doors and to sell his company off. The only thing he really had to offer is the 15 million dollars worth software code. We worked with him to prepare the product for the sale.

    But much to our shock, no one was interested in purchasing the product. We’ve approached various businesses, both in Europe and in North America (the owner had excellent connections), but no one would take the code, nobody would touch it with a ten foot pole, even if we were to give it to them for free!

    That was the event that opened my eyes to the fact the software code is not an asset. At best, it is nothing, and as the scenario may start worsening, software code may gradually start turning into liability.

    comment at 06. September 2005

  8. alexbunardzic:

    Anona wrote:

    If code isn’t an asset, how did MSFT make billions off of it?

    Who/what is MSFT?

    comment at 06. September 2005

  9. Aristotle Pagaltzis:

    MSFT is the stock symbol for Microsoft.

    comment at 07. September 2005

  10. alexbunardzic:

    Anona wrote:

    If code isn’t an asset, how did MSFT make billions off of it?

    We need to make a distinction between the application code and the infrastructure code. I was talking about the application code and the myth that it is an asset.

    comment at 07. September 2005

  11. hxa:

    There is some rhetorical trickery in the quote. He separates the thing (software), from the abstracted goodness of the thing (what is done with the software), and so the thing is turned into nothing but empty material by comparison. It is like saying ‘food is of no value, it is the nutrition that is valuable’. In reality things (software, food, whatever) are fixed to their uses.

    But software/code has unparalleled flexibility. It can realise an enormous range of ’structured’, ‘executable’ ideas. One might counter the original quote by saying: it is not the software that anchors you down, but the lack of mastery in expressing your business in software.

    comment at 17. September 2005

  12. alexbunardzic:

    hxa wrote:

    “It is like saying ‘food is of no value, it is the nutrition that is valuable’. In reality things (software, food, whatever) are fixed to their uses.”

    I think you may have read it in the wrong light. We’re not saying that code is of no value, we’re merely saying that it is not an asset.

    This is the same as saying that the words used to produce a white paper are not an asset. The white paper itself might be an asset, but if we’re to count on the words used to compose that white paper, we’d be barking up the wrong tree. Still, the words used in there are definitelly not worthless.

    Many people today are convinced that code is something that could be sold, thus it is to be booked as an asset in their ledger. However, those same people don’t count the words that are being used internally to compose important business documents, and so these words are not being booked as an asset.

    comment at 18. September 2005