“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.

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.

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.

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

Who/what is MSFT?

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.

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

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.

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.