How to Value Software in a Business, and Where might the Value Go?

CISC / DERI / IT Seminar

This presentation is intended to provide an understanding how software products are valued in the marketplace. This topic is rarely addressed in Computer Science education, to that few computer professionals are aware of the economic value of their products. The assessment of the value of their work has been left to business experts, economists, lawyers, and promoters. The lack of understanding hinders rational decision-making for tradeoffs in software design and implementation, market timing, and choosing business models. Having simple, quantitative models enables substantiating and revision of decisions made when planning software products. The presentation will introduce some relevant business terms and concepts so that software engineeringp practices can be related to financial outcomes. In particular, estimation of software life, development lag, and generation and maintenance of intellectual property will be covered. To quantitatively compare alternatives some simple spreadsheet results will be discussed. The understanding gained has applicability to many areas of high-tech product design, resource acquisition, production, marketing, selection of business structures, outsourcing, and even the impact of taxation policies. It will also elucidate where current computer science education falls short.

Gio Wiederhold is an Emeritus Professor of Computer Science, Electrical Engineering, and Medicine at Stanford University. Since his formal retirement, Professor Wiederhold is spending most of his time consulting for MITRE Corporation serving the U.S. Treasury on valuation of software and other IP being transferred internationally. Professor Wiederhold has authored and co-authored more than 300 publications and reports on computing and medicine. He initiated knowledge-base research through a white paper to DARPA in 1977, proposing to combine database and Artificial Intelligence technology, which led to the concept of mediator architectures. Research topics have addressed database technologies, knowledge-based integration of information, an algebra over ontologies, access to simulations to augment decision-making, privacy protection in collaborative settings, composition of software, and contributions to the semantic web. Professor Wiederhold has also worked with computing enterprises in Europe and Asia and on academic advisory boards, such as CWI and SIKS in the Netherlands. Professor Wiederhold has been elected fellow of the ACMI, the IEEE, and the ACM. He has been an editor and editor-in-chief of several IEEE and ACM publications.

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