Commercial Software Commercial Software Price and Price and

Employment Trends:Employment Trends:

Robert HoggRobert Hogg

How Employment in Software Development Affects the Price of Software in Canada

Why Should I Care About Why Should I Care About the Price of Software?the Price of Software?

• You will be buying computer software to help you do You will be buying computer software to help you do your real jobyour real job– Teacher: PowerPoint, Word, etc.Teacher: PowerPoint, Word, etc.– Programmer: C, Visual Basic, PascalProgrammer: C, Visual Basic, Pascal– Social scientist: Excel, Word, etc.Social scientist: Excel, Word, etc.– Business: Word, PowerPoint, Excel, COBOL, Access, Business: Word, PowerPoint, Excel, COBOL, Access,

QuickTax, etc.QuickTax, etc.– Artist: animation software (Flash), 3D modelling softwareArtist: animation software (Flash), 3D modelling software– Engineering: C, Excel, 3D modelling software, AutoCADEngineering: C, Excel, 3D modelling software, AutoCAD

• The list goes on…The list goes on…• In addition to being of critical importance to the In addition to being of critical importance to the

computer science job market, IT MATTERS TO computer science job market, IT MATTERS TO EVERYONE!EVERYONE!

BackgroundBackground• Many people believe the price of Many people believe the price of

software is increasing.software is increasing.• However, business and commercial However, business and commercial

software can decrease in price over time:software can decrease in price over time:– Easy to developEasy to develop– Base technology has not changed in yearsBase technology has not changed in years– Business has needed same functions for Business has needed same functions for

yearsyears•Word processingWord processing•Simple MathSimple Math•GraphingGraphing•Other Simple FunctionsOther Simple Functions

Variables & QuestionVariables & Question• Variables:Variables:

– Independent:Independent: Number of people employed in the Number of people employed in the software development industry, U.S.A., 2000 – 2009software development industry, U.S.A., 2000 – 2009

– Dependent:Dependent: Commercial Software Price Index, Commercial Software Price Index,

Canada, 2000 – 2009Canada, 2000 – 2009 [CSPI][CSPI]• Questions:Questions:

– How strongly are they correlated?How strongly are they correlated?– Can one be used as a model to predict the Can one be used as a model to predict the

other?other?– Is there a causal relationship? Is there a causal relationship?

•I have chosen to omit this point from this I have chosen to omit this point from this presentation for brevity purposes.presentation for brevity purposes.

TermsTerms• Computer Programmer:Computer Programmer: Person who uses Person who uses

a computer language to instruct a computer a computer language to instruct a computer on how to function.on how to function.

• Software Engineer:Software Engineer: Professional Engineer Professional Engineer (P. Eng.) who plans and develops correct (P. Eng.) who plans and develops correct and maintainable software. Sometimes also and maintainable software. Sometimes also in charge of coding. in charge of coding.

• Systems Software:Systems Software: Business software, Business software, often designed by in-house employees, to often designed by in-house employees, to automate payrolls, inventory, record automate payrolls, inventory, record keeping, etc.keeping, etc.

What is the CSPI?What is the CSPI?• Commercial Software Price Index (Canadian)Commercial Software Price Index (Canadian)• Tracks the retail price of “pre-packaged

software typically bought by businesses and governments,” (Statistics Canada)

• Is an index – no one software product need be equal to the CSPI

value at any given time. • Prices of software included in study may be up or down,

vary with company, product, store, release date, etc.

• Essentially the geometric mean of software prices in Canada

• All prices do not include tax, shipping, handling, etc.

Maximum @ Maximum @ Sept. ’00 ($106.5)Sept. ’00 ($106.5)

Reference Period Reference Period (2002)(2002)

Price ReboundPrice Rebound(2009 - present)(2009 - present)

Correlation between Correlation between CSPI & EmploymentCSPI & Employment

Employment Employment CategoryCategory

Linear Linear Correlation Correlation CoefficientCoefficient

Computer Software Engineers, Applications

- 0.97

Computer Software Engineers, Systems

Software

- 0.92

Computer Programmers + 0.93

Total of all Categories - 0.78

Coefficient Coefficient of of

DeterminaDeterminationtion93.9 %93.9 %

85%85%

85.6 %85.6 %

61.1 %61.1 %

Correlation between CSPI & Correlation between CSPI & EmploymentEmployment

CSPI = 113.6883192 + .000101746 Programmers - .000215579 Applications +

6.30455E-05 Systems

Causal TheoriesCausal Theories

• I have chosen to omit this point from I have chosen to omit this point from my presentation for brevity my presentation for brevity purposes. purposes.

• An in-depth analysis is available on An in-depth analysis is available on my Wiki.my Wiki.

• http://ancasterdatafarruggia.wikispahttp://ancasterdatafarruggia.wikispaces.com/Hogg%2C+Rces.com/Hogg%2C+R

ConclusionsConclusions• The number of computer software The number of computer software

engineers in the United States is engineers in the United States is strongly negatively correlated with strongly negatively correlated with the CSPI the CSPI

• The number of programmers is also The number of programmers is also strongly correlated, but positivelystrongly correlated, but positively

• A multiple-variable linear model A multiple-variable linear model allows for near-perfect predictions of allows for near-perfect predictions of the CSPI the CSPI

Meh.Meh.

Bias – U.S. Employment Bias – U.S. Employment StatisticsStatistics

• Came from United States Bureau of Labor Came from United States Bureau of Labor StatisticsStatistics

• Based on a sampleBased on a sample• Samples drawn from Unemployment Insurance Samples drawn from Unemployment Insurance

paperspapers• Large corporations more likely to be sampledLarge corporations more likely to be sampled

– Could be sample bias Could be sample bias • Large corporations more likely to offshore jobs?Large corporations more likely to offshore jobs?

• Voluntary response surveyVoluntary response survey– Non-response biasNon-response bias

• Response biasResponse bias– Employers could over-report #’s of programmersEmployers could over-report #’s of programmers

• Low #’s could indicate offshoringLow #’s could indicate offshoring

Bias - CSPIBias - CSPI

• Source: Statistics Canada (E-Stat)Source: Statistics Canada (E-Stat)• No bias could be detectedNo bias could be detected

• Some data taken from International Data Some data taken from International Data CorporationCorporation

WikiWiki

• http://ancasterdatafarruggia.wikispahttp://ancasterdatafarruggia.wikispaces.com/Hogg%2C+Rces.com/Hogg%2C+R

• You can view the bibliography there You can view the bibliography there as well. as well.