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He's on to something here, but I think the asset/liability duality isn't a matter of your point of view. Code really is a liability, even from the high-level vi

by cwp 11y ago

He's on to something here, but I think the asset/liability duality isn't a matter of your point of view. Code really is a liability, even from the high-level view in the boardroom. The asset is functionality. If you can get more functionality with less code, you improve your balance sheet. By analogy, data is also a liability. The asset is insight.

brianpan 11y ago
I think the better analogy is inventory, which is an asset. The value of data depreciates over time. Having too much data that is not producing insight or value is inefficient asset allocation. In other words, lean principles should be applied to data. Reduce data collection that doesn't add value. Calling data a liability is not quite the right analogy for me.
- stephengillie 11y ago
  Also, both are stored in warehouses.
- riskable 11y ago
  The problem with this is that while the value of data may depreciate over time the cost to store it also costs less over time due to Moore's law and Kryder's law.
  - brianpan 11y ago
    The depreciation isn't the important part. The article suggests considering data as a liability in the accounting sense. But the author should have stopping at saying it's a liability in the non-accounting definition. Assets have value, but there is risk associated with it. Assets like inventory can lose value because of depreciation, or because demand for the finished good has dried up, there's a risk of theft, there's a cost of storage, etc. Data should be viewed as an asset like inventory and lean principles can be used to reduce your risk and produce customer value efficiently.
yshklarov 11y ago
This strikes me as some sort of Orwellian contortion. It really is a matter of your point of view. Insofar as code is correlated with functionality (and it is at least to some degree), code can be viewed as an asset. In addition, code can be sold for cash, and this makes it an asset from the strictly financial point of view. It may have maintenance costs associated with it -- and these certainly need to be taken into account -- but that is not the same as being a liability.
- SonicSoul 11y ago
  Unless you've heard of places paying per line of code you seem to have missed the point of code being a liability. It's what it does that's valuable, not the volume of it
  - jsprogrammer 11y ago
    Code can only act through its volume. The fantasy of codeless functionality that is being propagated here is exactly that. Functionality only exists because of code. The two cannot be fully separated from each other in the way that some in this thread are implying.
    - Xixi 11y ago
      An airliner certainly is an asset (at least in the hand of a well run airline), but the lighter the frame the better: a lighter frame needs less fuel to fly, hence more money remains in the bank at the end. But without frame there's no plane, so you need some of it, just as little as feasible. It's the same for code: a running program can certainly be a huge asset, but the less code you have the lower the maintenance cost. The concept is just harder to grasp than paying a kerosene bill each time a plane takes off...
      - riskable 11y ago
        I totally agree with your sentiment but I do want to add that adding code can be useful and make it better even if you're not adding functionality. For example, while it may be "cool" to turn a straightforward loop into a complicated one-liner (which would be "removing code while retaining functionality") that wouldn't necessarily be a good thing. The longer, more straightforward code is likely to have a lower maintenance cost.
gnaritas 11y ago
> Code really is a liability, even from the high-level view in the boardroom. The asset is functionality. The programmers who understand and maintain the code are the real assets; everything else is a liability. Without those programmers, those programs will quickly rot because change is always happening and sticking a random programmer in there will over time degrade the program. Smart companies know this, it's what talent acquisitions are all about. You want the goose that lays the golden egg, not the egg. The egg has some short term value, but it depreciates quickly, the goose is the real asset.
- hyc_symas 11y ago
  Exactly. Intellectual property is worthless. The only thing of value is intellect.
  - vinceguidry 11y ago
    If intellectual property was worthless then Disney's workforce would consist entirely of live performers.
    - meric 11y ago
      In an ideal world as specified by the 1900 US Congress, even Disney's intellectual property would depreciate over time, and the assets would be the animators who create new intellectual property.
    - riskable 11y ago
      ...or their workforce would merely have a lot more animators, musicians, producers, etc and would necessarily produce more content more regularly than simply sitting on a mountain of IP and merely re-marketing it every few years with lots of lawsuits and lobbying mixed in to "protect" said mountain of IP. They would also be able to re-use and remix the content of others (e.g. competitors) more regularly and the public at large would be able to do the same. Resulting in more content for everyone to enjoy.
- williamcotton 11y ago
dwenzek 11y ago
I like the article conclusion a lot: > Actionable insight is an asset. Data is a liability. And old data is a non-performing loan. As comments react on the post's assertion that "code is a liability", I would translate this conclusion as: Useful program is an asset. Code is a liability. And spaghetti code is technical debt.
cgio 11y ago
From an accounting perspective I am inclined to disagree. Firstly, the way you present functionality as asset and code as liability, you do not make it easy for me to read how they are components of a balance sheet. More specifically, how do you see your balance sheet improving while still being balanced? Furthermore, both assets and liabilities (including capital) are stock measures. I would consider insight more of a flow than a stock. More specifically, I think it is the process and tools of achieving insights that is the asset. Whether data is part of this asset base is up for grabs, but accountants have not identified any reasonable way to measure it. "...the light that falls on to your eye, sensory information, is meaningless, because it could mean literally anything. And what's true for sensory information is true for information generally. There is no inherent meaning in information. It's what we do with that information that matters." Beau Lotto From a very interesting TED presentation. http://www.ted.com/talks/beau_lotto_optical_illusions_show_how_we_see.html http://www.ted.com/talks/beau_lotto_optical_illusions_show_h... And I know I am confusing information with data, but no one has a convincing definition to separate between the two.
- sjclemmy 11y ago
  With respect to your comment about the difference between data and information - I think of information as data that has meaning.
  - cgio 11y ago
    This is a common distinction. The issue is that my information may be your data and therefore any such definition does not refer to data or information but to someone's relationship with it. I allude to that with the quote I included above.
    - platz 11y ago
      excerpts from http://www.ribbonfarm.com/2014/02/07/an-information-age-glossary/ http://www.ribbonfarm.com/2014/02/07/an-information-age-glos... Data: Any collection of information, bullshit and noise. Information: Data that has been judged to be true or false through comparison with observed reality at a given point in time. Bullshit: (1) Data (often a firehose) produced by someone who is indifferent to the truth or falsity of what is being said (2) Data that appears to contain more information than it actually does (3) Noise randomly tagged with truth-values to give it apparent legibility Noise: The component of data that is neither information nor bullshit and at risk of being prematurely discarded ... Falsehood: Information that is known to be inconsistent with the observed state of the world. Truth: Information that is known to be consistent with observed reality at a given time and capable of being unpredictably turned into falsehood by a change in reality in the future. Illegibility: Information or bullshit that looks like noise to those outside a system, due to the presence of a large amount of metis. (Derived from James Scott). Metis: A collection of formulas that work to maintain the identity of a system. Intelligence: The ability to separate bullshit from information. Belief: Sincere acceptance of the truth or falsity of a piece of information. Art: the process of creating information starting with bullshit.

by cwp 11y ago

brianpan 11y ago

I think the better analogy is inventory, which is an asset. The value of data depreciates over time. Having too much data that is not producing insight or value is inefficient asset allocation. In other words, lean principles should be applied to data. Reduce data collection that doesn't add value. Calling data a liability is not quite the right analogy for me.

stephengillie 11y ago
Also, both are stored in warehouses.
riskable 11y ago
The problem with this is that while the value of data may depreciate over time the cost to store it also costs less over time due to Moore's law and Kryder's law.
- brianpan 11y ago
  The depreciation isn't the important part. The article suggests considering data as a liability in the accounting sense. But the author should have stopping at saying it's a liability in the non-accounting definition. Assets have value, but there is risk associated with it. Assets like inventory can lose value because of depreciation, or because demand for the finished good has dried up, there's a risk of theft, there's a cost of storage, etc. Data should be viewed as an asset like inventory and lean principles can be used to reduce your risk and produce customer value efficiently.

yshklarov 11y ago

This strikes me as some sort of Orwellian contortion. It really is a matter of your point of view. Insofar as code is correlated with functionality (and it is at least to some degree), code can be viewed as an asset. In addition, code can be sold for cash, and this makes it an asset from the strictly financial point of view. It may have maintenance costs associated with it -- and these certainly need to be taken into account -- but that is not the same as being a liability.

SonicSoul 11y ago
Unless you've heard of places paying per line of code you seem to have missed the point of code being a liability. It's what it does that's valuable, not the volume of it
- jsprogrammer 11y ago
  Code can only act through its volume. The fantasy of codeless functionality that is being propagated here is exactly that. Functionality only exists because of code. The two cannot be fully separated from each other in the way that some in this thread are implying.
  - Xixi 11y ago
    An airliner certainly is an asset (at least in the hand of a well run airline), but the lighter the frame the better: a lighter frame needs less fuel to fly, hence more money remains in the bank at the end. But without frame there's no plane, so you need some of it, just as little as feasible. It's the same for code: a running program can certainly be a huge asset, but the less code you have the lower the maintenance cost. The concept is just harder to grasp than paying a kerosene bill each time a plane takes off...
    - riskable 11y ago
      I totally agree with your sentiment but I do want to add that adding code can be useful and make it better even if you're not adding functionality. For example, while it may be "cool" to turn a straightforward loop into a complicated one-liner (which would be "removing code while retaining functionality") that wouldn't necessarily be a good thing. The longer, more straightforward code is likely to have a lower maintenance cost.

gnaritas 11y ago

> Code really is a liability, even from the high-level view in the boardroom. The asset is functionality. The programmers who understand and maintain the code are the real assets; everything else is a liability. Without those programmers, those programs will quickly rot because change is always happening and sticking a random programmer in there will over time degrade the program. Smart companies know this, it's what talent acquisitions are all about. You want the goose that lays the golden egg, not the egg. The egg has some short term value, but it depreciates quickly, the goose is the real asset.

hyc_symas 11y ago
Exactly. Intellectual property is worthless. The only thing of value is intellect.
- vinceguidry 11y ago
  If intellectual property was worthless then Disney's workforce would consist entirely of live performers.
  - meric 11y ago
    In an ideal world as specified by the 1900 US Congress, even Disney's intellectual property would depreciate over time, and the assets would be the animators who create new intellectual property.
  - riskable 11y ago
    ...or their workforce would merely have a lot more animators, musicians, producers, etc and would necessarily produce more content more regularly than simply sitting on a mountain of IP and merely re-marketing it every few years with lots of lawsuits and lobbying mixed in to "protect" said mountain of IP. They would also be able to re-use and remix the content of others (e.g. competitors) more regularly and the public at large would be able to do the same. Resulting in more content for everyone to enjoy.
williamcotton 11y ago

dwenzek 11y ago

I like the article conclusion a lot: > Actionable insight is an asset. Data is a liability. And old data is a non-performing loan. As comments react on the post's assertion that "code is a liability", I would translate this conclusion as: Useful program is an asset. Code is a liability. And spaghetti code is technical debt.

cgio 11y ago

From an accounting perspective I am inclined to disagree. Firstly, the way you present functionality as asset and code as liability, you do not make it easy for me to read how they are components of a balance sheet. More specifically, how do you see your balance sheet improving while still being balanced? Furthermore, both assets and liabilities (including capital) are stock measures. I would consider insight more of a flow than a stock. More specifically, I think it is the process and tools of achieving insights that is the asset. Whether data is part of this asset base is up for grabs, but accountants have not identified any reasonable way to measure it. "...the light that falls on to your eye, sensory information, is meaningless, because it could mean literally anything. And what's true for sensory information is true for information generally. There is no inherent meaning in information. It's what we do with that information that matters." Beau Lotto From a very interesting TED presentation. http://www.ted.com/talks/beau_lotto_optical_illusions_show_how_we_see.html http://www.ted.com/talks/beau_lotto_optical_illusions_show_h... And I know I am confusing information with data, but no one has a convincing definition to separate between the two.

sjclemmy 11y ago
With respect to your comment about the difference between data and information - I think of information as data that has meaning.
- cgio 11y ago
  This is a common distinction. The issue is that my information may be your data and therefore any such definition does not refer to data or information but to someone's relationship with it. I allude to that with the quote I included above.
  - platz 11y ago
    excerpts from http://www.ribbonfarm.com/2014/02/07/an-information-age-glossary/ http://www.ribbonfarm.com/2014/02/07/an-information-age-glos... Data: Any collection of information, bullshit and noise. Information: Data that has been judged to be true or false through comparison with observed reality at a given point in time. Bullshit: (1) Data (often a firehose) produced by someone who is indifferent to the truth or falsity of what is being said (2) Data that appears to contain more information than it actually does (3) Noise randomly tagged with truth-values to give it apparent legibility Noise: The component of data that is neither information nor bullshit and at risk of being prematurely discarded ... Falsehood: Information that is known to be inconsistent with the observed state of the world. Truth: Information that is known to be consistent with observed reality at a given time and capable of being unpredictably turned into falsehood by a change in reality in the future. Illegibility: Information or bullshit that looks like noise to those outside a system, due to the presence of a large amount of metis. (Derived from James Scott). Metis: A collection of formulas that work to maintain the identity of a system. Intelligence: The ability to separate bullshit from information. Belief: Sincere acceptance of the truth or falsity of a piece of information. Art: the process of creating information starting with bullshit.