Yasuo Kadono

The differences in structural relationships among software engineering capabilities and business performance depending on origin of IT firm in Japan

To clarify the mechanism of how software engineering capabilities relate to business performance of IT vendors, we analysed data collected from 100 major IT vendors. Then, we verified the relationships among software engineering capabilities and business performance vary significantly depending on origin of vendor: maker-turned, user-turned or independent. In maker-turned vendors, service, process, and product innovations are effectively connected. In user-turned vendors, software engineering innovation is probably attributable to a management policy of paying extra attention to business performance. In independent vendors, human resource development is the only factor that positively and significantly influences the other capabilities and business performance.

A Survey On Management Of Software Engineering In Japan

The purpose of this study is to clarity the mechanism of how software engineering capabilities relate to the business performance of IT vendors in Japan. To do this, we developed a structural model using factors related to software engineering, business performance and competitive environment. By analyzing the data collected from 78 major IT vendors in Japan, we found that superior deliverables and business performance were correlated with the effort expended particularly on human resource development, quality assurance, research and development and process improvement.

IT Management Effectiveness: An Empirical Study in Japanese Companies

The purpose of this study is to clarify the mechanism of how information technology (IT) creates business value, particularly from the viewpoint of IT management in individual companies. To do this, we developed a hypothetical structural model that consists of six performance indicators, namely: awareness and actions of top management, linkage between management and IT, IT development capability, IT investment and deployment, IT readiness, and business value creation from IT. Based on analyses of data collected from 509 major companies comprising various types of business in Japan, we found that awareness and actions of top management lead to business value creation from IT via other intermediate factors, such as linkage between management and IT, etc. Based on the structural model, we propose a framework called “IT management effectiveness”, by which the overall effectiveness of IT management is measurable.

Structural relationships among software engineering capabilities in Japan

This study aims at better understanding how software engineering capabilities should be improved in the drastically changing IT industry in Japan. Based on the results of path analyses on the three surveys data from 151 IT firms, human development and R%D are significantly fundamental capabilities to improve the quality of deliverables. Also, improving capabilities of project management and process improvement are significantly an immediate effect on deliverables. On the contrary, quality assurance and customer contacts might need long-term efforts to be successful. The results suggest that order effects among the software engineering capabilities are verified based on the data-centric approach.

A Study on Relationships Among Software Engineering Capabilities in Japan Using Panel Analysis

To understand how software engineering capabilities relate to IT vendors’ business performance and business environment, the author designed social research on software engineering excellence (SEE) and administered it in 2005, 2006 and 2007 with the Japanese Ministry of Economy, Trade and Industry. The author measured the SEE survey results with regard to seven factors including service science characteristics: deliverables, project management, quality assurance, process improvement, research and development, human development, and contact with customers. This paper integrates 233 responses to the SEE surveys into a new database and identified 151 unique IT firms. Based on the results of the panel analysis, most SEE factors for a year had significant positive influences on the same factors the next year. Three paths existed to improving the level of deliverables through project management, quality assurance and research and development. Some SEE factors had significant positive influence on different factors in the following year diagonally. Some negative paths existed, implying that effort put toward a particular factor did not pay off during the research. These efforts may have longer-term effects on other SEE factors. In comparison to the overall structure, stratified analysis on the relationships among the seven factors suggested that year-to-year relationships of the independent vendors tend to be strengthened due to enhancement of series correlation.

A Study into Characteristics of Software Vendors in Japan from a Competitive Environment and Resource-Based Viewpoint

The objectives of this research are to describe the competitive environment in the software industry in Japan and to understand the characteristic differences among manufacturer spin-offs, user spin-offs and independent vendors. Based on management frameworks such as Porter’s five forces and Barney’s resource-based view, we developed a model to measure environmental threats and competitive strengths/weaknesses. We then conducted factor analysis of the data collected from 100 major IT vendors in Japan. On this basis, we extracted eight threat factors, e.g., industry stagnation, difficulty in recruiting bright people, ROI/quality demands from clients, price cutting/quick delivery demands from clients, and adoption of new technology. We also identified six strength/weakness factors, e.g., human capital, advantage of scale, expansive business, inimitability, and stability. Regression tree analysis suggested that manufacturer spin-off vendors tend to significantly expand their business with well-resourced RD even so, some independent vendors with inimitable assets are thought to be role models for software vendors in Japan.

Statistical Analysis Results and Practical Implications of the SEE Surveys

The objective of the research is to better understand the mechanisms of how software engineering capabilities relate to firms’ business performance and business environment for the Japanese software industry. Based on the Software Engineering Excellence (SEE) survey results shown in Chap. 2, statistical analysis results are demonstrated using cross-section analysis, path analysis, stratified analysis, panel analysis, and longitudinal analysis. Focusing on management of software engineering innovation, we empirically verified the common order effects originating with human resource development and proceeding along the paths of service innovation, product innovation, and process innovation. Based on the panel analysis, we demonstrated several series correlations among the software engineering capabilities. The longitudinal analysis suggested positive relationships among software engineering capabilities and business performance in the long-term. However, the relationships between the software engineering capabilities and business performance vary significantly depending on the origin of a vendor: manufacturer or user spin-off or independent. Based on the analysis results, the several implications for managing innovation in software engineering in Japan, such as economies of scale and organizational inertia, are discussed in this chapter.

Introduction to Software Engineering Innovation in Japan

The Japanese information service industry continues to have a considerable presence in the world, although its total sales have grown at a sluggish pace since it passed 10 trillion yen in 2005. However, IT vendors in Japan are facing a wide range of old and new issues in their business environment, such as responses to rapid technological innovations, an orientation of custom-made applications for the domestic market, global competition with new entrants from emerging countries, man-month-based multilayer subcontractors, origin of vendor (e.g., manufacturer spin-offs, user spin-offs, and independents), leadership of senior managers at IT vendors, skill building of software engineers, and IT management in user companies. In this book, we address these issues relating to the Japanese software industry as part of management of software engineering innovation, and we simultaneously look at the whole picture from both supply and demand sides of software. In this chapter, we articulate the research objectives based on a literature review of the information service industry in Japan (e.g., market size and history, government policy, and industry structure), innovation in the software industry (e.g., issues of the Japanese software industry, nature of Japanese software innovation, and types of innovation), the approach to research (e.g., the resource-based view and relevant software engineering disciplines), and measurement models. Next, we seek to clarify the relationships between the software engineering capabilities of Japanese IT vendors, their business performance, and their business environment through the eight chapters of the book.

Agent-Based Modeling of the Software Industry Structure in Japan: Preliminary Consideration of the Influence of Offshoring in China

In Chap. 7, our goal is a preliminary assessment of the future software industry structure in Japan, giving priority to the effects of offshoring in China, based on surveys on software engineering capabilities of Japanese IT vendors conducted together with the Japanese Ministry of Economy, Trade and Industry (METI). An agent-based simulation model, focusing mainly on customers’ price preferences and on the quality of vendors’ communication with customers, concludes that Japanese vendors can possibly lose market share if Japanese customers prefer the lower prices offered by offshore vendors. The results suggest that Japanese vendors should improve their communication skills to satisfy their customers’ requirements regarding the quality of enterprise software, while also taking into account their customers’ price preferences to avoid direct price competition with Chinese vendors. Otherwise, some Japanese vendors within the current man-month-based multilayered software industry culture will not survive in the drastically changing Japanese market.

The Surveys on Software Engineering Excellence

In Chap. 2, to solve the issues relating to managing innovation in the Japanese software industry as mentioned in Chap. 1, we aim to assess the achievements of the software engineering capabilities as represented by IT vendors in Japan; we additionally aim to better understand the mechanisms of how software engineering capabilities relate to IT vendors’ business performance and business environment. To this end we designed a research survey to investigate software engineering excellence (SEE); we administered it together with METI and IPA. SEE was originally developed based on interviews conducted with over 50 experts in academic, business, and governmental circles in Japan and the U.S. and on literature searches in the field of software engineering in a broad sense, as we reviewed in Chap. 1. Therefore, SEE can be used to evaluate the overall software engineering capabilities of IT vendors with regard to the following seven factors: Deliverables, Project Management, Quality Assurance, Process Improvement, Research and Development, Human Resource Development, and Customer Contact. We introduced two additional primary indicators as well: Business Performance, e.g., profitability, growth, productivity, and efficiency of management, and Business Environment, e.g., origin of vendor, number of software engineers, average age of employees, business model, customer base, and corporate culture. The SEE survey resulted in 233 valid responses. We found that vendors with a larger number of software engineers tended to obtain a higher SEE score, as did vendors whose employees were older, though they tended to be less profitable. Finally, there was no significant relationship between the SEE score and operating profit ratio of the IT vendors in Japan. Because the SEE survey results are precious pieces of information in the study of the Japan’s software industry, the detailed findings are demonstrated in Chap. 2, and figures relating to the survey results are included in Appendix.