SEPTEMBER 2018 The Developer Coefficient Software engineering efficiency and its $3 trillion impact on global GDP stripe 1 THE DEVELOPER COEFFICIENT A decade since the global financial crisis, companies increasingly face challenges beyond scarcity of capital. As technology fracks into every aspect of the world economy, software engineers are becoming one of the world’s most precious resources. While businesses today face myriad issues—security vulnerabilities, trade tariffs, complex government regulations, increased global competition—how they deploy their developers may be the most overlooked factor impacting their future success. Developers act as force-multipliers, and if used effectively, have the collective potential to raise global GDP by $3 trillion over the next ten years. While many people posit that lack of developers is the primary problem, this study— which surveyed thousands of C-level executives and developers across six different countries—found that businesses need to better leverage their existing software engineering talent if they want to move faster, build new products, and tap into new and emerging trends. Senior executives report that the lack of developer talent is one of the biggest potential threats to their businesses. In fact, they now worry about access to developers more than they worry about access to capital, immigration concerns, and other challenges. Despite the number of developers increasing year-over-year at most companies, developers working on the right things can accelerate a company’s move into new markets or product areas and help companies differentiate themselves at disproportionate rates. This underscores the most important point about developers as force-multipliers: It’s not just how many devs companies have; it’s also how they’re being leveraged. Access to developers is a bigger threat to success than access to capital THE DEVELOPER COEFFICIENT C-Level Executives How threatening are the following factors to the success of your business? (somewhat/very) Disruption from tech industry Increased regulation Security / data breach 66% 61% 60% 58% 56% 56% 55% 51% 62% 62% Access to developer talent Growing competition from China Corporate tax rates Trade tariffs Access to capital Impact of Brexit Immigration reform How much of an impact can developers have to help your company with each of the following challenges? (moderate/major) Differentiating products / services vs. competitors Increasing sales Bringing products to market faster 70% 71% 65% 69% Internal reporting / visibility How has the number of developers/software engineers changed in the following year? Stayed the same Increased Germany Increased (46%) lowest percentage response 14% 19% 56% Decreased How much of a priority is it for upper management to increase the productivity of its developers? High / medium priority 96% Not at all / low priority 3% 2 THE DEVELOPER COEFFICIENT 18 million 31.6% $17,000 $51,000 $918 billion ~$300 billion Estimated developers in the world GDP per developer Efficiency loss of developers (from survey) Global GDP per capita Aggregate GDP of developers globally Global GDP loss from developer inefficiency annually Sources: Evans Data Corp., CIA Factbook, Stripe research While it’s a priority for senior executives to increase the productivity of their developers, the average developer spends more than 17 hours a week dealing with maintenance issues, such as debugging and refactoring. In addition, they spend approximately four hours a week on “bad code,” which equates to nearly $85 billion worldwide in opportunity cost lost annually, according to Stripe’s calculations on average developer salary by country. Nearly two-thirds of developers agree that this is “excessive” and believe that clear prioritization, responsibilities, and long-term product goals would improve their own productivity. ‘Bad code’ costs companies $85 billion annually Developers Approximately, how many hours on average do developers at your company work each week? 41.1 hours 39.6 hours Mean (all countries) Mean in France (lowest) HOW $3 TRILLION IN GDP IMPACT ADDS UP 3 Developers THE DEVELOPER COEFFICIENT How many hours each week do you think the average developer at your company spends on addressing “technical debt?” How much do you agree or disagree with the following statement? “The amount of time developers at my company spend on bad code is excessive.” How many hours per week do you estimate developers at your company waste on maintenance (i.e. dealing with bad code / errors, debugging, refactoring, modifying)? 17.3 hours 20.9 hours 13.5 hours Mean (all countries) Mean in France (highest) Mean 59% 70% Strongly / somewhat agree (all countries) Strongly / somewhat agree in Singapore (highest) THE DEVELOPER WORK WEEK Bad code Technical debt 3.8 hours 13.5 hours Average developer work week 41.1 total hours 4 Developers Which of the following do you believe is hindering developer productivity at your company? 41.1 9.25% 17.3 13.5 3.8 ~$85 billion Average hours per developer workweek Average hours spent on technical debt Percent productivity loss from bad code Average hours spent by developers on bad code, debugging, refactoring, modifying THE ECONOMIC IMPACT OF ‘BAD CODE’ Average hours spent on bad code Global GDP loss from developer time spent on bad code annually Sources: Evans Data Corp., CIA Factbook, Stripe research How much of a negative impact does each of the following have on your personal morale? Maintenance of legacy systems / technical debt Leadership’s prioritization of projects / tasks Building custom technology Not being given sufficient time to fix poor quality code Changing priorities resulting in discarded code or time wasted Work overload 52% 79% 81% In your opinion, as a whole, how productive are developers at your company? Consider 100% being perfectly productive and 0% being completely unproductive. MEAN 68.4% 0% 100% THE DEVELOPER COEFFICIENT 45% 40% Spending too much time on legacy systems Paying down technical debt 79% 78% 76% 5 Senior executives feel the threat of tech industry competitors most acutely, which is why they’re prioritizing investments in infrastructure, R&D, and recruiting over the next five years. Both developers and C-level execs agree that artificial intelligence, Internet of Things, and API services are having the biggest impact on their businesses today, with ML, virtual assistants, and blockchain likely to be impactful in the next 10 years. Senior executives are more optimistic than developers that their companies will be ready to tap into to these trends, however, with developers worried about not having the right technology infrastructure and skilled employees. C-Level Executives Companies in which of the following industries pose the greatest competitive threat to your business? What are the top three areas your company plans to increase investment in the next 5 years? Compared to now, how much of a core competency will software development need to be 10 years from now? Retail Manufacturing Telco Engineering services Banking and finance Tech Customer service Sales Marketing Recruiting technical talent R&D Software infrastructure and tech Much / somewhat less The same Much / somewhat more Technology companies pose the biggest threat across industries 19% 19% 23% 27% 36% 44% 24% 26% 29% 31% 31% 43% 3% 16% 81% THE DEVELOPER COEFFICIENT Singapore Tech (59%) highest among all countries 6 C-Level Executives C-Level Executives Which of the following technology trends, if any, are having the greatest impact on your company today? + Which of the following technology trends, if any, are having the greatest impact on your company in 10 years? How confident are you that your company has sufficient resources to respond to these trends? How confident are you that your company has sufficient engineering resources to keep up with these technology trends? Why aren’t you confident that your company has sufficient engineering resources to keep up with these technology trends? API-based services Blockchain ML SDS Virtual assistants IoT IoT AI AI 22% - 20% 24% 18% 25% 24% 28% 41% 15% 20% - 25% 21% 28% 27% 34% 41% Developers Developers We don’t have the tech infrastructure to support it We’re too focused on quarterly or annual gains to prioritize long-term growth Leadership doesn’t prioritize technology We don’t have enough skilled employees We’re too slow to react to tech trends 33% 36% 36% 42% 44% 83% 77% 23% 17% Very / somewhat confident Very / somewhat confident Not very / not confident Not very / not confident THE DEVELOPER COEFFICIENT Developers C-Suite 30% Germany (highest across all countries) 7 Stripe partnered with Harris Poll to survey developers, technical leaders and C-level executives about their organizations’ business challenges, software development practices, and future investments to determine the role that developer productivity plays in their success—and the growth of worldwide GDP overall. More than 1,000 developers and more than 1,000 C-level executives in the United States, U.K., France, Germany, and Singapore participated in the study. Stripe.com METHODOLOGY