Profit Maximization with Software Engineering Certifications

Thursday, November 6, 2014

Criminal enterprises are fantastic laboratories for the field of economics. When participants are willing to throw off the shackles of laws and/or morality, they can try all sorts of things to maximize their income streams.

Though a staunch law abider myself, I am fascinated by folks who commit one crime in particular: racketeering. Despite the fact that many diverse groups have been prosecuted under the relevant statutes (such as religious organizations, stock brokers, political activists, police departments and crime families), few know what racketeering is and fewer still understand what racketeering has to do with the field of software engineering.

Allow me to explain. A racket is a solution to a problem that only exists because of the solution. For instance, a thug may threaten a local merchant with violence unless he purchases an insurance solution. Of course, this insurance's only function is to protect the store owner from the actions of the thug.

In the above case, few would argue that there is an economic benefit to the activities described.

The fields of software engineering (including both project management and software development) have their own version of racketeering: certifications.

Certifications began innocently enough. They were a way for the elites in their fields to demonstrate their expertise and competence. Everything worked well until someone with a background in economics got into the mix and ruined it for everyone.

Certifiers realized that certifications designed to highlight the best of the best were an unprofitable proposition. Few software engineers would pay to take exams that they were likely to flunk and exams that weeded out all but the best would be expensive to create. A much more profitable alternative would be to change their role from certifiers of excellence to gatekeepers of the masses.

If the vast majority of candidates earned a relevant certification, human resource departments who were ill-equipped to select candidates would require that piece of paper in order to whittle down their candidate pools. In effect, the certification costs would become a fee that every candidate would become forced to pay.

Developers, project managers and system administrators began spending significant amounts of time and money paying for paper that was increasingly demanded by employers while being simultaneously less valuable as a means of signaling competence. A truly bizarre end for the certification industry, but one that could be predicted by the power of economics.

Do you want to learn how to understand the software industry like an economist? Check out my software pricing handbook and learn how economics really works in the world of software.