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Summary of Embedded Software Industry Survey 2008

Since 2004 the Ministry of Economy, Trade and Industry (METI) has been conducting annual surveys of companies and engineers engaged in the embedded software business, with the aim of identifying the current state of this rapidly growing industry. Embedded software refers to software that is embedded in vehicles, mobile telephones and many other devices.

The results revealed emerging problems, such as the polarization of embedded software in quality and shortages of highly skilled engineers, but they also indicate that practical activities that METI and IPA’s Software Engineering Center (SEC) have been jointly promoting in the field of software engineering are yielding results.

A summary of the Embedded Software Industry Survey

Methodology
From November 2007 to January 2008, a questionnaire survey was conducted for executives, business leaders, embedded software development projects leaders and embedded software engineers of approximately 7,500 companies that belong to industry groups or associations related to embedded software. Valid responses were returned from 317 business units (of 291 companies), 519 projects, 1,015 embedded software engineers (including 153 respondents at Embedded Technology 2007 (ET2007)).

Results
(1) The embedded software industry is continuously growing.
The size of the Japanese embedded software development industry increased to approximately \3,510 billion, up 7.5% from the previous year.

(2) Quality problems associated with embedded software: The number of these who answered “none” increased, while the number of those saying “30% or more” fell for the first time.
One question asked about products that caused quality problems after shipment was asked. Those who answered “none” increased by about five times, from 7.3% to 33.5%, over the past four years, suggesting a rapid increase in the supply of high-quality products. On the other hand, the percentage of companies that experienced quality problems in or before last year with more than 30% of their products increased for three consecutive years. The figure was 22.5% in the 2008 survey, which is about 20% lower than the 2007 figure of 26.8%. This was the first decline since the start of the survey. The percentage of companies that experienced quality problems with 20-30% of their products also fell from 15.3% to 12.8%.

(3) The average number of faults per product varies widely by company size.
The average number of faults per product was analyzed by company size. The number was 0.33 in companies with 5,000 or more employees, and 0.58 in those with 1,001-5,000 employees, while the equivalent number was 1.62 in companies with 301-1,000 employees, 1.07 in those with 101-300 employees, 0.61 in those with 100 or less. The disparity in the average number of faults between large and small companies is assumed to contribute partly to the polarization of quality.

(4) Over 40% of the quality problems with embedded products after shipment are caused by software errors.
The leading cause of the quality problems with embedded products after shipment was software errors (46.3%), followed by hardware design faults (21.8%) and production faults (12.7%). A trend over the past four years is that the percentage of faults during product conceptualization and specification continues to fall year after year. Software errors have remained the major cause of quality problems for the past four years.

(5) The shortage of engineers is easing.
The average shortage rate*1 has fallen for two consecutive years, from a peak of 48.6% in 2006 to 36.4%. The shortage rate by profession*2 is the highest in three categories: product managers (64.9%), QA specialists (55.1%), and development environment engineers (50.7%). Professions with relatively low shortage rates are test engineers (29.0%) and software engineers (25.9%). Over the three years since 2006, the shortage rate of product managers, the profession with the highest shortage rate in the 2008 survey, has increased the most in all the professional categories (from 61.2% to 64.9%). The shortage rate of bridge system engineers, the category with the highest shortage rate in 2006, was reduced the most (from 116% to 48.7%) during the same period. The profession that showed the second largest drop after this was test engineers (from 66.7 to 29.0%).

*1: Shortage rate: The value obtained by performing the following calculation, based on the survey results on executives and business leaders:
Total shortage of engineers in number / Current total number of engineers

*2: Professions
• Product managers: Managers who oversee the product life cycle, including product conceptualization, development, manufacturing, distribution, marketing and maintenance, from the viewpoint of management.
• Project managers: Managers who plan, lead and supervise a product development project in the process of its designing and implementation.
• Systems architects: Engineers who design system architectures and their development processes in a way that the requirements for system use and development are met.
• Software engineers: Engineers who design and construct software.
• Test engineers: Engineers who design and perform tests.
• Domain specialists: Specialized engineers who have advanced and specialized knowledge and development experience in a specific technology or product field.
• QA specialists: Specialized engineers who foster the assurance, maintenance and improvement of quality across all the processes of a project.
• Development process improvement specialists: Specialized engineers who assess the development process and its implementation status and promote improvements.
• Development environment engineers: Engineers who design, construct and operate the development environment for a project, including tools and equipment to be used there.
• Bridge system engineers: Engineers who coordinate organizationally and geographically dispersed teams that participate in a project.

(6) Advanced*3 embedded software engineers are needed.
Although overall shortages are easing, demand is still high for embedded software engineers with advanced skills; the shortage rate of entry-level engineers was 26.3%, while that of advanced (experienced) engineers was 48.4%. Over the three years from 2006, the shortage rate of entry-level engineers fell from 44.2% to 26.3%, showing the largest decline among all the categories. The shortage rate of advanced engineers stood out last year at 64.9%, but the rate declined this year, making the disparity between different skill levels restored to an extent equivalent to that of two years ago.

*3: Advanced: Capable of implementing technologies, methodologies and businesses while exercising leadership or capable of implementing these while leading internal and external teams by means of standardization and the development of new technologies.
Intermediate: Capable of discovering and solving challenges in business operations while exercising leadership.
Entry-level: Capable of discovering and solving challenges in business operations under the leadership of higher-level engineers.

(7) Software engineering methods have been introduced for improving quality and developing human resources.
The respondents’ most common reason for having adopted solutions*4 developed and provided by the Software Engineering Center*5 was “quality improvement” (cited by more than 75%), followed by “human resource development” (more than 60%). This suggests that many respondents recognize SEC’s solutions as effective for solving major challenges in developing embedded software. About 70% of those who have adopted SEC’s solutions give high marks to them, rating them as being “beyond expectations” or “just as expected.”

*4: Embedded Technology Skill Standards (ETSS), Embedded System Development Coding Reference (ESCR), Embedded System Development Process Reference (ESPR), Embedded System Development Management Reference (ESMR)

*5: Established in 2004 under the Information-Technology Promotion Agency, Japan (IPA) and headed by Seishiro Tsuruho.

Division in Charge

Information Services Industry Division, Commerce and Information Policy Bureau

Release Date

May 22, 2008