II. Computer Programming and Other Software Services, Data Processing and Information

II.

1. Scope of the survey

(1) The computer programming and other software services covered in this survey are business establishments that are involved in services such as production, and surveys, analysis and advices concerning the production of programs of computers (make-to-order software, software products (packaged software for business use or software packaged in box, etc.), embedded software, software for games)

(2) The data processing and information services covered in this survey are business establishments that are involved in (1) services for assigned computer calculations, (2) services of writing data to data media for computers, (3)services for collecting, processing and accumulating various kinds of data such as real estate information, meteorological information and scientific technology information and provide it as information, (4)management service of information processing systems and computer rooms of users, (5)various surveys services such as market surveys and opinion polls, and (6)machine-time services.

However, establishments that involve in the following services are excluded in this survey:

1) Internet based services (but some operations such as ASP business that handles the whole flow of the business from production of software are covered in this survey)

2) Business establishments which involve in exclusively sales of software products developed by other business establishments

3) Business establishments which involve in the software business or data processing and information services as an internal business for their own

4) Business establishment which mainly involve in other industries (recording information manufactures, news syndicates (news suppliers), private inquiry agencies, tourist information services, business consultants)

5) Call center business, customer service business, maintenance business.

2. Explanation of the Items in the Statistical Table

(1) The number of the business establishments is the sum of the establishments which gave valid responses to the survey as of November 1, 2007.

Among the business establishments, “single businesses” do not have branches or sales offices under the same management in other places. “Headquarters” refers to a headquarters or main office which has branches or sales offices under the same management in other places and controls them all. “Branch” refers to a branch, sales office, etc. which is controlled by the headquarters under the same management.

The number of the relevant business establishments refers to the number of the business

establishments described in the relevant item and included in the sum of the number of the business establishments. Consequently, the “number of the business establishments” is replaced by the “number of the relevant business establishments” because there are some establishments which are listed in plural items among some survey items.

(2) By management organization: among the organizations whose corporate veils are recognized under the law and that operate business, corporations, limited companies, unlimited partnerships and limited partnerships are referred to as a “company”, and the organizations categorized other than “company” are referred to as a “corporation or body other than a company.” “Individual” refers to sole proprietorship (including a joint management by individuals).

(3) Capital amount (or amount of investment): the capital amount or amount of investment that had been paid as of November 1, 2007.

(4) The number of employees: as of November 1, 2007.

1) The number of employees of business establishments includes the employees who belong to business categories other than the relevant businesses (referring to computer programming and other software services or data processing and information services) and those who are assigned or dispatched to business establishments under separate management such as other companies (enterprise) or those who work at business establishments under separate management such as other companies as sub-contractors (dispatched). However, the employees who are assigned or dispatched from other business establishments under separate management such as other companies or those who have come to work from other enterprises under separate management such as other companies as sub-contractors (accepted) are excluded.

The item classification by employment category is as follows:

A “Single proprietors and family workers”, “paid executives”, “regular employees” and

“temporary or daily employees”

a Among “single proprietors and non-paid family workers”, single proprietor means a person

who is a proprietor of a privately managed company (including a joint partner) and is actually engaged in the business at the business establishment. Family worker means a family member of a single proprietor who makes his/her life with the single proprietor and is primarily engaged in the business at the business establishment but does not receive a fixed amount of salary.

b “Paid executive” means a person who serves as an executive in a “company” or

“corporation/entity other than company”, regardless of on a full-time or pat-time basis, and receives compensation or salary.

c Regular employees are “those who are employed for an unfixed period of time, or those who are

employed for a fixed period of time of one month or longer” or “those who were employed for eighteen days or longer both in September and October 2007”, and are classified into “those who are generally called full-time employees” and “part-time employees and others”.

• “Those who are generally called full-time employees” are those who are called full-time employees or full-time staff among regular employees.

• “Part-time employees and others” are those who are called “employees on a short-term contract”, “part-timers”, “arbeits” or staff with similar titles other than “those who are generally called full-time employees”.

d “Temporal and daily employees” means those who do not fall under the category of regular employees, and who are employed within a fixed period less than a month or on a daily basis.

B “Persons who are dispatched to business establishments under separate management among

the aggregate total” are those who are assigned/dispatched to business establishments under

separate management such as other companies, or those who work at business establishments under separate management such as other companies as subcontractors of the employees of the entire business establishments as put in A in the previous page.

2) “Persons who are dispatched from business establishments besides the aggregate total” means those who are assigned/dispatched to the business establishments from business establishments under separate management such as different companies, or persons who have come to work at business establishments under separate management such as other companies as subcontractors (accepted).

(5) The number of employees: as of November 1, 2007

The number of employees is the sum of persons obtained by deducting “employees who are dispatched to business establishments under separate management” from the employees at business establishments (as put in A in the previous page) and including “employees dispatched from business establishments under separate management”.

1) The number of employees counted by department of the main business (computer

programming and other software services or data processing and information services) is the

breakdown of employees who engage in computer programming and other software services, or data processing and information services by department as mentioned below:

A The “management and sales department” generally refers to those in charge of the “general

affairs, planning, human resources, accounting, budget or sales” or in those who in charge of “accepting orders and making contracts or communicating the intentions of the clients to each department and delivering the outcomes or final products (such as make-to-order software or research results) and so on of the main business (referring to a business that achieves larger annual sales of computer programming and other software services or data processing and information services in this report).

B A “system engineer” is also called a system planner or system analyst, and is mainly engaged in

services from system analysis to system planning and preparing system plans.

C A “programmer” refers to those who are engaged in designing and producing programs based on

the system design specifications.

D A “researcher” is a person engaged in such works as an economist, analyst or specialist who is in

charge of other research projects.

E “Others” refers to those who are engaged in such works as an operator, keypunching, data collection, market researches, public opinion researches and consulting services.

2) Of that number, persons who are dispatched from business establishments under separate

management are those who are assigned or dispatched from enterprises under separate management

such as other companies or work as subcontractors among the number of employees by department mentioned above.

(6) The annual sales are the amount of sales of the entire business establishments and sales by business (“computer programming and other software services”, “data processing and information services” and “others”) obtained during one year from November 1, 2006 to October 31, 2007 or one year before the closing date closest to the survey date. This is not profit or income, but the sales (operating revenue) before business expenses are deducted (consumer tax included). Consequently, the relevant annual sales do not include incomes from management of assets and disposal of assets which are not conducted as business transactions.

The amount for the annual sales includes the sales amount and internal transfer invoice amount paid for the services that were provided in the course of headquarters-branch (sales office) or inter-branch (sales office) trading (or service offering amount if there were no such values).

The sales of “computer programming and other software services” and “data processing and information services” by business do not include sales of computer hardware, related equipments and supplies and are posted as the sales of “others” and its breakdown of “wholesale and retail trade”.

(7) The classification by business category is as follows:

<Software business>

1) “Make-to-order software development service”: development of software which is ordered by specific users, including system integration service and maintenance service. In addition, a software development service provided by an information service provider for assigned calculation business or one that is provided at the site of the contract partner is also included in this category. 2) Software products: easy-order made or ready-made software developed for an indefinite number of

users. It is classified into “business package”, “game software” and “basic software for computers, etc.”

Products developed by other companies are included if they are sold at the name of its own brand.

A “Business package”: software products used for businesses at companies or administrative offices. B “Game software”: game software development for video games for home use, PC games and

cell-phone games (excluding games which are single bodies and activated only by a chip mounted in the body).

C “Basic software for computers, etc.”: software that controls the computer system and provides the basic user-operating environment

<Data processing and information services business>

1) “Information processing service”: services of on-line and off-line information processing, ASP service (application service provider: only limited to the integrated services from software production), information processing consulting service (consulting service for planning IT-related investment only), etc.

2) “Assigned system management”: services provided in order to undertake the management and operation of information operation systems, computer rooms and others for users, in which management by dispatching operators, keypunching operators and others to the contract partners’ sites is included here. However, those who fall under the category of the ‘dispatching of workers’ under the Worker Dispatch Law(Note) are included in “services” of “others” other than the relevant business (“computer programming and other software services” or “data processing and information services”).

However, in the case when several services including the system design and so on are undertaken as a package, it is usually divided into a different category for each service. However, if that is not possible for any reason, the package is included under this category.

(Note) The Law concerning the Assurance of Proper Management of Labor Dispatch Services and Arrangement of Labor Conditions (Law No. 88, 1985)

3) Database service: a service for collecting, processing and accumulating various kinds of data on computers and providing it as an information upon the requests and it is classified into “Database services through the Internet” and “Others”.

A “Database services through the Internet”: database providing services through networks such as the Internet (only limited to those engaged in collection/processing/providing of information)

Instead they use package media such as magnetic tapes or CD-ROMs.

4) “Researchers”: think tank services, consulting services (excluding information processing consulting services), market research, public opinion research, economic research, etc.

5) “Others”: data writing services such as keypunching, income from lectures concerning information services, training, and other information services other than (1) to (4) that were stated above.

(8) Annual operating cost: the sum of the expenses of the overall business establishments during one year from November 1, 2006 to October 31, 2007 or one year before the closing date that is closest to the survey date (including consumer tax).

There are items which are specially set for some businesses. The names of such businesses have been described.

1) “Total salary paid”: the sum of the annual salary paid (periodically or specially paid money such as base salary, bonus and benefits) and retirement allowance (including taxes).

It includes compensation and salary of executives paid from operating cost, pay for part-time employees and others or temporary and daily employees, and pay for those who are assigned or dispatched (who work at business establishments under separate management such as other companies) to whom the respective business establishment mainly pay).

2) “Sub-contract cost”: costs involved in giving out business (referring to a business with larger annual sales among computer programming and other software services or data processing and information services of the main business ) either partially or totally to others mainly in the form of assignment, undertaking. Sub-contracting costs that were accrued in the course of headquarters-branch-sales office- trading are also included.

3) “Depreciation cost”: the amount of depreciation of buildings, machinery/facilities/equipment and others which cost ¥100,000 or more for purchase.

4) “Rental expense”: the annual amount of rent in the case that someone engages in a business by renting “land/building” or “machinery/equipment”.

A “Land/building”: the annual rental cost in case of engaging in a business by renting land/building, including common service charges such as an administrative fee, and monthly parking fee.

B “Machinery/equipment”: the annual rental fee of “information related equipment” such as computers and PCs, “vehicles” such as automobiles, “office equipment” such as copiers, and is classified into “information and communication equipment” and “others”.

• “Information and communication equipment”: rental fees of wired communication equipment, wireless communication equipment, broadcasting equipment, automatic changer, facsimile, electronic computer, terminal, auxiliaries, auxiliary equipment to computer, PCs and so on.

• “Others”: rental fees of machine/equipment other than information and communication equipment including “vehicles” such as automobiles, “office equipment” such as copiers.

5) Other operating cost: all operating cost other than (1) to (4) mentioned above:

Advertisement cost, packing and shipment cost, commission paid, sales commission, travel cost, transportation cost, expenses for perishable tools and equipment and fixtures, business entertainment expense, repair cost, insurance cost, tax and duties, donation, welfare expense, membership fees, conference expense, communication fee, utility bills, labor cost of temporal employees, rental cost of the items other than land/buildings and machinery/equipment, etc.

(9) Annual operating cost and expenditure for tangible fixed asset: the amount of the tangible fixed assets (“machinery/facilities/equipment”, “land”, and “buildings/other tangible fixed assets”) and intangible fixed assets that were obtained during one year from November 1, 2006 to October 31, 2007 or one year before the closing date closest to the survey date at business establishments, including consumer tax.

1) “Machinery/facilities/equipment”: expenditure for information and communication equipment, machinery, facilities, equipment and others that are durable for 1 year or over and cost ¥100,000 or more, and is classified into “goods rental and leasing”, “information and communication equipment” and “others”.

A “Goods rental and leasing”: an item of goods rental and leasing and expenditures for purchasing goods that are durable for 1 year or over and cost ¥100,000 or more and are subject to a rental or leasing contract.

B “Information and communication equipment”: expenditures for equipment that is durable for 1 year or over and costs ¥100,000 or more such as wired communication equipment, wireless communication equipment, broadcasting equipment, automatic changer, facsimile, electronic computer, terminal, auxiliaries, auxiliary equipment to electrical computer, PCs, CAD/CAM (computer-aided design/computer-aided manufacturing).

C “Others”: expenditures for goods that are durable for 1 year or over and cost ¥100,000 or more such as tools & fixing, machinery, facilities, equipment and fixtures (excluding information and communication equipment).

2) “Land”: expenditure for land and improvement of existing land.

3) “Buildings/other tangible fixed assets”: expenditures for buildings, rebuilding/remodeling, facilities for water supply/drainage and gas, and facilities attached to buildings such as heating and cooling devices, and so on, and for other tangible fixes assets acquired

3. Codes and Note

(1) The codes used in the “Summary” and statistical tables in this survey report are as follows:

1) “-” means “n/a”, “…” means “unknown (not surveyed),” “0” means “ a rounded off number,” and “” means a “minus figure”.

2) “x” means a numerical figure concerning one or two business establishments which is kept confidential in order to keep the secret of each respondent. In addition, in the case where the figure is related to three or more business establishment, ”x” is used in the same way, if the figure of the first or second business establishment can be identified from the context.

(2) As the published numbers are rounded off, the sum of the each figure in the breakdown and the total number may be different.