We observed that before initiating software development the objectives are minimally organized and developers introduce comparatively higher organization throughout the design process. To be able to formally capture this observation, a new communication channel representation system for software is developed in three stages a) set-theoretical representation of software design, b) mapping of software design to a communication channel formalism, and c) hierarchical decomposition leading to higher organization. This new representation system provides a better understanding of the software design by introducing a stepwise entropy reduction notion to the design process. Formal representation of hierarchical decomposition of software and entropy-reduction view of software design provides a stronger bridge between established engineering methods and software design, opens up new possibilities in software research, connecting software with information and coding theory. © 2014-IOS Press.