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Software creates $1.4 trillion in domestic economic value

Software—particularly cloud-based technology—is now creating roughly $1.4 trillion in economic value in the U.S. and is poised to grow even more, particularly as non-tech companies transform themselves into software businesses, according to a new report released y by global investment firm Battery Ventures (www.battery.com). The figure represents nearly 8% of U.S. GDP (gross domestic product).

The report was delivered by Battery General Partner Neeraj Agrawal at the inaugural CloudNY conference in New York. Based on earlier research by the BSA | The Software Alliance, as well as new research by Battery, the report traces the history of today’s software renaissance from the mainframe era in the 1970s through the client-server era, then into desktop “software-as-a-service” (SaaS) applications and, finally, to today’s cloud-first offerings delivered over the web.

“People don’t realize how big this industry actually is—partly because so much software is baked into everyday products we use at the office and at home,” said Agrawal, a longtime cloud-software investor. “But software’s time has come. The cost of starting a software company is lower than ever. And as spending on traditional software categories, like ERP and CRM, continues to grow—and as software seeps into newly smart products like cars, medical devices, and next-generation industrial tools—we are looking at a category that is a major component of our nation’s economy and a driver of jobs.”

Agrawal predicts that by 2020, software will represent 10% of GDP and could drive $2 trillion in value.

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