The SIIA’s Report on Software & Information

In its most recent report, Software and Information: Driving the Global Knowledge Economy, the Software & Information Industry Association (SIIA) aimed “to collect and disseminate objective data about the economic contribution of the software and information industries to the U.S. and world economies,” and to, “provide the most accurate measurement of the substantial impact” of those industries. While the case the SIIA makes is strong (the software and information industries do add significant value to the domestic and world economies and they are chief drivers of innovation and increased productivity), it must be kept in mind that the SIIA is “the principal trade association for the software and digital content industry.”

As an introductory note the report addresses the change seen in the software and information industries over the past decade. “The evolution and growth of technology over the last decade, driven by the emergence and ubiquity of the Internet, has led to a substantial convergence of software and information products and services.” As the world continues to step into a knowledge-based economy, the importance of these products and services will only continue to grow. Indeed, “software and information industries are key drivers of the new global knowledge economy.”

To demonstrate the value of the software and information industries, the SIIA points to their contribution in driving U.S. job creation and economic growth. In doing this, the SIIA takes a strong position: The software and information industries are major drivers of U.S. job creation and economic growth. By nearly all measurements, these industries have an economic impact far greater than their share of the entire American economy.” It is argued that the software and information industries generate millions of high-paying jobs in nearly every state, and that the rate at which it is adding jobs is higher than the U.S. private sector as a whole. Between 2006 and 2007, the sector added 400,000 high-wage jobs, this, “17 percent net increase in the industries’ employment base, is nearly double the 10 percent increase in total U.S. private sector employment since 1997.” Furthermore, the industries are growing at a rate which outpaces, “growth in the U.S. economy as a whole.” This in turn contributes, significantly to the overall health of the American economy.” In fact, the association argues that, The contribution of the software and information industries to the U.S. economy is far greater than other industries as measured by their share of the U.S. economy.”

The association also refers to data from the Information Technology and Innovation Foundation and states, “the widespread dissemination of IT and telecommunications hardware, software and services has increased worker productivity three to five times more than non-information technology capital,” and that “In the United States, IT was responsible for two-thirds of total factor growth in productivity between 1995 and 2002 and virtually all of the growth in labor productivity.” The report also notes a few sectors of the “old economy” which have been particularly affected. Financial-services has benefited primarily from the real-time access that it is now granted, healthcare (while not as quick in its embrace of new IT), is following in its digital conversion efforts, and educational and training institutions are using “software and information technologies to provide more timely, flexible, engaging and personalized learning.”

Continuing to paint a picture of success, the SIIA report shows that just as things domestically are doing well, globally the picture is a pretty one as well. “The industries’ reach also extends well beyond the U.S. market, where U.S. firms are world leaders, experiencing strong sales and revenue growth in the global marketplace.” Sales both through U.S. affiliates abroad (the “largest component of the industries’ international trade”) and via direct exports (which reached almost $19 billion in 2006) continue to grow. Looking to the future, it is suggested that the foreign markets offer continued potential.

While all is well at the moment, the SIIA reports attention cannot slip, or the U.S. software and information industries could lose their hold. The educational system must train produce new workers, the U.S. education system at all levels must further act on the national consensus that our educational system needs to improve its science, technology, engineering and math education.” Regulatory models must recognize new and evolving business models. It is suggested that these regulations, “must continue to be based on the least-restrictive approach, refrain from choosing one business model to the exclusion of others and, wherever possible, rely on meaningful self-regulatory compliance efforts that build confidence in the marketplace.” In a nod to another association, the Business Software Association (assigned the taske of hunting down software pirates) the SIIA states the need for strong protection of intellectual property and a crackdown on software piracy. And of course, as the Internet is largely responsible for the industries’ growth the SIIA want to see continued advanced in computer access and broadband penetration.


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