Software Pulse

Business Strategy for Software Executives

October 3, 2005

Deven Parekh and Peter Sobiloff

Software’s New Economic Drivers

The maturation of the technology industry means software vendors can watch macro economic measures — as well as IT market developments — as indicators of future growth, valuation and stock performance. Here are the trends to watch.

By Rick Sherlund, Goldman Sachs

The macroeconomic influence on tech is greater than ever as tech has grown to be the single largest component of corporate capital spending—now almost 40 percent of the total.

IT spending was able to well outpace economic growth as it grew as a proportion of GDP from 1.5 percent in 1970 to almost 5 percent in 2000. Since settling in at less than 4 percent in recent years, tech is likely to resume growing as a percentage of the economy, but not nearly at the rate of decades past.

Not surprisingly then, the correlation of IT with the broader economy has jumped from less than 0.1 in the 1970s to over 0.9 in recent years as the industry has matured.

While tech continues to benefit from "mini-waves" of technology shifts (e.g., wireless), there are not the rapid, landscape-changing shifts that drove feverish growth in the 90s. In addition, many of today’s technology trends actually serve to reduce aggregate IT spending.


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Software Pricing Conference

Join thought leaders from the world’s largest software companies at SoftSummit - a unique conference where executives discuss and debate trends, best practices and strategies for software pricing, licensing and management. This year’s event is at the Westin, Santa Clara, California, October 10 & 11, 2005. Hear from top executives from McKinsey & Co., Microsoft, IBM, SAP, HP Software and many other leaders speaking on these topics and more:

  • Software pricing and licensing best practices
  • The debate over multi-core software licensing
  • Key software industry metrics and benchmarks
  • Software-as-a-service and on-demand computing

Register today using the promo code SANDHILL and receive a $200 discount.

Meet the New Software Ecosystem

New technologies and business models have brought a whole new set of opportunities and challenges to the software industry. Founding chairman Shirish Netke explains how the launch of the Software Economics Council (SECO) will address these emerging concerns and unite the maturing business ecosystem in this week’s post to the Blog on New Era, New Thinking.

Best Practices for License Compliance

Smart companies can capitalize on open source by developing thoughtful policies covering its licensing obligations. Palle Pedersen, CTO of Black Duck software shares best practices from leading companies in this week’s post to the Blog on open source.

Share your insight on the software business. Email with your submissions to the Blog.

Improving Society’s ROI

Meet Christa Gannon, founder of FLY, Fresh Lifelines for Youth. The Silicon Valley-based non-profit rehabilitates juvenile offenders at a rate nearly four times better than that of the justice system and at just 1/20th of the cost — how’s that for a great value proposition? Find out more about Christa, FLY (this year’s recipient of the SHG Foundation grant) and what software vendors can learn from FLY’s teen participants in this month’s installment of Software Personalities.

Poll: $100 Laptops on the Way?

Nicholas Negroponte of the MIT Media Lab says a prototype of a sub-$100 computer aimed at digitizing the third-world will be available in November. How will this technology impact developing nations?
Take our Pulse Poll >>

Last week, visitors speculated on whether a Web-based application from Google could ever overtake Microsoft’s Windows monopoly.
Give your opinion and see the perspective of visitors >>

Learn Marketing from
The Chasm Institute

Don’t forget to check the Event Calendar for upcoming software seminars and conferences. For example, the Chasm Institute is offering a one-day seminar on the "Fundamentals of High-Tech Marketing" in San Jose, Calif. on Oct. 18 and in Boston, Mass. on Oct. 20.

Is your organization planning an upcoming event? Add it to the Event Calendar. Simply visit our community page, scroll down to "Events," click on "Want to post an event?" log in and provide the details. If you have any questions or need assistance, email

More at

Oracle says its better to "crush" than buy
Read the most important enterprise software industry news of the week >>

Virtual Iron receives $8.5 million.
Monitor the latest software venture capital deals >>

BEA buys M7, an Eclipse-based tools company.
Size up last week's software M&A deals >>

Mobilitec names new VPs of Marketing and Business Development/Product Management.
See who’s made it to the top in our list of recent software executive appointments >>

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Parting Thought

"Lots of folks confuse bad management with destiny."
— Elbert Hubbard

Courtesy of Malcolm Kusher, The Kushner Group