Business software investment

Business software investment takes two main forms. UK businesses can either purchase new software, which may be of the off-the-shelf packaged form or customised business software or develop software on their own account. The former is more easily measured whereas the latter requires an investment of resources. For the majority of the time, investment in both types of software moves in tandem with prevailing economic conditions and in particular business profitability and confidence. Technological advancements and changes in the applications of current technology are also likely to generate a period of high investment in software. Over the long term, software prices have declined steadily due to intensifying competition between developers.

IBISWorld estimates that total business software investment will increase at a compound annual rate of 4.9% over the five years through 2025-26. While fluctuations in own account software investment tend to be relatively tamed, the value of purchased software is more volatile year-on-year. This is because many developers may choose to price their products in their domestic currency, making these purchases dependent on exchange rate fluctuations. Amazon Web Services, for example, prices its services and software in US dollars. Although some companies allow customers to pay their bills in pounds, the fees may still be determined according to the US dollar exchange rate at the end of each billing month.