Treat software as an investment; boost the economy
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Software accounting reform could boost GDP....
UK businesses could help the economy by treating software purchasing as an investment rather than a cost, according to new academic research.
Software assets are normally described in accounting terms as ‘tangible’, and are categorised in the same way as physical machinery. But databases or applications, for example, could be described as ‘intangible’ assets that actually grow in value as they are populated with useful information.
The paper, published by economists from Queen Mary University, estimates that by counting software as an asset that will grow in value as it accumulates ‘knowledge’, rather than a piece of machinery that will devalue as time goes on, businesses could add around 2% to country’s gross domestic product. That would in turn affect interest rates.
The paper estimates that in 2004, UK businesses spent £22 billion on software.
Further reading
Has IT lost the power to improve productivity? - January 2007
