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Business Software Spending During the COVID-19 Crisis

April 6, 2020

Moving a large number of employees to full-time "work from home" creates many challenges—particularly for those employees who have not worked remotely with any regularity and for businesses without an established culture of remote work.

The new normal within (and surrounding) the COVID-19 crisis is creating the need for many companies to invest in tools that facilitate remote work; remote interaction with prospects and customers; and, in some industries, the ability to deliver services remotely. 

To help understand what businesses and employees are doing to deal with this new normal, G2 Research conducted a survey of 676 respondents consisting of B2B workers across all industries. Approximately 52% of the respondents are from the United States; ~15% from the United Kingdom; ~15% from India; ~11% from Australia; and ~8% from Canada. 

SaaS spend during COVID-19

Within the survey, we included a series of questions on software spending and acquisition trends in the current economic environment. The general opinion of many analysts, experts, and business leaders seems to be that companies would only be spending the very minimum needed to keep functioning, and that the tools acquired would not necessarily be kept once the crisis ends.

It may be surprising, but the data from the survey does not support that opinion.

When asked about how their employer’s spending on software would change during the COVID-19 crisis, nearly 50% of respondents indicated that the spending will increase, while 32% indicated that it will remain the same. In other words: Nearly 70% of respondents believe that spending on software will be the same as before the crisis or increase.

Furthermore, only 12% of respondents believe that software spending will decrease. Segmenting the data by company size yields similar results, with the enterprise segment leading the spending increase at 54%. Only in the small-business segment does “stay the same” outpace increasing spending.

The total number of applications added in response to the crisis is also significant—and potentially unexpected. Only 7% of respondents added no new applications. At the high end, 24% of respondents added five or more applications.

What types of applications are businesses adding to facilitate remote work? 

Unsurprisingly, tools to help remote workers collaborate and get work done are the leaders. Web conferencing solutions are essential for internal meetings and collaboration, working with partners, and interacting with prospects and customers. In some industry environments, like education or medical, they also can provide a way to remotely deliver services to a distributed customer base. There are platforms in each of those verticals that offer more specialized functionality (see online learning platforms, virtual classroom technology, and telemedicine software) but web conferencing tools are readily available and often offer a free trial or a freemium version.

Increased spending for companies that did little to no remote work in the past is expected, at least in the short term. Scaling existing infrastructure is also a reason to upgrade to more robust tools. The spend could be short term, since these new products are cloud-based subscriptions and could be shut down after the crisis. 

However, that does not seem to be the plan for many of the businesses we surveyed. 32% of the respondents believe their companies will retain all the new technology and processes past the crisis, and 76% plan to keep some or all of the newly acquired software.

Spending trends then, now, and in the future

It's obvious, but enabling a rapid shift from "office work" to "work from home" requires an investment in new technology. Certainly the survey data shows that clearly. But with so many respondents planning to keep the new digital technology in place, it begs the question: Is this crisis the catalyst for accelerating change? 

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In the 2008 financial crisis, many businesses moved from older on-premises (and capital investment-heavy) software to cloud-based software that could be funded from operating costs in an environment of limited capital availability. This change marked the tipping point of SaaS: moving from limited adoption to almost ubiquitous. For some time now, we have talked about digitally transforming businesses, but progress and change have been slow. Will this crisis accelerate the move to digital in such a broad way that businesses, at least in many parts of the economy, will be permanently changed?

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