The current outbreak of COVID-19, which took the world by a storm in February of this year (2020), meant businesses around the globe were rapidly accelerated into a digital world. Those who were reluctant to make the jump fell at the wayside, while those liberal enough to adopt a new digital age of business clung on to their enterprises. But what happened to already tech-savvy SaaS companies during this time of crisis? In this article, we take a look at the growth of SaaS pre and post COVID and explore what the future holds for SaaS investors and executives.
What is SaaS
The global public cloud Sofware-as-a-Service (SaaS) topped $100 billion last year with European companies taking the lead in powering the startup ecosystem, and making the most money with investors. So what is SaaS?
Software-as-a-Service is a subscription of cloud-based applications hosted by a third party. The model largely relies on external infrastructure, hosting, upgrading, and services. The aim of SaaS is to offer flexibility and scalability to companies investing in computing resources, and to help streamline a regulatory process.
Will customers still invest in software?
On the face of it, Software-as-a-Service should be resilient in the face of a crisis as companies tend to have customer success at the heart of their business model. The product has always offered customers the promise of financial flexibility, but when customers are reeling in financial difficulty and are having to reduce expenditure, will they still invest money in SaaS?
Pre-COVID, Tech giant Technavio monitored the SaaS market and announced it was set to grow by $60.36 billion during 2019–2023. Thinks are still looking promising for the market, with many companies growing their revenue during the lockdown and continuing to do so post-COVID.
Take Typeform, a Barcelona-based survey provider. Prior to the pandemic, Typeforms monthly revenue growth was at 1%. Their monthly revenue growth during lockdown has been 6%. For them, the pandemic has played customers into their hands, and they’ve grown at a rate faster than they would have done without COVID.
Similarly, Bloobirds a SaaS company that creates software to speed up B2B sales, is thriving. Just last month amidst the Coronavirus pandemic, Bloobirds managed to secure €3 million in funding. Chief Executive Javier Darriba noted that “B2B sales software is more relevant than ever, as face-to-face selling becomes more complicated in a post-coronavirus world”. Thanks to COVID, the B2B market is flourishing, and record stock prices for cloud software companies have been reached on the US stock market. Would these records have been hit without a pandemic? Possibly, but not at the speed we’ve witnessed over the past 3-months.
The Start of a Digital Future
The success of SaaS companies during the global pandemic suggests that digital data and services are the future. While industries such as travel and tourism, hospitality, and education have taken a huge hit, SaaS is skyrocketing. More and more companies have been forced to adopt a digital service of one form or another. Remote working has also fed nicely into the pockets of the SaaS market as companies handle sharing data with multiple locations.
Modern SaaS companies are already living far in the future and have product and customer experience at the heart of their businesses. For the futuristic SaaS company, sales are merely an outcome of existing. Time is spent obsessing over small metrics and measuring adoption techniques. All efforts are spent to ensure the user experience is the best it could possibly be. This business characteristic works well with COVID, when we’re in a phase of time where a customer’s needs are more important than anything else. A company’s flexibility to attend to these needs is crucial, and SaaS companies have the structure to do just that
Will SaaS survive?
In short, SaaS companies will survive if their software is seen as a necessity to customers. Regardless, SaaS companies should now be taking stock of the operational implications caused by the virus. They should manage the impacts and position themselves to capitalize as we pass beyond the crisis. As most SaaS companies were created after the 2008 financial crisis, it’s easy to think they’ll flourish in the aftermath of a crisis. Whether this will be the case, only time will tell.