New data from Analysys Mason indicates that the pandemic is showing a drop in SMB’s IT spending – and the biggest hit is software as a service and cloud collaboration… but with caveats.
The channel collectively accounts for 91% of SMB spending on SaaS, Analysys Mason said. Year-on-year revenue growth for this key route-to-market category is expected to fall 3-5 percentage points in 2020; that is compared to the firm’s previous forecast.
However, even though SMBs will buy less SaaS because of COVID-19, Analysys Mason still expects the sector to grow by 12% this year.
The fluctuation is attributed to organizations furloughs and layoffs – which will end or return at some point. The upside? Taking all verticals into account, Analysys Mason sees hosters and MSPs in the channel growing their revenue the most. The firm says that’s due to SMBs’ increasing needs for support and management.
The research firm says overall collaboration spending (not just on cloud platforms) will drop by about $1 billion, to $34 billion. That aligns with analysts’ expectations that SMB spending on IT and communications solutions, in general, “will fall significantly due to the COVID-19 pandemic,” the report reads. Analysts say the largest declines will come in 2020 and recovery will begin late next year and into early 2022.
Ninja RMM has published some survey data too – while the majority of those polled are reporting More or Even monthly recurring revenue, 60% have lose clients and 38% are reporting volume down when compared to March and April.
Why do we care?
I certainly don’t want to fall into a trap of looking for data that backs up a world view. That said, I don’t believe this is it out of line nor an anomaly.
The overall economy is down. There are going to be impacts, and it’s best to plan for that. Forrester’s Jay McBain has advised for a 17% drop in MRR, and I’ve cautioned to plan for 30% in budgeting. I’m still cautioning to plan for 12 to 18 months of impact.
This is clearly driven by individual industries too, so these aggregate numbers will not apply directly to you or all of your customers – some will be worse, and some will be much better. Get close to your customers, understand their needs, and manage to pessimism. Those companies that operate lean and mean will survive and flourish.
Source: Ninja RMM