It’s no secret that the COVID-19 pandemic has severely impacted companies around the world, but to truly recover, we need to understand its impacts on our industry. In the age of COVID-19, most companies are experiencing a severe disruption in how they do business. Lauren Kelley and Greg Fiore recently spoke about this at Bain & Company’s COVID-19 Business Impact on SaaS and Software Companies Webinar. We’ve outlined some of the top takeaways!
To understand the COVID-19 impact on 2020, we first need to look at 2019. Lauren mentioned that “2019 was a record-breaking year in terms of the money being invested into the tech and software industry.” Prior to this crisis, 2020 was expected to be a very active year in the technology and SaaS industry and many investors saw it as a safe place to invest. With this in mind, we can see that the industry as a whole started the year in a very strong position.
The question that many people have is likely “what is the impact on companies across the board?”The research at Bain & Company tells us that 75% of technology and SaaS companies have seen sales be impacted by COVID-19. Some companies that operate in areas like healthcare or online communication have been impacted in a positive way. Unfortunately, many more have been disrupted and seen a drop in sales.
As you can see, almost across the board there has been a decrease in the technology budget many companies have available. This makes sense as sales become more difficult, companies are attempting to offset this reduced cash flow by cutting costs. Their research does show that in some segments such as software and healthcare, there are some increases in the technology budget. These are companies that have seen an uptick in business due to an increase in demand.
Companies have taken very different approaches to how they handle this crisis. Some have been very defensive with their stance as to where others have used more aggressive COVID-19 messaging. Lauren mentions that in their research they “definitely saw a pattern of companies with a low cash position taking a defensive strategy.” She elaborated that companies that have resources on hand are able to take higher risks and react proactively to the crisis.
On the flip side of this, some companies have not been quite as lucky. Companies with reduced cash available have been less included to take aggressive actions with their COVID-19 messaging. These are the companies that have taken a more defensive stance. Lauren takes time to explain the impact of this strategy. “The companies that are taking the most defensive positions are taking cuts across the board.”
Their research shows that these have been some of the hardest-hit companies and are making cuts to numerous departments. Some of the largest impacted departments have been sales and marketing teams with many companies cutting these areas first.
The Bain & Company team has found that about 80% of companies have revised their revenue projections in light of the ongoing crisis. Most of these have seen a negative impact with a scarce few seeing improvements. These are again in industries that focus on industries such as healthcare and online communication. Research has also found that only 20% of companies have decreased their sales quotas. This means the vast majority have decided to continue with their current expectations for sales teams.
When looking at the vast amount of research that the Bain & Company team has done, it begins to paint a picture of the Covid-19 impact on SaaS companies. There has been a widespread impact on the technology and SaaS industry. As a result, many companies seeing a reduction in sales and budget. At OpFocus, we understand the hardships that many companies are facing and the need for a plan moving forward. If your team doesn’t know where to go next, let OpFocus provide our expertise. Let’s discuss the type of strategic roadmap we’ve prepared for teams like yours. and the impact it has had.
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