2020 will undoubtedly be remembered for the coronavirus pandemic, but it should also be marked as the year cloud services and the SaaS market kept the world ticking over.
The sudden shift to mass remote working presented a lot of software firms with an opportunity to show what they could do to a wider audience. For example, very few had heard of Zoom in January, but just two months later it was a household name. By the summer, so many of us were using it that the company had reported 355% growth year-on-year and many businesses were starting to worry about “video-call fatigue”.
That wasn’t the only issue Zoom users worried about, initially, as the sudden attention on the video conferencing platform also unearthed some critical security flaws. A lack of end-to-end encryption and the ease with which unwanted guests could access meeting IDs created a bit of a PR nightmare.
Despite these faults, the firm grew and grew and the simplest explanation for its rapid rise is that it was offered as a free service. Businesses need to stay connected with employees and Zoom allowed them to do that without adding an extra cost. So far, the company’s success is tied to the coronavirus pandemic, but it may live on long after COVID-19.
“The pandemic forced many organisations to implement remote working overnight,” explains Rob Harrison, UK MD at SAP Concur. “With employees unable to travel to the office, activities such as expense claims and invoice processing became more difficult for those organisations still using paper-based processes.
“Cloud-based tools helped organisations to continue their operations with minimal disruption, despite having no access to the office. Now that both organisations and employees have seen the lifeline that these tools can provide, we are likely to see continued investment in cloud-based systems.”
SaaS (Software as a saviour)
The switch to remote working was so swift and large that, by July, Gartner predicted the Software as a service (SaaS) market would grow from $104.7 billion in 2019 to $120.9 billion by 2021. The organisation’s vice president of research, Sid Nag, said the cloud had “delivered exactly what it was supposed to” by meeting customers' demand for remote software.
The benefits of cloud computing and remote working software have been obvious to the tech industry for years, but the rest of the world needed a little more convincing. So when COVID-19 hit and we all went inside, collaboration services like G Suite or Office 365 suddenly saw a rapid increase of users.
This was particularly true for communications platforms. In the first three months of 2020, as the pandemic spread around the west, Microsoft Teams usage surged to 44 million active daily users. This jumped up to 75 million a couple of months later partly because, as rival firm Slack pointed out, it was bundled into a subscription service, so users had it whether they specifically wanted it or not.
Slack referred to Microsoft Teams as a “weak copycat product” in an anti-competition complaint it filed with the European Commission (EC). But the year ended with Slack being acquired by Salesforce after failing to match the pandemic growth of other collaboration services, while Microsoft Teams continued to grow.
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The acquisition of Slack by Salesforce capped off a brilliant year for the SaaS giant. The company made changes to its business during the first half of the year – “reallocating resources”, as CEO Marc Benioff phrased it – making certain roles redundant while investing in more digital ones. The firm saw 29% growth in Q2 and announced plans to hire 12,000 new workers over the next year.
Given what Salesforce provides, this is as good an indication of the growth of the software market. And, despite news of a vaccine, now that world has seen what it can do, it may never go back.
