Covid impact on software industry

How has COVID Impacted the SaaS Industry?

There’s no denying that the coronavirus pandemic has affected the UK economy. In early October 2020, IBISWorld (1) reported that:

  • In a best-case scenario forecast, construction output in the UK is expected to fall by 25% in 2020
  • During the height of the coronavirus outbreak, every major UK carmaker suspended or cut production
  • The global collapse in air travel led British Airways to announce that it will retire all of its Boeing 747 fleet 
  • TV, print, radio and cinema advertising expenditure fell by 48% between the start of lockdown and June
  • 59% more restaurants and dining outlets had closed by the start of August 2020 than the whole of 2019
  • Cineworld announced the temporary closure of all of its UK cinemas putting over 5,500 jobs at risk
Software as a service (SaaS) industry and Covid-19 in the UK

But what about the SaaS (Software as a Service) industry? Between 2016 and 2019 the only way was up, with funding for European SaaS companies rising from $2 billion to $5 billion. (2) Would COVID-19 de-rail this phenomenal rise? Let’s find out.


SaaS in lockdown 

As the pandemic took hold of the nation, working from home in virtual offices drove the demand for digital solutions. With business functions such as face-to-face sales no longer possible, teams adapted to the new normal by moving online. This new system of remote sales meetings via video calls, also known as digital prospecting, has the added benefits of being both time-saving and cost-saving.

As a result, SaaS companies such as Zoom Video Communications and cloud communications platform Twilio reaped the financial rewards. Speaking to Sifted, Ricardo Sequerra, partner at Berlin-based Point Nine Capital said, “You have industries like travel, automotive, restaurants, that have been down 40-90% on the stock market. And then on the other end – SaaS stocks keep skyrocketing.” (2) 

It’s easy to see the attraction of SaaS in a time of COVID. SaaS products are:

  • Deployed instantly without the need for physical distribution
  • Cost-saving thanks to the monthly/annual subscription model
  • Cloud-based eliminating the need for physical storage space
  • Suitable for multiple remote users across the globe
  • Secure with robust data backups and recovery 
  • Easily adaptable to meet changing business requirements

That’s not to say that some elements of the SaaS industry weren’t negatively affected by lockdown. With offices closing across the land and many companies feeling the financial crunch themselves, some customers requested discounts or deferred payments, and an average of 11% of software subscriptions were cancelled or put on hold as SaaS spend fell by an average of 4%. (3)

Corona virus (covid) alert on website. Saas industry.

SaaS in the new normal

As lockdown continued and companies evolved their remote working practices, the use of SaaS tools grew by 17% in May 2020. As it became evident that COVID restrictions weren’t changing any time soon, many companies opted for cost-saving annual SaaS subscriptions rather than monthly subscriptions, which led to a 25% increase in SaaS spend. This growth continued into June 2020 with SaaS tool use increasing by a further 22% and a 16% rise in SaaS spend. (3)

SaaS in the future

All the signs suggest that the SaaS industry is nothing if not resilient. Speaking in early October 2020, Philippe Botteri, a leading SaaS investor at Accel, wrote: “All the traffic lights are green for the SaaS ecosystem.” (4)

One of the reasons for this optimism is the agile and flexible nature of the SaaS subscription model. Businesses who respond to changing customer needs (such as letting customers temporarily suspend subscriptions) build trust with their customers, grow at three times the rate of those that aren’t flexible, and retain one out of every six customers who are considering cancelling. (5) 

Another reason is the remote work revolution. Nine in ten people who worked from home during lockdown want to continue doing so in some form, and one in three not working from home would change roles or employees in order to do so. (6)

Even when things return to (some sort of) normal, 50% more employers will partially rely on a remote workforce than before the pandemic. (7) Twitter went one step further in May 2020 and announced that their employees will be allowed to work from home ‘forever’. (8) 

A Statista survey released in June 2020 about the impact of the coronavirus outbreak on companies’ SaaS spending worldwide found that over 50% of companies will continue or increase their current Saas spend:

  • 20.5% of respondents reported less than a 10% decrease in SaaS spend
  • 22.5% saw no change in SaaS spend
  • 30.4% saw an increase in SaaS spend ranging between 1% and 20%

So with SaaS use undoubtedly on the rise, what are the software as a service products to look out for in 2020 and beyond?

Covid-19 app and SaaS (software as a service)

Here’s a breakdown of the fastest-growing SaaS software trends based on traffic data analysed by TrustRadius, a review site for software & service companies. (9) As you can imagine, the majority are tools designed to make it easier to work from home – and communicate with friends and family – as the pandemic continues. 

  • Telehealth Software
  • Electronic Signature Software
  • Web Conferencing Software
  • Antivirus Protection Software
  • Remote Desktop Software
  • Video Platform Software
  • Webinar Software
  • Web Portal Software
  • Live Chat Software

For a deeper dive into what’s hot or not in the world of software, check out our countdown of the SaaS trends for 2020.

Your SaaS requirements

If you’re considering introducing SaaS products into your business, here’s our quick reminder of the benefits of using SaaS.

And if you’re interested in custom software unique to your brand, our team specialise in SaaS solutions tailored to your exact requirements and specification. To find out more, get in touch.











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