Do SaaS Businesses Thrive or Dive When the World Goes Remote?

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As the world witnessed in early 2020, change can happen fast. Business sentiment mirrors these changes, causing the stock market to make wide swings in response.

On March 9 in the U.S., the Dow Jones Industrial Average (DJIA) fell 2,013.76 points—the worst single-day drop in history. But the plunge wasn’t over. It fell 2,352.6 points three days later, and then 2,997.1 points on March 16.

The 12.93% plunge in March 2020 surpassed the Black Monday crash in 1929 that triggered the Great Depression.

The stock market then underwent somewhat of an uncertain recovery. Wall Street decided to move on a different trajectory than Main Street.

What does this mean for the business ecosystem?

Uncertainty.

Some industries are being hit harder than others, with public-facing businesses such as restaurants and retail stores taking a tremendous blow. The impact is expected to go beyond the crisis as the economy will likely struggle long after businesses are able to reopen.

According to Gregory Daco, chief U.S. economist of Oxford Economics, between 8 to 10 million businesses may shut doors, beyond those that were ordered to close.

In the midst of bleak predictions though, some businesses such as a number of software as a service (SaaS) companies are actually seeing a surge in growth. In addition to their mostly cloud-based, virtual delivery models, the recurring revenue structure keeps them in a much more business-as-usual position. And for some, a massive increase in demand doesn’t hurt either.

Abrupt work and life changes foster the need for SaaS solutions

Technology really facilitates our ability to stay connected with the world, especially while exercising stay-at-home orders. From remote work to distance learning, and even touching base with family and friends, the internet and a variety of SaaS products help bridge the physical divide.

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Here are four different ways SaaS businesses keep us connected when the world goes remote.

1. Telecommuting is supported by strong cloud-based infrastructure

Around the world, the face of the workforce transformed within weeks when millions of people suddenly transitioned to telecommuting, or working from home due to the novel coronavirus.

How many people exactly? Official data is being gathered, but Global Workplace Analytics (GWA) estimates 56% of U.S. workers—up to 75 million people—have a job that could at least be partially done at home. It’s a likely assumption that employees who can work remotely are doing so.

Communication

One of the most widely publicized SaaS success stories is the uptick in Zoom subscriptions, as individuals and businesses started using the video communications app to stay in touch. In 2019, the average stock price was at 80.24. On April 23, 2020, the conferencing provider hit a stock price high of 169.09.

It isn’t just Zoom that rose to the top at the outset of the pandemic. Microsoft Teams, another popular conferencing app, saw an increase of 12 million users, from March 11 to March 18.

Customer management

Workers suddenly thrust into the work-from-home environment have leaned heavily on tools they can access remotely, such as customer relationship management (CRM) software. Salesforce, for example, has been around for more than two decades and has soldiered through two recessions.

On Feb. 25, 2020, Salesforce CEO Marc Benioff addressed the company’s durability in its recent earnings call.

“Now as we look at navigating a biological crisis when we started Salesforce, Parker [Harris] and I really built a business model that was designed to transcend these situations so that we would have durable growth over time regardless of the crises,” he said.

Even as stocks were slipping in the volatile market, Salesforce rises to the top by pledging to workers that there will be no layoffs for three months, noting workers’ importance in their local economies.

Work collaboration

In its first four-plus years of existence, SaaS business Slack managed to grow its customer base to 1 million users. After stay-at-home orders were implemented across the world, its user base skyrocketed to 10 million on March 10, 2020, and then to 12.5 million on March 25.

In a video chat with MarketWatch, Slack CEO Scott Butterfield noted that March 9 was the most productive in the history of the SaaS business.

“Everything I was trying to accomplish as CEO in a cultural work sense, the efficacy of communication, was happening,” he said.

2. Education continues with teachers connecting with students remotely

Social distancing rules to minimize COVID-19 exposure shut down school around the world. Although many educators initially thought the closings would only last a couple of weeks, many schools have now elected to remain closed through the end of the 2019-20 school year.

In response, an abundance of SaaS companies stepped up to facilitate better communication between teachers and their students. Many are also offering free opportunities for educators.

Adobe, for example, is offering a free 90-day trial to Adobe Connect, its conferencing software, as well as expanding its Creative Cloud availability to customers in the education field. In a report on April 15, 2020, Adobe’s stocks gained 9.13% in one week.

Vidyo is a SaaS product that offers many educational solutions, including virtual field trips. Since the COVID-19 outbreak, Vidyo is offering temporary licenses for organizations. Its user base is growing with license fees being waived, while stock prices for Enghouse Systems Limited—its parent company—increased from 24.47 on April 15, 2019 to 33.20 a year later.

3. Entertainment fends off boredom with streaming services and online resources

In the early days when the Coronavirus raced across the United States—requiring youngsters and their families to shelter in place—a ray of sunshine burst forth from the streaming service Disney Plus. The eagerly-awaited home release of Frozen 2 was being pushed up.

Indeed, the Disney enterprise has done extraordinarily well with families being confined to their houses. In early April 2020, Disney Plus had more than 50 million subscribers—nearly doubling the 26.5 subscribers it had two months prior.

It wasn’t the only steaming service that doubled its viewership. Netflix also added 15.77 million new users, more than doubling its subscribers in a three-month period.

And while music streaming services have taken an overall hit—largely because people aren’t commuting to work right now—a survey by Nielson Music / MRC Data reports 38% of respondents have added music streaming services to spice up their day.

The report continues: of those who’ve signed up for an entertainment subscription service, 79% plan to continue paying for the subscription after the pandemic ends.

4. Telemedicine connects doctors and patients

For the millions of people who would normally visit their physician for a minor injury or ailment, the pandemic has made them rethink their options. Telehealth options are expanding, not only for businesses that specialize in telemedicine, but also for SaaS businesses that support local offices switching to a virtual format.

Teladoc Health, for example, announced on April 14, 2020, that it facilitates over 20,000 visits a day, which has more than doubled the number of daily visits seen early in the previous month. Subsequently, it predicted its 2020 Q1 revenue to be between $180-181 million, versus $129 million the previous year.

Not all SaaS news is good news

Of course, while SaaS businesses jump to the forefront in response to global crises, it’s important to remember there are entities that look to take advantage of increased SaaS technology usage trends in a negative way.

For example, since Zoom’s 2020 usage spike, security concerns have emerged. Cyble—a cybersecurity business—announced a half-million Zoom users had their data compromised, with their passwords being sold on the ‘dark web.’ However, it doesn’t appear the business was hacked, but that hackers were recycling username and password combinations from previous hacks to try on Zoom.

It’s critical for SaaS companies to keep security measures at the forefront of any growth. It may be tempting to cut corners to expedite user acquisition, but forward-thinking businesses need to take precautions to keep things secure, now and in the future.

Future SaaS trends in the post-pandemic era

Just as nobody really knew what to expect when the novel coronavirus was declared a pandemic, nobody can predict what happens when the world eventually finds a new normal—or when any other challenges arise. However, many businesses anticipate more people will be able to work from home in the future.

In an interview with CNBC, president of GWA Kate Lister said, “The coronavirus is going to be a tipping point. We plodded along at about 10% growth a year for the last 10 years, but I foresee that this is going to really accelerate the trend.”

In the recent Microsoft Q3 earnings call, CEO Satya Nadella said that the world was thrust into “a world of remote everything.”

Nadella continued the call by saying:


“As COVID-19 impacts every aspect of our work and life, we have seen two years’ worth of digital transformation in two months.

From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security, we are working alongside customers every day to help them stay open for business in a world of remote everything.

There is both immediate surge demand, and systemic, structural changes across all of our solution areas that will define the way we live and work going forward.”

To this end, businesses are starting to eye strengthening the infrastructure with a longer-reaching 5G network, which can support further growth and development. The push to improve 5G capabilities is mirrored by a March survey by Sitetracker that 44% of internet carriers believe the pandemic will increase the need for a stronger infrastructure.

The 2020 pandemic restructured the focus for people across the globe. They realize the importance of being able to shelter in place when needed and will continue to rely on strong SaaS businesses to help them adapt to the ‘new normal’ and a competitive edge.

Yet, at the same time, the digital transformation enabled by these solutions will support economic stability by helping to keep business as usual, now and in the future.

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Tags: SaaS Subscription Business

Mariah Patterson

Mariah Patterson is a former journalist with diverse writing interests. As a regular writer on the Fusebill blog, Mariah taps into the years of combined knowledge of the subject matter experts at Fusebill. She loves to highlight ways to improve business efficiency in the SaaS and subscription business worlds. Enjoying fiction and nonfiction alike, she has published a children’s book and will be publishing her first novel later this year. Mariah lives in Maine and captures her family’s exploits in her blog.

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