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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

SMB SaaS adoption growth creating new services opportunities

Techaisle SMB and Midmarket SaaS adoption data comparison from 2015 to 2019, illustrates that US SMB SaaS adoption went from widespread to practically ubiquitous. In 2015, less than 60% of microbusinesses and only 62% of all US small businesses were using SaaS, though the balance reported an intent to adopt software-as-a-service. In 2019, microbusiness use of SaaS has reached 77%, and overall small business SaaS use is up more than 29% to 80% of all US firms within the 1-99 employee segment. Looked at another way, growth from 62% to 80% means that within four years, over 47% of small businesses that weren’t already using at least one SaaS service adopted the technology.

The relative increase in the midmarket is even more striking. In 2015, 83% of US firms with 100-999 employees were using SaaS; by 2019, this figure has reached 98%, meaning that 88% of the 17% of midmarket businesses that hadn’t adopted SaaS in 2015 began using SaaS in the 2016-2019-timeframe, and leaving only 2% of US midmarket businesses without any SaaS services in use.

Data gathered from Techaisle SMB and Midmarket SaaS adoption survey suggests that the immediate planned progression of SaaS portfolios will be measured in the US but not so in most other regions. European SMB SaaS adoption is still tepid at 49%, Asia/Pacific is not far behind Europe at 46%, and Latin America is still only 36%.

As is generally the case with cloud solutions, SMB buyers who have purchased or plan to acquire SaaS applications most often approach the ISV directly. While SPs/MSPs have traditionally been the most common alternative source of SaaS solutions, new SMB customers are increasingly turning to consultants – and to specialized cloud brokers – if they are not engaging directly with the ISV. The data indicates that these cloud service brokers are emerging as an important force in the SMB SaaS market.

Add-on services represent a large and essential source of revenue for SaaS suppliers; license spend represents less than 25% of total SMB customer spending, while non-license spend on services accounts for over 75% of the total. Support for analytics/dashboards and system integration are the two most widely adopted add-on services. Current SMB users are looking to invest in systems integration, sales process design, disaster recovery and deployment services, while new SaaS buyers are adding maintenance and operations, systems integration and analytics/dashboards to their new SaaS solutions. Some services are ‘stickier’ than others. Survey also found that SMBs often drop services after initial deployment is complete, but backup/DR, data cleaning, security, and analytics support are each retained by at least three-quarters of initial SMB SaaS buyers.

Stickiness, however, is mainly a function of company size. Very small (<10 employees) businesses tend to dramatically reduce annual spend after deployment, while small and mid-sized businesses report relatively flat year-over-year spending.

System configuration (including designing reports, dashboards and analytics), customization, data and/or application integration, consulting (including sales process design) and training are the top five non-license services acquired by SMBs, as measured by percentage of total services spending.

Let us drill down into services usage with the adoption of CRM.

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Techaisle survey shows Customer-focused Cloud applications top SMB SaaS list

The data contained in Techaisle’s recent detailed survey, US SMB & Midmarket SaaS Adoption Trends, covering over 2500 responses, with a margin of error of +/- 1.94% at 95% confidence level, paints a fascinating picture of the sea change that is occurring within SMBs, and which is reflected in SaaS adoption patterns.

Techaisle was the first to highlight and has very well documented the role of SaaS as a deepening force within SMBs. Latest survey builds on the argument and shows that Customer-focused SaaS applications are at the top of the SMB SaaS list with 76% of US SMBs planning to adopt one or more customer cloud applications in the next one year. This is line with the four pillars of midmarket digital transformation identified by Techaisle. Customer intimacy is one of the pillars.

The vision of customer-centric business has long been beyond most organizations’ operational capabilities (hence, customer segments rather than customer activities), but with increased data/intelligence and the vastly lower cost of processing, storage and applications afforded by cloud, it is becoming more attainable.

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SMB Cloud CRM adoption journey points to accelerated digital transformation

Techaisle’s detailed SaaS adoption survey tracked the current and planned buying journey of cloud CRM, ERP and other SaaS applications within SMBs and Midmarket firms. Cloud orchestration & digital automation have become essential ingredients for business transformation. Techaisle analyzed the extent to which use/intended use of each of these cloud applications is connected with other applications and whether they are part of a conscious effort for digital transformation. The two sets of figures below show past and planned CRM and its adjacent SaaS applications adoption journey.

The research reveals a very stark difference between the past cloud CRM adoption journey and the intended path after adopting cloud CRM for the first time. The past adoption patterns were seemingly random reacting to a specific point of pain, but planned adoption is deliberate keeping in view the business issues & IT challenges and taking giant steps towards a connected digital business.

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For SMBs Connected Cloud SaaS applications really matter

Techaisle’s upcoming detailed survey report on US SMB & Midmarket SaaS Adoption Trends shows evidence that connected cloud applications really matter for SMBs. 16% of SMBs have already connected SaaS applications across the enterprise and another 10% are on their enterprise-wide connected SaaS journey. These SMBs are getting the benefits of business growth, enterprise agility, corporate efficiency, collaboration and alignment.

Cloud is the agility platform and SaaS offers a zero-friction option for automating processes. The first entry point to cloud in many SMBs is the purchase of a specific business application by a business user. A typical example is of SMB marketing acquiring a SaaS application to help with social presence management, or sales, as is often the case, acquiring a cloud based CRM to track opportunities. Each of these disconnected siloed SaaS applications do provide real & immediate benefits in terms of enhancing individual productivity and enhancing morale and helping with recruitment of tech savvy new workers. However, where cloud starts to differentiate itself and create meaningful impact for SMBs is in connected automation across related activities and applications categories.

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