One question that continues to loom large over the enterprise software world is if Covid-era inflections will sustain. Have companies and individuals developed new Covid-driven habits and software adoption that’s semi-permanent? We’ve been asking this question since the start of the pandemic.
A subset of this broader question is how the SMB SaaS world will fare in a post-Covid world. Like the broader enterprise software and SaaS universe, the SMB subset that Localogy tracks has experienced a healthy dose of that overused (but accurate) catchphrase: accelerated digital transformation.
But that transformation is happening in some areas of SMB SaaS more than others. How are SMBs adopting digital tools for everything from CRM to payroll to eCommerce? And how are they buying software these days: a traditional high-touch sale or streamlined self-service?
With these questions in mind, Localogy went searching for answers. Many of these questions were baked into the latest wave of the firm’s flagship Modern Commerce Monitor SMB survey series. Now in Wave 6.1, what does the report’s Fall Update uncover? Let’s dive into a few highlights and insights.
Covid-Aligned
Starting at a high level, it’s worth noting that 85 percent of U.S. SMBs now use online services in some way for marketing or business operations. That’s a 143% compound annual growth rate from 2017. But the pace of growth within Covid-aligned years (2020 and 2021) over-indexes at 154%.
The areas SMBs have adopted include finance and operations, sales & marketing, and CRM software. Further down the list, but still seeing healthy growth, are supply chain and payroll/HR. There’s also clear growth in mobile app usage in all these categories, now at 74% penetration.
Panning back, there’s also growth in the number of total apps that businesses use. This again shows a clear correlation to Covid-aligned years, with the greatest growth happening in 2020 and 2021. Specifically, the average number of software products SMBs use is now 6.8, up from 5.1 in January 2020.
As for the reasons for all of the above adoption, SMBs predominantly state (72%) that time savings is the biggest adoption driver. That’s followed by feature sets that exceed previous tools, mobile access, and cost. Surprisingly cost is lower on the list, indicating SMBs’ priorities in the current environment.
In the same way, it’s notable that saving time is such a dominant adoption driver. That’s always been the case for time-starved SMBs, but has taken on new meaning in the Covid era when the ground has shifted under them. This response (again, 72%) is up from 51% in February 2021 and 39% in January 2020.
Localogy members can access full charts and SMB survey reports. Non-members can purchase reports.
Aspirational Analysis
Back to the question of the post-Covid world, the above sentiments represent SMBs’ current thinking as the world still has one foot in a pandemic (geography-dependent). But what other signals indicate their adoption aspirations as we move into 2022. Will things go back to pre-Covid levels?
The answer so far appears to be no. Specifically, 45 percent of non-SMB-SaaS users plan to adopt in the future. More to the point, 65 percent of users (those represented in many of the above data) plan to purchase more services in the future. This means Covid-era SaaS levels won’t just sustain but grow.
Drilling down to areas of future adoption, they map to the above areas of current adoption, with some deviation. Finance and operations lead the way, followed by supply chain software, CRM, payroll & HR and advertising and marketing. Fintech appears to be the big winner in current and aspirational adoption.
As for more precise timing than “in the future,” the biggest response among SMBs (45%) was adoption within 6 months. Timeframes then trail off, correlated to time-decay. Specifically, 25% of SMBs plan to adopt online services in the next 6-12 months, 20% within 1-2 years, and 10 percent beyond two years.
For deeper analysis and figures, check out the full report. And stay tuned for more tidbits we’ll examine over time here on Localogy Insider…
Localogy members can access full charts and SMB survey reports. Non-members can purchase reports.
