Markets and Trends

COVID-19 Response: SaaS Supports Digital Transformation

COVID-19 is forcing companies to re-evaluate their technology and processes. Explore how SaaS and cloud software is supporting digital transformation with IDC.
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Disruption comes in many forms and with variances in impact and duration. Digital transformation continues to be a major disruptive force that is accelerating with no sign of slowing. COVID-19 has certainly been a formidable global disruption that has extracted a tremendous human and economic tool. Disruptions of this magnitude expose vulnerabilities in business operations that otherwise may have lingered unaddressed.

The current pandemic has proven to be very effective at exposing vulnerabilities, most prominently in companies who remain wedded to legacy technology supporting slow, manual processes. The sudden exponential growth in remote workers has delivered the future of work today. Businesses who are further along in their digital transformation journey find themselves in a far better position to respond because digital operating models are inherently faster, more agile, and resilient, and ideally suited to changing environments.

SaaS and Cloud Software Support Digital Transformation

Investments in SaaS and cloud software in support of digital transformation deliver exceptional value during disruptive periods, enabling the business to make smoother operational transitions that would not be possible without the efficiency, scalability, and innovative capabilities of public cloud. As a result, many businesses are fast tracking their move to cloud, prioritizing investments in digital transformation initiatives designed to streamline business processes, automate whatever should be automated, and reduce technical dept. The fact is modern SaaS and cloud companies are already living in the future. Legacy technology investments have been put on hold indefinitely.

Findings from IDC research show that in some cases, employees are producing at a higher level working remotely.  As companies progress on the journey from the current crisis to a return to growth and the future enterprise, SaaS and cloud-enabled innovation provides a new playbook for turning disruption into opportunity. Case in point: a small Massachusetts municipality faced a $40 plus million cost to construct a new water treatment facility, plus regulations that would add $1 million in personnel costs, turned to technology and automation innovation. The solution was a connected, highly resilient automated facility that qualifies for a waiver from the state’s requirements. The technology allows for complete offsite monitoring of assets and water quality. Automation and other technologies save the municipality $3 million annually in personnel costs and increased efficiency.

SaaS and IaaS By the Numbers

IDC continues to track the impact of COVID-19 on IT spending.  Findings highlight the shift in IT investment priorities from legacy to digital technologies. The pandemic provides the additional impetus to engage in enterprise-wide digital transformation. Figure 1 shows the impact of Covid-19 on 2020 SaaS spending.

Figure 1. Impact on 2020 SaaS Spending

Figure 1. Impact on 2020 SaaS Spending
Source: IDC 2020 Survey. N=908

The migration from legacy business applications to SaaS creates new opportunities for transitioning from the status quo or “what is” to a new normal or “what is”.  A new generation of SaaS has emerged to take advantage of innovation accelerators like artificial intelligence and machine learning, IoT, and advanced analytics. Cloud-native SaaS applications offer superior agility and portability and are much better suited for hybrid cloud and multi-cloud deployments. Figure 2 shows the impact of COVID-19 on innovation accelerators like AI.

Figure 2. How Will Demand Change in Response to COVID-19?

Figure 2. How Will Demand Change in Response to COVID-19?
Source: IDC 2020 Survey. N=908

The coronavirus (COVID-19) pandemic is impacting the global economy at nearly every level. Anticipate market challenges, keep business moving, and forsee what recovery could look like with IDC’s extensive COVID-19 research and advice:

Frank Della Rosa is Research Vice President responsible for SaaS, Business Platforms, and Industry Cloud. Mr. Della Rosa's core research analyzes current market conditions and trends and provides strategic guidance to technology suppliers and mid-market and enterprise technology buyers. Ongoing research highlights various SaaS and cloud computing aspects, including hybrid and multi-cloud application deployments, business platforms, cloud marketplaces, buyer behavior, and global trends across vertical and functional markets.