The market landscape has been shifting rapidly due to COVID-19. Experts say the business ecosystem will be totally different before and after COVID-19.A Gartner survey revealed that 74% of companies intend to shift some employees to remote work permanently post-COVID-19.In 2021, companies with online channels will outperform in revenue companies without them by 30%.In 2020, worldwide IT spending shows a minus growth rate, but the virtual communication solution market is growing rapidly.
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This Month’s Newsletter COVID-19 Induced Downturn Will Disrupt SaaS Pricing Models
SaaS(Software as a Service) has become a popular option for enterprise applications. SaaS is a cloud-based software distribution model available to customers on-demand. Since it is subscription-based, you don’t need to pay upfront for installation or maintenance, reducing enterprises’ capital expenditures.
But as Gartner points out in this report, “SaaS has not delivered on all the promises of cloud computing — predominantly price elasticity — as the leading SaaS vendors have promoted subscription pricing requiring commitments.” According to Gartner, most SaaS deals require a commitment, and the "default" is three years.
Due to COVID-19, we believe that commitment-free SaaS can emerge. Gartner predicts, “By 2021, 50% of the top 20 SaaS providers (by revenue) will offer consumption-based SaaS pricing options as standard.” Large cloud IaaS providers can lead this disruption with SaaS marketplaces.
Advice for the CIOs? “Use the economic downturn resulting from COVID-19 to align costs with consumption, and use more flexible consumption and payment options for SaaS.” The report further suggests maximizing cloud benefits by shifting to dynamic budgeting cycles that include appropriate payment models. Read more about their specific advice in the full report.
This doesn’t only apply to your SaaS subscription - you can optimize your infrastructure costs and balance operational and financial control. We can assist you! Check out our FinOps offerings and contact us for additional information.
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Gartner, COVID-19-Induced Downturn Will Disrupt SaaS Pricing Models, 6 May 2020, David Smith, Jo Liversidge
Gartner, Magic Quadrant for Public Cloud Infrastructure Professional and Managed Services, Worldwide, 4 May 2020, Craig Lowery, To Chee Eng, Scot MacLellan, Ross Winser, Brandon Medford GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.This graphic was published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. The Gartner document is available upon request from Bespin Global.
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