Eric Tan is Senior Vice President, IT and Business Services Coupa, a senior business expense management manager and a former battery portfolio company.
Scott Göring is VP of Business Development at Battery Ventures .
Since the pandemic hit the US in full force last March, the B2B tech community has been asking the same questions over and over again: Are companies spending more on technology? What is the money spent on? Is the sales cycle faster? Which trends are expected to have an impact by 2021?
Recently we decided to team up to answer these questions. We analyzed data from the recently released Q4 2020 Outlook of the Coupa Business Spend Index (BSI), a leading indicator of economic growth, against the backdrop of hundreds of conversations we had with business tech buyers this year.
Coupa, a former Battery Ventures portfolio company, is a business expense management company that has cumulatively processed more than $ 2 trillion in business expenses. This perspective provides Coupa with unique real-time insights into technology spending trends across industries.
Tech spending continues despite the economic recession – which explains why many startups are doing big rounds and are even tapping into the public markets for capital.
By and large, tech spending continues despite the economic recession – which explains why many tech startups are launching large rounds of funding and even tapping into the public markets for capital. Here are our three specific takeaways on current tech issues:
Spending is shifting from remote collaboration to SaaS and cloud computing
Tech issues are one of the hottest boardroom topics today. Decisions that were previously limited to the organization of the CIO are now operationally and strategically critical for the CEO. Several reasons are driving this shift, but the pandemic has forced companies to act differently and connect with customers almost overnight. The Boards recognize that companies must change their business models and processes if they are not to become obsolete. The question everyone is asking is no longer, "What is our technology investment?" but "how fast can they happen?"
Spending on WFH / remote collaboration tools largely ran its course in the first wave of adjustments forced by the pandemic. Now we are seeing a second wave of technology spending, where companies are using technology to make things easier and just keep their doors open.
SaaS solutions replace unsustainable manual processes. Consider Rhode Island's decision to move from in-person polling to using SurveyMonkey. Many companies are shifting their supplier payments to digital payments and foregoing paper checks entirely. The utility PG&E is accelerating its roadmap for digital transformation from five to two years.
The second wave of adjustments also prompted many companies to join the cloud, as this graphic shows:
Similarly, the difficulty of maintaining a traditional data center during a pandemic has led many companies to make the permanent switch to cloud infrastructure under COVID. As they migrate that workload to the cloud, the cake is still growing. Data from Goldman Sachs and Battery Ventures suggests the $ 600 billion disruption potential will bleed out by 2021 and beyond.
In addition to adopting SaaS and the cloud, companies in various industries are investing in technology to reduce their dependence on people. For example Tyson Foods invests in and accelerates the adoption of automated poultry, pork and beef processing technologies.
All companies are now digital products companies
You mention "Digital Product Company" in the past and we all think of Netflix. Now every company has to imagine offering digital products in a meaningful way.