Q1 2021: A closer look at remote work solutions

One trend that has particularly taken off owing to the pandemic is cloud-based solutions. Slack alone has seen huge uptake, and this is demonstrated by the growth in messages in its Slack Connect service. Working at home for extended periods has not only made this essential, but it has also reinforced the effectiveness of such systems. “Yes, Zoom has definitely benefited from the pandemic, but every single cloud platform, whether it’s Microsoft or Cisco or RingCentral, has basically seen enormous growth. I believe that this growth is here to stay because what it has done is it has changed perceptions about the cloud, about reliability, and also about remote working in general,” explained a former head at Zoom Video Communications Inc. And as a former manager at Smartsheet noted, for communication technology the TAM is “astronomical”. It simply covers so many types of work: “All these competitors are in the space of working together. ‘Are you doing work?’ ‘Yes.’ ‘Are you trying to collaborate?’” 

But it is questionable how much of this will churn in future. As we heard from the former Zoom executive: “[Zoom] said about 60% of their incremental growth during that quarter came from monthly contracts. What that tells you is that a lot of that growth is from companies who are looking at this as a short-term necessity rather than a long-term strategic play.” However, they also noted that working from home part time was becoming much more acceptable. “Overall, I would say, at the very least, I expect about half of the growth that has come in, especially from the small and medium business, to be at risk of churn, because that’s where most of these monthly contracts are coming in from.”

A major development within the workforce collaboration space has been Salesforce’s acquisition of Slack. The USD 27.7bn deal, announced late last year, is the largest merger within the software industry in the past two years. At its investor day in 2020, Salesforce set a USD 4bn revenue target for Slack for the next five years, which would mean achieving a CAGR of 35%. A former senior account executive from Slack Technologies was positive this could be achieved: “At the growth rate that they’ve been at, 50-55% YoY, if they were to continue with that growth rate for the next few years, then they would be at USD 4bn in five years. Obviously, every company starts to plateau a little bit, they’re not going to grow at 50% every year, so the question is, will Salesforce help them maintain that growth rate? My notion, for at least the next couple of years, is yes, they will, because they’re going to make these introductions.”

The same specialist highlighted some of the upsides of this deal for Slack. The “biggest elephant in the room”, they believe, is the fact that the platform isn’t widely understood. “They don’t know why it’s so different from other solutions out there, specifically Microsoft Teams, and so this helps Slack get their story to the right executives at the companies that already have Slack within their tech stack.” Meanwhile, Salesforce could become more “nimble”. Whereas Slack releases new products daily, Salesforce is on a quarterly basis. “By bringing this culture into their group and hopefully weaving Quip and Slack together more tightly, they can then accelerate how they release products and how their customer experience works for them.” 

Moreover, according to a former VP from Salesforce.com Inc, this could position Salesforce and Slack better against Microsoft Teams. “I think Microsoft – and in my opinion, this harms Slack a little bit – has the ability to bundle Teams in with their other office productivity products as well as their CRM [customer relationship management] and their ERP [enterprise resource planning]… I think that’s where Slack may have been running into some headwinds as far as being a standalone competitor in that space.”

There are myriad other companies within this space. Another notable player is Smartsheet, which the former manager explained is less about project management and more about collaboration. “If you ask me what they do, they are trying to get out of the stigma of Excel on steroids, but frankly, it was a very sophisticated, collaborative project management software.” They also compared its strategy to Salesforce: “The goal is to be embedded, no different than a Salesforce… Most companies, you get to a  point where you literally cannot run the business without Salesforce, if you have a sales team. You need the CRM. Smartsheet, I think, their effort is to tether their way or create little routes or connectors into everything. They want to sink their fingernails, if you will, into every aspect of the business.” The company connects with myriad other services, including Jira and Slack.

Numerous companies are creating solutions to support remote work collaboration – and it is apparent that COVID-19 has been propelling innovation in this sector. As the world shifts to a new normal, and working remotely becomes normalised, demand for these platforms is expected to remain strong.