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FORUM TRANSCRIPT

Enterprise SaaS Customer Assessment & H2 2022 Budgetary Outlook

  • Public Equity
  • TMT
  • North America
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Specialist

Former executive at Futu Securities International Hong Kong Co Ltd and executive at CrowdStrike Holdings Inc

Agenda

  • Enterprise SaaS (software-as-a-service) sector customer trend analysis in a multi-vendor cloud software landscape, highlighting adoption rates
  • Customer spending and budget allocation across major ERP (enterprise resource planning), HCM (human capital management), CRM (customer relationship management) vendors and more such as Oracle (NYSE: ORCL), Salesforce (NYSE: CRM), Workday (NASDAQ: WDAY), ServiceNow (NYSE: NOW), SAP (ETR: SAP), and others
  • Key decision-making criteria across ERP and adjacent module evaluations
  • Possible spend reduction on modules during a recession and growth opportunities where customers could add value
  • Outlook for H2 2022 and beyond

Questions

Transcript

1.
What are your thoughts on the operating environment in the purchasing environment for enterprise SaaS [software-as-a-service]? What are the 2-3 most important key trends or drivers across the main module systems – ERP [enterprise resource planning], CRM [customer relationship management], HCM [human capital management] or any other relevant SaaS products – that we should pay attention to?

Specialist 1 (SP 1): The biggest drivers right now, of course, are that you see that the importance of each one of the core SaaS applications for a business, CRM, ERP and HCM, and even as you get into IT systems, they’re expanding their footprint, and there are starting to become conflicts and overlaps between the different platforms. Each one of them sees themselves as the centre of the universe and as the centre of the ecosystem for a business, and they want to be the platform that becomes the operating system for the business. The biggest trend is how do you decide which modules and which functionality are you going to use from each one of the different platforms and how are you going to integrate them together, and then how are you going to unify the data from those systems so that you can use it for decision-making and analytics to drive your business? That’s what I see is going on in the marketplace right now.

Specialist 2 (SP 2): For me, the most important is, for our company prospects, the companies I work, I work a bigger size of company, so we do look for best-in-breed and aligning our use cases. I can give you the example currently. We are a USD 2bn turnover company and we want to reach to USD 5bn, so we aligned our tools with our use cases, how we can increase our business, our revenue and how those tools can help us. We have our different use cases drive as per our business, so we are trying to align first our business requirement, our business goals with those tool procurement policies. Second, as we are bigger companies, how the integration with the other platform would work, how easy it would be and how easy we can integrate and automate end-to-end workflow for it. The third is the implementation partner’s compliances should match with our compliances, so that could take a longer time. If I like some tools and I evaluate it but their compliances don’t match with our overall compliances, we don’t buy those tools at all. For me, if you would ask, one is best-in-breed, the second is aligning your requirements over the tools that you’re buying and aligning with your mission statement, so your tool can get you the best ROI integration with other application, creating as much as automation workflow across the organisation using those tools, and third is the compliance.

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2.
If we do enter a recession or period of economic contraction, what do you think should be top-of-mind for software decision-makers? What might be the top areas where budgets are allocated over the next 12-18 months?

SP 2: First, we do look for mission-critical softwares what we are using it. As I said, if your mission policy is, if your use cases are always aligned, the tools you are buying, you know definitely why you bought that tool, so it will help you by itself. If my company goal is USD 2bn to USD 3bn in one year, I know exactly what tools can help me out, so I always point it out what are the mission-critical tools for us to achieve it to that particular goal. Our budget goes from top to down that list. The second is absolutely, when you talk about budgets, we try to see where we need the cutback. Cuts should not impact our productivity of the employees or our mission statement, so we try to align with it. I would say that when the recession is coming, the tools budget will definitely go as those two statements. One, how critical is that tool to achieve your yearly goal? Plus, you should not be impacting by cutting the tools of employees’ productivity or any other their working functional areas. Those two factors would be the key factors for you when you are cutting the budget for your tools if the recession comes.

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3.
What do you think are the most mission-critical tools that chief information officers, chief technology officers, CFOs and chief human resources officers may not want to cut back on as much during a recession in terms of their SaaS play? As you mentioned, the productivity of the tools being acquired is of high importance.

SP 1: Anything that’s used to operate the business is going to be considered critical and used to contribute to the productivity and I think particularly when it’s to do with the operations of the business. Those are going to be the applications that are going to be the last on the list to be affected. These SaaS applications, typically you have they’re priced month-to-month but they’re annual subscriptions, so a lot of people have this concept that if recession comes, we’re immediately going to cut back on our software spend. That’s not reality. Reality is you’re not going to be able to cut back for at least whatever your contract period is, and you’re not going to be able to cut back, in many cases, unless you actually reduce your headcount within your organisation. Really, the first step is you’ve got to right-size your software spend to the size of your organisation. Any of your productivity spend, anything within HCM, even within ERP and CRM, is going to be driven by your headcount, and oftentimes, or more often than not, is driven by how many user licences you have allocated within those systems. You have to right-size your organisation first, and then you can start looking at how you’re going to right-size your software. You can always go back to the software-as-a-service vendor and try to renegotiate your contract and try to reduce your cost intra-contract, but that’s not usually allowed until your contract renewal comes up. Anything that’s productivity-based, user-based and used to operate the business are probably the last things on your list to cut back.

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4.
Which applications do you work with the most today? Which have you evaluated or purchased and why? Which do you think would be the most important or essential for your organisations over the years?

SP 1: It depends upon who you talk to in the organisation. Of course, sales and marketing are always top-of-mind because those are the revenue-generators, and those tools, you could argue they’re essential to the business as you’re driving the business, but if there’s an economic contraction or there’s an economic need to cut back, that’s probably the place you would look to first. ERP is used to operate the day-to-day operations of the business and is critical to your finances, and usually there’s not an easy way to cut back on your ERP spend, because the allocation of resources and the usage of that tool is pretty much ubiquitous throughout your organisation. Then,your HCM probably is going to be directly tied to how many employees you have, so if you’re cutting back on your employees, arguably you could cut back on your HCM spend, through payroll reduction and the number of monthly users. HCM is probably another one that maybe you could slim down the number of modules you’re using, but it’s become pretty essential, particularly for larger organisations, to be able to deal with their employee experience and allow for their employees to be self-sufficient, so to speak, particularly in larger organisations. Then, for us, and I’m sure CrowdStrike is similar to us, we’re a digital business, so anything that we use to operate our digital business, all the way from software development to DevOps to security and quality assurance and deployment and IT operations and cloud operations, those are all essential things that have to operate, regardless of the economic conditions of the company.

SP 2: I do have similar. I have a Salesforce. We have an implementation of SAP going on. We are moving from Oracle NetSuite to SAP right now, and we also have a Workday, for HCM we are using it. Our Salesforce, we are a B2B, business-to-business, and B2C business, so most of the sales workflows, from marketing to converting the leads opportunity, getting the codes to a business or our customers, is all happening in Salesforce. Salesforce does have a lot of implementation done, so we have almost 100-plus employees who only look after Salesforce customisation. Saying that, Salesforce becomes a bread-and-butter for our sales-related motions, and changes are happening, so this is one the mission-critical applications for our sales, or to grow and do the business day-to-day using the Salesforce platform. I do work directly with our different sales stakeholders to get their requirement and get the automation done how we can, even aligning our different orgs and different roles, plus how we are selling a different product lines item, how we need to sell a product line item with the professional services. I work directly with it, so our sales figures are dependent on Salesforce CRM, so this one of the mission-criticals we have, and we have a pretty big, huge team who basically implement our Salesforce-related customisation. We are just not using out-of-the-box, but we are doing a lot of customisation in-house also. That second is, I talked about it, currently we are moving from Oracle NetSuite to SAP implementation. We are taking the help of Deloitte in our implementation manner, so that is another big initiative going on on a CFO level. Within a year, we are going to move our finance from NetSuite to SAP.

The reason behind, the same mission-critical statements, like how are you going to make sure your sales revenue would increase within the next few years? That said, your finance tools should be capable of running the invoices and running the revenues and revenue platforms should be data efficient to close the deals quickly for you, so your sales and finance can have more focus on more deals in a short span of time. That is an implementation we are doing. We are spending a lot of money on it, and we are looking forward to implementation to get complete, and then we want to take over of it, once Deloitte builds it, and the plan is we would have an in-house team for the customisation. Again, it will be a totally customised application, as per our company need, so it does require talent, tools and investment on it, and it will keep going. It’s not like once you build it you are done with all the expenses. You keep adding new features and you keep adding more team, so the expense grows over there. Then we have a Workday team, which basically work on our Workday-related, employee-related different functions and all. The one thing I’m not sure you are interested or not, we are also having a huge implementation for ServiceNow, where we basically use that technology service for all over the world where we have our employee base, to get them the most productivity done, give them access to different tools and getting their day-to-day problems sorted out as soon as possible. We are around 5,000 employees and we have a 24/7 support using the ServiceNow platform for our own employees, to make sure that they have access to the right system and they are really productive in the same way.

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5.
Are there any specific areas where you think decision-makers should or will look to reduce value or cut back on spending if we enter a particularly harsh recession? How much of a reduction could be possible if there is one?

SP 1: Anything that is based on user licence, your productivity suites like Microsoft 365, if you’re cutting back on your workforce, then that’s an area where you can also look to cut back. Same thing with your CRM and your CRM platform. In the areas of other areas where if there’s a reduction in usage, and particularly if you’re in the cloud, if there’s a reduction in usage of your cloud platform or your infrastructure and you start to look at how you could reduce, because the load on your environment is lowered, can you reduce your cloud spend and the infrastructure you have allocated? Those get a little bit more difficult, because there are a lot of companies got caught off-guard when the economy swung back after COVID so quickly, and they weren’t prepared. That becomes a tricky evaluation. Then, if you cut back on infrastructure, then you could start looking back, looking at cutting back on the amount you’re spending on observability tools and automation tools and things like that. You have to start with you have to actually cut back your business activities before you can really start looking at what you’re cutting back from an IT standpoint, because as long as you have those activities going on and you still have those employees engaged, you can’t cut back your licensing. That’s the way I talk about it with my executive team here, is that you can’t start talking about cutting back IT spend if you aren’t actually talking about cutting back business activity and number of users, number of employees and things like that.

Third Bridge (TB): What do you think would be reduction in spend in a worst-case scenario of a hard recession? What are your thoughts about potential spend reductions in a softer or a flat-to-declining market environment?

SP 2: I would definitely say that if the reduction happened, I don’t see the tools are the first to get cut. I think the employees get the first cut, projects gets another cut. You delay the projects from one year to another year, and until, unless you do not reduce the number of employees, you just can’t say, “I’m going to cut the CRM licences,” or, “I’m going to cut the SAP licences,” because it’s all by the number of usage. If the recessions come the hardest, the first would be the resources-wise and all, and there are other expenses they cut down, like travel expense and all those different kinds, but I don’t think that makes a big difference on those big companies. If they really want to save the money, the thing is kill the projects or postpone the project and let resources go first. Do the lay-off and then decide what is exactly needed when it comes to a tool licensing, but, as Bill also mentioned, all those tools come with a contract. It’s not middle of the year I can just go and say, “Salesforce, I don’t need those many licences any more.” Planning for a tool cut licences needs a plan. It’s not like I can wake up in the morning and decide I’m going to cut it. I need to talk to Salesforce, go through my company with the legal contract and see what has been written in the contract and how our licensing has been fulfilled over the years. Is it a usage basis totally, or it is a number of employees or do we have floating licences, or how our contract says? Either of it, on the termination and so on.

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6.
You mentioned that spending reductions for a recession is a longer, more planned-out issue overall. Do you believe companies are altering plans for (audio distorts 23.11) spend at this point in 2022? How early on are these decisions typically made, and what does the overall contract lifecycle look like?

SP 2: Honestly speaking, our budget is already decided in Q1, what would be our budget. As you know, things are changing super fast, so until, unless, as I said, our planning and budgets are given on the number of mission-critical sides, like the project or projects which has the mission-critical, which really needs to get delivered, I don’t see them get impacted, even the more the recession grows. I do see the projects which were funded six months back but it’s not mission-critical, good-to-have ones, or the projects or the tools which we were just adding more productivity, some level of it, but we can live on it and we wanted to buy on a Q3 basis, that can definitely drop off. The one existing vs the new one, the ones can get cut off would be the new ones. You have yearly budgets for different tools or different resources for each quarter-wise, which is decided on Q1, but as situation changes of the market, of course you do calculate all the risk, but the market is changing so quickly right now, so we would see that what we have planned for Q3, if it is not a mission-critical tool, we have not bought it, we are not under agreement, we are not going to get it. We can postpone it for next year until the things get better.

SP 1: I’ll just tell you, internally we’re full speed ahead at this point, but we’re being cautious. We’ve started our budget discussions for 2023 already. Typically that doesn’t start, in normal circumstances, until September, so we’re starting a couple of months earlier this year. That’s probably the biggest change that I’ve seen. There hasn’t been any discussion about, “We’re going to be making cutbacks, we need to plan 2023 for X% of reduction,” or anything like that, because we’re not seeing any impact so far. I think they want to be able to know what the budget looks like going into 2023 and just be prepared to be flexible if things were to worsen in H2 2022 going into 2023, or if H1 2023 starts to soften quite a bit. They need to know where are the places where they can cut back and what things are not adjustable? Again, most, I’d have to say 95% of our contracts are annual contracts, and so going into 2023, if we have our budget, that budget is pretty well locked-in for the year. We have to be able to know what our 2023 business activity expectations are going to be, so that makes it pretty dicey if, all of a sudden, we had a big reduction in H1 2023. We probably couldn’t make a whole lot of significant adjustments until going into 2024.

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7.
You mentioned infrastructure software, so which applications or infra vendors do you see growing most quickly within an organisation, even in just H2 2022? Could you expand on your thoughts around that sector and its growth? What might that look like?

SP 1: If a company is in the process of a digital transformation, moving to the cloud, then there’s got to be some business justification for that. The question is, is it being driven because the business needs to be more digital-native or they need to be more flexible, scalable and so forth? If those business drivers are being reduced because of a recession, as we talked about earlier, maybe you start to push out projects. Maybe you start delaying projects or you just outright cancel them for the near term and just postpone them for a year, until you see what the economy is going to do in a year. Those are the things that, like you said, if you don’t actually cut back on the business activities, either through customer activities reducing or your internal employees being cut back, there’s not an opportunity there to cut back, or there’s not much of an opportunity. I think at best, if somebody came to me and said, “I need you to cut back 10% off of your budget for next year,” I could probably do that without a whole lot of pain, but once you go beyond about a 10% cutback, you’re starting to cut into the muscle and the bone, and that’s when you start to have to make business trade-offs, saying, “What are we willing to do without?” or, “Are we actually going to cut back on user licences in these particular areas? Are we going to actually be able to reduce our IT infrastructure in the cloud because we’re expecting customer activities to cut back by 20%?” Those are the kinds of conversations you start to have.

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8.
Could you expand on what might be comprised of that hypothetical 10% cutback? You mentioned cutting the muscle and bone. Which applications or infrastructure software vendors could be first to be cut in a recessionary environment?

SP 1: For example, there may be some nice-to-have features of, let’s say, your HCM platform, or even your ERP, that you could say, “We can stop using the employee engagement module of my HCM. I can cut back on our performance-management module of our HCM,” and maybe I save 10% in our licensing by doing that. On the ERP, maybe there are some business strategy application capabilities, or maybe there are some advanced analytics capabilities, things like that. I’m just throwing those out there, but there may be some nice-to-have modules that in good economic times you can justify, but going into hard economic times they don’t have a very clear ROI, that you could say, “If we cut back on these, we could live without them for a couple years. It’s not going to really hurt us terribly and we don’t see an immediate ROI, so we could cut that back.” Those are the kinds of things that you’d look for. You’d take a really fine-toothed comb to every one of your user-licence-driven applications and make sure you’d look at usage patterns and things like that and say, “Do you really need this licence to Adobe Creative Cloud?” or Adobe Pro or even Lucidchart or Atlassian, all these different tools that people have that maybe they don’t use on a regular basis, maybe they could live without. Those are the kinds of things you can go through and just really take a fine-toothed comb and maybe cut back 10%.

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9.
What rate of IT spending from enterprises on digital transformation and cloud spending were you seeing? Could you rank the most- or least-penetrated applications by cloud adoptions across ERP, CRM, HR, payroll, accounting and DevOps tools?

SP 2: We do spend a lot on those applications, for sure. Unfortunately, I can’t tell you the exact numbers, but I can rank you. It starts with the most spend. It is going on a Workday vs Salesforce. They are almost matching in the spend-wise, and it is a good spend. It is millions-plus of spend. I cannot tell you the exact number, but I think that (inaudible 32.58) topmost, plus our ServiceNow also has a great spend. We are spending a lot on our ServiceNow also, because that provides our all-over-the-world employees productivity and makes sure our employees have all the tools access, and whatever issues they face for infrastructure tool-wise or access-wise should get resolved as soon as 24/7. In ServiceNow, not only we are spending on the tool, but we have a huge team across the world to get the team 24/7 access to all the different regions and zones around the world, so our ServiceNow spend is also a bigger one, but it also has a bigger employee spend also, or a contract to spend money for a human.

We are spending on not only the tools, but we are spending on our implementation and helping people on the same for the same tool and resolving their queries. If you were to ask me, the most expensive one is ServiceNow, including the resources we have hired to help people. Second is Salesforce and a Workday, and then on the third I would say SAP, and then fourth is we have a lot of other tools like the Jira, and then we have Copado go-live there, which we have CICD-related tools. Then we have our project-management related tools, but those are pretty much standard tools which all the different companies I come in (inaudible 34.37) sides they can have. Our bigger spends are, the first top one is ServiceNow, Salesforce, Workday and SAP are the biggest of it for the application-wise, the ones I look after and implement and I know the different spends on it.

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10.
How are you thinking about the pace of the IT digital transformation efforts on mission-critical systems in particular? Do you think decision-makers could or should look to scale back efforts there, or are they particularly insulated across the suite we just discussed?

SP 2: It is a well-thought process has been taken when we defined those bigger ones, specifically those first four or five ones. It goes to our good CTO, CIO, what tool, what we want to implement it. It’s not only our engineering team comes up and implemented ServiceNow or Salesforce, or buying our different orgs for Salesforce. We have our different orgs from Salesforce, also, but those projects are sponsored by very, very high level of the team, like on the chair members and all. I would say those are the well-thought implemented projects, and when it comes to a smaller one like DevOps, which I can make a call of USD 1m-plus, I can make a call for it and evaluate it, that is the one that can change during the time as our requirement changes, and that are more a flexible side of, and that we can even balance it out, “When is the best budget time for me to implement it?” or, “If I’m implementing, when is the best ROI I can get out of it?”

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11.
Are there any applications or projects that you would consider all but guaranteed to continue to be full steam ahead, unless we enter a particularly harsh recession? Might any applications see persistent growth, even in a recessionary environment?

SP 1: Yes, I think that anything that we’re doing around data analytics and business intelligence that contribute to us being able to make faster, better decisions for the business, those have a direct ROI, and so those are going to continue. Any other projects that are related to the CRM or ERP, that have a very clear business case with hard-dollar either savings or efficiencies that can be measured, those are other projects that I believe will continue. It’s the projects that have, what do I say? Less clear benefits or direct hard-dollar savings, those are the ones that are either going to get delayed or outright stopped, and we’ll wait and see where we are in a year or two.

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12.
What are your key decision-making criteria and priorities with cloud software? What are the main factors in a business ROI calculation? How have those shifted over the past 3-6 months, or how might they shift over the next 3-6 months?

SP 2: Right now, I don’t see our business gotten to the point where we are shifting our criteria of selecting the tools. Yes, we know the market is changing. As I said, we already have a plan for this year, and the budget has been already allocated from top priority to the lower-priority projects and the tools both. As we are moving each quarter to quarter, we basically walk through for the project readiness, like, “Are we ready to implement this project or are we ready to buy this tool, and what is the ROI?” When you talk about ROI, you are basically talking about is it ROI is a nice-to-have, or it is really returning a value? I can give you the example where I have implemented. I joined CrowdStrike in May, and they already had a tool called Copado for Salesforce CICD deployment. They had a tool for a year, but it has a big implementation roadmap, so they have not implemented those developer pipelines, which can basically increase your number of releases what you do for Salesforce and decrease the deployment time. When I joined, my first thing was, “We are spending this much of this tool, but we are not using it,” so my first thing was, “In the first three months of my joining, we are already paying for this tool. These are the different ROI we can achieve with that, including more releases, less bugs, less time to spend on delivering the new feature set, which would really help us to get more market value or sell more software for other companies.”

I have implemented that tool within two months, seen the ROI which can directly impact your revenue or productivity of employees or where you can see benefited. It’s not only to internal productivity, but you can see the benefit feature-wise as one big 360 view, where you can see, “This software I implemented is helping you to sell more in less time.” Implementing that whole CICD pipeline for the CrowdStrike for the Salesforce has given me the opportunity bring the good ROI what we are building and how we are pushing to production. That was a planning I have done and implemented. I keep looking how we can increase our ROIs. When you talk about ROIs, it has different metrics you will follow. You follow the metrics for customer satisfaction, you follow the metrics of customer requirement match, you follow the metrics of employees’ productivity. I have created an Excel sheet, and whenever I am picking up a project, I am basically selling my ideas and adoption plan using those ROI sheets, which is easy to understand and which is easy to also let us understand, knowing now those difficult times might come, is it good to have a tool or this tool can really change the whole strategy or way of working what we are doing, or it can directly show us our sales increase or our salesperson can do a lot better job? Those ROIs really help us to decide our moving factors for each quarter to quarter going on.

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13.
What systems or solutions that you work with tend to be the most difficult to rip and replace? When are point solutions at risk of being replaced by competitive vendors that have overlapping functions within their platforms? When would an ERP system potentially displace a point solution that you’re working with? Which solutions tend to be the stickiest out of those you’ve evaluated or purchased over the years?

SP 1: The big core systems to your business operations are obviously the stickiest ones. Your ERP probably the most sticky, because the implementation time frame and cost and the business risks are probably the highest of any system in your environment. For digital businesses like Mala’s and mine, the tools we use to develop our software are also very critical. Once developers get used to certain tools, it becomes part of their religion. You have to pull those tools out of their hands with crowbars, because it just becomes part of their day-to-day activities, and unless they find a tool they come across that helps them be more productive, developers, I think, have a tendency to be rather, I don’t want to say lazy, but they like to use tools that help them get their job done faster, let’s put it that way. If they can find tools to do that, they’ll adopt them, but usually the tools that they use on a day-to-day basis help them be productive and they don’t want to give those up.

Your CRM, there’s another one that becomes very much a part of the ecosystem of your business, particularly around your revenue-generation activities. Anything that the CRM platform, particularly a Salesforce type of, which literally is a platform that it seems like every six months they’re acquiring a new business that helps them to create an ecosystem or an operating system around their whole platform, so they’re looking to make their platform best-in-class across the board, not just at the core CRM or in their service modules or marketing or whatever. I would say around your ERP, the ERP platforms seem to be continually expanding their footprint, and the CRM is doing the same. Even ServiceNow is doing the same. ServiceNow is going into HR and there are all types of different service aspects for the business, and becoming an operating system platform for the business as well. Those are the three that I think have the biggest expansion opportunity to overtake some of the point solutions that in the past have been considered best-in-class.

TB: Mala, could you speak a bit about the same thing? What systems or solutions that you’ve worked with tend to be the most difficult to rip and replace? Which tools in particular have you worked with that have the best or deepest moat, or are most difficult to pull out? What factors into that calculation when you’re dealing with ERPs with broad use cases vs point solutions or when vendors have those overlapping functions? What tends to win out?

SP 2: I do think, as I said, currently I implemented now the whole deployment system. Deployment is a bread-and-butter, so now replacing Copado, which we are spending a lot of money, again, USD 1m, is not an option any more, because that becomes your key structure, how you are releasing your production. It becomes a regime that you really have to have it. One way or another way, you need to deploy. Functions, and the tools which do, I would say, your key jobs, develop and building a software and releasing the software, always stay. The tools what I see and the resources get impacted the most where you can basically change the responsibility, or say, “I do not need to spend the money, because this tool can be added into the development.” Let me give you the example. When you have a development and a QA team, and when the recession comes, you do spend money on developers’ tools and you also spend the money on QA or automation tools. I do see it, most of the organisations tell the developers, “We’re not going to have any QA tools getting automation done. You can use the same development tool for the automation, plus you can perform the basic quality operations also, and we’re going to let the QA team and tools go.” That, I have seen it really frequently, but when it comes to the developer-specific functions which help them to do their job, daily basis, that is more like a code solution, like code source, and all those different solutions are running your code. It could be via Jenkins or it could be via any other tools.

Those are difficult to cut, because those are the tools are going to make your software progress keep up to date. There could be add-ons on it which you have bought it over the time period, like a code coverage or different analytic tool. That you can let it go if you think it is getting very expensive, but, again, it’s not like overnight you can decide, “We’re not going to use the code coverage from tomorrow.” You need to come up with a plan, like if I’m replacing the code coverage tool, if I’m going to use any open-source tool, or how we are making sure that what tools we are taking off from a development productivity box can be replaced with the cheaper or free options, so you do need to plan for it. That comes to a development tool, and I did talk about the QA tools, which can be replaceable and which you can let go, saying, “We not require this much of testing. Our developer can do the testing and they can use the same tool as a developer tools box. For the automation, we do not require a separate team or separate testers for the same.” That comes to a development part, but when it comes to big softwares, where you have spent millions of dollars and you have a lot of customisation done, where you have a direct customer impact, it is not going to be easy to replace, even during the recession, until, unless you know that it is not going to impact your reputation or a business directly.

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14.
Do you think cloud software customers should or will likely have new priorities over the next 12 months, based on 2023 trends? Do you think anything could be viewed more favourably when assessing 2023 budgets, based on any specific 2022 trends that we’re monitoring?

SP 1: That’s a good question. I think what is unpredictable right now is where the business contraction is going to be. Are customers going to increasingly increase their usage of digital solutions because it’s more efficient, it prevents them from having to drive them as much, or is it going to be in the service economy and people stop travelling and they stop going to restaurants and things like that? That’s the unpredictable part of where the economy is headed. I think it’s going to be the COVID effect in the economy, where people became more dependent upon digital services. I think that the effect that COVID had on many businesses was an increased and immediate increase in investment in digitalisation and digital tooling. I think that’s going to continue. I think that’s where companies need to continue to invest and they’ll see a benefit, and they’ll come out of the economic downturn in a better position. I think that’s where businesses are going to continue to invest, and if they’re transforming to the cloud, they’re probably going to continue to invest in those areas so they continue to shore up their business and be prepared for the digital future.

SP 2: Definitely, like what Bill says, that now we’ve become a remote-first company after COVID and how we are now operating, delivering and how we are engaging our customers, that has been pretty much changed before COVID and after COVID era. Knowing those new customers’ requirements, knowing you have a bigger market and different diversity in employees, though also in customers too, so balancing out those diversities plus your deliverable would decide the key strategy, how it would be for 2023 spending. Where you want to spend, what would be your key metrics which you want to analyse, what your whole platform goal would be to achieve your mission-critical statements. For my company, we don’t even want to be come a USD 5bn revenue company, but also we want a customer-first, give us a customer-first experience. Having said that, aligning your tools, your requirements and your projects to those mission-critical statements would change your strategy how you are today operating as compared to 2023, now knowing we have a recession also coming. You also have a customer now who has budget cuts for your tools and all, so how would you make sure, knowing those uncertainties, you are still able to achieve your sales goals, your customer experience goals? Those kinds would be the key factors to let you decide and drive your 2023 budgets and 2023 plan.

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15.
Are there any key areas of software spend that you think have an opportunity to expand and grow in terms of adoption among large customers? What do you think should be the highest priority for software spend for an enterprise setting a budget for 2023?

SP 1: That’s a great question. It largely is dependent upon where the company is in their digital transformation. If they’ve limped through the whole COVID effect and they’re still early in their digital transformation, I think that they’re going to find themselves in a spot where they’re just going to have to delay that transformation because they don’t have the capital resources to invest, and they’re just going to have to ride it out. If there are other companies that are further along that transition, they’re going to continue to invest and maybe even increase their investment to accelerate that transition, because the business benefits and the paybacks are clear once they make that transition. Any kind of transformation where they’re moving whether it’s their ERP or CRM or HCM or even their applications to the cloud, I think you’re going to see a continued acceleration in those areas and I think there’s going to be more investment. Certainly, security is going to continue to be solid, and I think, as Mala mentioned, the ability to invest in digital transformation around deployment and DevOps, that is going to continue as well, because there are productivity benefits of doing that.

SP 2: Definitely the first thing is how quick and in a good-quality product you can take it to the production, and how you can satisfy your customer or your internal users’ need would be the highest spend your money would go, which would align your clear line with what your company wants to achieve. How the software would help you to take you through that journey would be the first preferable software to buy and easy to convince to all the board members that this software would help you to take your company from one level to another level, would be the one you need to spend money. That (audio distorts 57.57) into different categories. It gets into development, deployment, customer experience, aligning across the regions, different countries if you are doing the business, bringing the unified platform for everyone, bringing the transparency on the table, bringing the world best customer experience to your end users. Providing them a different way of communication, like using the chat, using the e-mail and making sure you have the best platform, not only for your internal employees but for your customers also, would be the softwares that will take over the most of the budgets.

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