Collaboration and productivity software companies enjoyed specialties as many companies scrambled to enter the remote work system amid COVID-19. In the process, collaboration and productivity software startups armed with SaaS models such as Zoom and Notion emerged as heavy-weight tech companies, and venture investment companies (VCs) flocked to various promising B2B SaaS startups in each field.
However, due to the recent economic contraction, there are signs of change in the collaboration and productivity B2B SaaS market.
In particular, as companies try to tighten their belts, SaaS purchase patterns are also changing their focus from the so-called Best of Breeds, in which http://54.254.57.212/wp-content/uploads/2023/07/twx33i9v6eu-1.jpgs choose what they like, to SaaS, which has a platform character that can use several functions at once.
This can also be a big variable for changes in the industry’s situation. Some predict that if platform purchases increase, big tech companies such as Microsoft and Google could have greater market dominance than B2B SaaS startups that have focused on specific functions.
SaaS prospects will be tested for growth amid economic contraction
Recently, Business Insider also dealt with this and mentioned productivity software B2B SaaS startup Notion a lot.
Notion has rapidly emerged as a company that is drawing attention in the collaboration and productivity software market in the COVID-19 situation. By advocating an all-in-one workplace that combines memos, documents, project management, and collaboration functions, Notion quickly penetrated not only tech companies, but also venture investment companies (VCs) and TikTok influencers.
As Notion grew its presence, some companies followed suit, including software giant Microsoft. In November last year, Microsoft unveiled a loop similar to a Notion on its flagship B2B SaaS platform Microsoft 365.
Microsoft 365 includes business tools such as Word and Excel, as well as communication service Teams. Microsoft 365 paid subscribers will be able to use a loop similar to Notion without paying additional costs.
In fact, it is not surprising that the number of metoo strategies that follow similarly among existing companies when startups with products that look like something are rapidly emerging. It happens from time to time in the world of business. In addition, the strategy in which a large company imitates a small company sometimes ends without surprisingly making a big change.
Nevertheless, the reason why Microsoft’s move is drawing attention is because there is an analysis that companies’ SaaS purchase patterns are changing to put more weight on platforms that provide multiple functions at once amid the economic downturn.
According to Business Insider, some analysts believe that the tools provided by small companies could be targeted first as companies cut IT-related spending. B2B SaaS, such as Asana, Notion, and Smart Sheet, is more used on a team basis than on a company-wide basis. As a result, there is a view that the burden of stopping the use from the perspective of companies may be less.
It is rumored that some SaaS startups that focus on specific areas have also begun to cut their jobs. In the process, more and more B2B SaaS companies, which have slowed down in growth, may be handed over to large companies. B2B SaaS startups, which explore new gaps or automate processes where people collaborate asynchronously, are still evaluated to have growth potential, but the barriers to entry for success still seem to be increasing.
B2B SaaS companies should also expand
With the external environment changing, promising B2B SaaS startups in the productivity and collaboration fields are also changing their strategies to provide as many products as possible.
Notion is also visualizing its expansion to cope with possible variables such as Microsoft’s release of loops. Notion acquired Cron, a calendar app, in June, and in early July, it also acquired a Flowdash team that allows companies to develop custom solutions.
Zoom, a cloud-based video conferencing service, is also speeding up its expansion to cloud phone services, contact center services, and app stores in consideration of the weakening of the COVID-19 pandemic special. Product expansion seems to be a necessary step in reality because listed companies such as Zoom also have the burden of meeting investors’ expectations for growth.
However, it can be harder than you think to evolve from providing a single feature to a multifunctional platform. Being good at one thing doesn’t mean you can be good at other things. There are already many cases in which they have expanded to the other side after preoccupying a specific field but have not achieved meaningful results.
Considering this, M&A may be a realistic strategy in a sense rather than independent expansion. Slack is a case in point. Slack sold the company to Salesforce, a large B2B SaaS company with integrated platform power, for $27.7 billion in 2020. Salesforce, which has acquired Slack, will be able to fill the disappointing part of Microsoft’s high competition for B2B SaaS dominance.
Looking at the recent movement of B2B SaaS companies in the productivity and collaboration field, it is noticeable that some large-scale companies are trying to expand their product lineup. Looking at the current atmosphere where interest in integration and platforms has grown relatively, large and small M&As are likely to increase. In this process, it is also noteworthy how the B2B SaaS industry will change.
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by Sasquachi
