New Data on How COVID-19 Will Impact B2B Tech Spending

June 8th, 2020

**Updated on June 8, 2020

Over the last 3 months, we’ve provided our community with a market-level view of how businesses are adjusting their tech spending practices to adapt to the COVID-19 pandemic and economy. In March we saw a rapid increase in spending as companies shifted to largely remote workforces overnight. After that transition, many businesses expected to reduce spending in Q2 to cope with a frozen economy. 

Now, the main business strategy question is how organizations should return to workplaces and how the economy should reopen. Businesses are forecasting expenses for the rest of 2020 with these two primary considerations in mind. 

We re-surveyed our audience of software buyers on May 27 to see how they are forecasting the next two quarters. After a whirlwind 3 months of instability, uncertainty, and fear, it appears spending forecasts are finally stabilizing.


Buyers' expected change in software spend, over time

Understanding the Stabilizing Software Market

For the first time in the COVID-19 pandemic, the near majority of our audience isn’t expecting changes in their software spend in the near future. This change reflects a market stabilization after the pandemic threw the world into chaos.

Now, businesses are looking towards their long-term stability in the “new normal.” They are making software buying decisions to facilitate continuity and growth. We asked our community about these issues to see how spending as well as other aspects of B2B buying decisions may have been altered by COVID-19. How has the buyer’s journey changed, and who’s involved in that journey in the COVID-19 era?

In April, we noted a decline in the number of SMBs planning to increase spending. This trend has continued and broadened to most, if not all, company sizes. 


Expected changes in spending by company size

For the most part, spending patterns have aligned across company sizes. The plurality of respondents now say that there are no software spending changes expected for the rest of 2020. There was more uncertainty at higher company sizes, but that can be attributed to a higher percentage of lower-level employees and employees who are not budget holders in these organizations. This trend is consistent with prior TrustRadius research, which has found less certainty and confidence in the purchase process and selection decisions at enterprises than other company sizes. 

Spending changes are also fairly consistent across industries.


expected change in software spend, by industry

Within our sample, we collected the most significant responses from organizations in Education, Financial Services, IT, Marketing, and Health Care. Among these industries, most buyers expect no changes in software spending through the rest of 2020. Interestingly, a large minority (25%) of respondents working in Education said they are increasing spending—the largest segment of respondents to say so. These respondents are likely to increase spending during the summer in order to have their technology purchased and implemented by the time school starts in the fall. 

Seasonally-based industries may still experience more change in software spending throughout the year. In order to fully convert to new and radically altered situations, such as all-virtual learning environments in the Education sector, organizations may increase or decrease investments in technology. The timing of these spending changes will likely revolve around “off-seasons” where industries can change technologies with minimal impact on their customers/users. 

We also collected generational data from our community, which strongly signaled that more senior and experienced workers are the most confident that spending has stabilized. 


Expected change in software spend, by age

Older respondents were consistently more confident in there not being any further software spending changes in 2020. Younger generations, on the other hand, were more likely to be unsure. The clear upwards trend in confidence that there won’t be change, which correlates with greater experience in the workforce and through prior economic upheavals, supports the theory that companies have largely concluded their changes to their software spending for 2020. 

The Impact of COVID-19 on Long-Term Business Stability

Since many companies have already completed their adjustments to a post-COVID-19 economy, the next question is whether they think those changes are enough to help them survive. Our audience reported that half of businesses feel their long-term stability is threatened to some degree by COVID-19.


Impact of COVID-19 on Long-Term Business Stability

 The majority of threatened businesses feel “somewhat” threatened. 8% of all businesses feel “greatly threatened” by COVID-19. 1 in 3 respondents have felt no impact on their stability. This suggests a large minority of businesses’ finances, strategy, and spending have stabilized after the last few months. 

The threat to long-term business stability is also disproportionately felt by smaller companies. 


impact of covid-19 on long-term stability by company size

Over 60% of companies with 1-10 employees feel their stability is threatened by COVID-19. They are twice as likely to feel greatly threatened than other businesses. Mid-sized businesses are faring slightly better, with around half of businesses feeling some sort of threat.


most very small business' long-term stability are threatened by COVID-19

Enterprises, especially large enterprises, are the most confident in their long-term stability. The majority of the largest companies, at 10,000+ employees, feel either no impact or a positive impact on their long term stability. Large enterprises are twice as likely to report “greatly improved” long term stability compared to other company sizes (12% vs. 5% overall).

The discrepancy between small businesses and large enterprises can be best explained by differences in cash and asset stockpiles not connected to immediate cash flow. Small businesses are much more likely to have tighter budgets and leaner operations and are especially vulnerable to the direct impacts of COVID-19. That leaves them with less flexibility and fewer options to downsize if necessary—such as in the case of a pandemic. In contrast, larger enterprises are more likely to be able to absorb financial fluctuations and streamline their budgets. This gives enterprises better odds of surviving or thriving in tumultuous economic conditions. 

How The Tech Buying Process is Impacted by COVID-19

As the pandemic progressed through March and April, industry analysts hypothesized that software buying power and decision making would consolidate around senior leadership and executives. Businesses faced tighter budgets and closer scrutiny of all purchasing decisions across the board. After 3 months of technology buying during the pandemic, we asked our community about those experiences to see whether purchases were becoming less collaborative. 

Our data reveal that the complex picture of B2B decision making does not appear to have changed radically due to the pandemic.


has COVID-19 changed the software buying process?

It’s clear that the majority (61%) of our community hasn’t experienced any changes in their businesses’ software buying processes during the COVID-19 pandemic. More interestingly, of those who have experienced some change, over two-thirds of them report buying processes being more collaborative or inclusive than pre-COVID buying. 

This data suggests that there has not been a centralization of software buying processes to senior-level execs. Instead, companies may be consulting more stakeholders to ensure that each purchase is as good a fit as possible before committing their budgets. 


covid-19's impact on the software buying process, by age

When respondents are segmented by age, which can be a proxy for experience and seniority, we see that the most experienced respondents are the most likely to say that software buying processes haven’t changed during COVID-19. Older respondents, who are more likely to have a better historical perspective, are the most likely to say that buying processes haven’t changed as a result of the pandemic. Even more striking is that younger respondents, who have a higher bar for collaboration and more democratic buying practices, have observed a higher degree of collaboration. Since the average number of participants in buying committees is 2-5 people, software purchases remain fundamentally collaborative. 

Respondents who have seen shifts in the buying process during the COVID-19 pandemic are twice as likely to have experienced a more collaborative process, rather than involving only a single decision-maker. 


COVID-19's impact on software buying by company size

Furthermore, collaborative software buying rates appear to increase among larger companies. One theory that could explain this trend is that larger companies make larger software purchases, and more expensive purchases are under greater scrutiny than in the “before times.” This results in more people engaging in various stages of the buyer’s journey for each software purchase. 

Buying Committee Changes During COVID-19

The two most common buying committee dynamics our community used to buy software during the pandemic employed some form of collaboration. However, not all collaboration styles are equal, and some dynamics involve more executive veto power than others. Nearly half of respondents used either group consensus or a collaborative recommendation approach to buying software during COVID-19. Only 17% used a single decision-maker. 


What buying committees look like during COVID-19

There was also a large minority of respondents who didn’t know about any COVID-related buying decisions. However, these were primarily lower-level employees who are generally less likely to be involved in purchase decisions anyway. 



When segmenting responses by job title, a significant disconnect emerges between senior level and middle-upper management buyers. Buyers at the top of the organizational hierarchy, such as founders, owners, and CEOs, are much more likely to say that there was a single final decision maker (likely themselves). 

In contrast, folks with mid-level and upper-level titles, such as C-suite, director, or manager, are more likely to identify a collaborative buying dynamic, such as recommending options to execs for a final decision. This disconnect suggests that recommendation-based dynamics and sole decider dynamics could very well be referring to the same situation. 

In other words, stakeholders view the buying process differently depending on what role in the organization and the process they play. Mid-level management may provide recommendations to the executive buyer and see this as a collaborative purchasing process. By the same token, the executive buyer (likely the CEO, owner, or founder) may view the same situation as having a single-decision-maker buying model. 

Executive Purchasing Power Before and After COVID-19

While the technology buying process as a whole may be more collaborative during the COVID-19 pandemic, there’s also evidence that executives are holding on to final decision-making power.

When comparing data from the latest B2B Buying Disconnect, published in December of 2019, and data collected in May 2020, there are some clear differences in buying committee dynamics. Most notably, the frequency of sole decision-makers has declined by 35% in 6 months. More companies are providing recommendations to execs for the final decision than they were before the pandemic. 


COVID-19 impact on software buying committees

This change suggests that, while buying processes are becoming more inclusive of additional stakeholders and participants, final decision-making power is indeed centralized at the executive level in nearly half of B2B technology purchases. 

Using This Data to Your Advantage

Stabilization in software purchasing will allow B2B software vendors to more readily predict and plan on retention, lead generation, and new sales forecasting. The most promising news is for businesses focusing on retention—the market trend shows that most businesses have already made the cuts they expect to need to get through 2020. 

The onus now falls on sales and demand gen teams to navigate engaging with buyers serving their needs in a more stabilized, but changed, COVID-19 environment. This may be the area where there is the most to be learned and tested to see what strategies are most effective. 

To help software vendors engage with buyers in the market during the COVID-19 pandemic, we’re offering 30 days of free True Intent data to all qualifying companies. This resource shows you which accounts are evaluating your product and your competitors’ products on TrustRadius, as well as how frequently they’re researching. True Intent gives vendors insight into how many collaborators in an account are engaging with your products, and what research activities they are taking in the discovery, evaluation, and selection stages of their buyer’s journey. 

Click here to claim your 30 days of free True Intent data and empower your pipeline with real, bottom-of-the-funnel insights. 

Appendix

B2B Tech SpendingSurvey Results From April 2020 

We collected data from 2,168 respondents from 4/9-4/10 through an email survey to the TrustRadius database of software buyers and users. Compared to March survey results (below) the data showed a sharp decline in new spending. This decline was particularly prominent among CEOs and midsize businesses. We also explored how COVID-19 has impacted our community’s professional lives on an individual level.

Explore the charts below for a historical look at businesses and software buyers’ expectations around the COVID-19 pandemic and its impacts from April 2020. 

How buyers expect COVID-19 to impact software spend
What are busineses reducing software spend on?
Where are businesses increasing software spending?
fewer midsize businesses are increasing spend than a month ago
most people still expect to return to prior spend levels by 2021
COVID-19 impact on Q2 software spending, by company size
2.5x more C-suite execs are cutting software spending after a month of COVID-19
COVID-19 impact on software spend, by job title
COVID-19 Impact on Q2 software spending
How has COVID-19 impacted your work-life?
How has your work life been impacted by COVID-19?

B2B Tech Spending Survey Results From March 2020

For the first iteration of this post, we collected data from 1688 respondents from 3/18-3/19 through an email survey to the TrustRadius database of software buyers and users. The data showed high rates of increased spending as businesses quickly pivoted to remote-first workforces. We also found high expectations among those decreasing spending to revert those losses once the pandemic is over. 

Explore the charts below for a historical look at businesses and software buyers’ expectations around the COVID-19 pandemic and its impacts from March 2020. 

How software buyers expect covid-18 to affect their spending, no change 26%, spending more 40%, 18% spending less, 15% unsure
Software buyers who plan to increase spending due to COVID-19 by job title
Do software buyers expect to return to previous spend levels after COVID-19?
Top reasons buyers are unsure about their software spend
Why 26% of respondents don't expect software spend change