AppDirect's survey rings true, albeit self-serving

In a nutshell: SaaS is good, but SaaS is hard.

Public APIs give customers access to the internals of the SaaS platform
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I quite like Henry Ford's approach toward choice: You can have any color you like so long as it's black. Too much choice makes for (in my case, at least) increased stress as choices from a bewildering array of automobile options become ever more difficult.

And this situation of consumers being spoiled for choice occurs in our own sector: technology.

When I started out on this tech commentary lark over a decade ago, it was still the early days of SaaS. Only a few vendors -- Salesforce and NetSuite among them -- existed at that time. At the small and midsize business (SMB) end of town, there was a similarly limited choice of tools. Indeed, the start of my blogging journey coincided almost exactly with Rod Drury founding Xero, a SaaS company offering accounting for SMBs.

Fast-forward to today and there are thousands of different SMB SaaS products. Xero has been joined by dozens of competitors in the account software space, and there are solutions for almost every problem space you can think of -- fleet management, CRM, email marketing, office productivity and so on and so on.

All of this choice has its benefits. No longer do customers need to be shoehorned into a solution that only partially suits their needs: SMBs have the ability to build themselves a quasi-suite made up of disparate but integrated solutions, the totality of which meet their needs perfectly.

But all of that choosing takes a lot of time and effort, and customizing the integration is yet another task that SMBs have to think about. Which is where AppDirect comes in.

If you've not heard of AppDirect before, that would be because its solution generally gets someone else's name stuck on the front of it. AppDirect offers a platform that gives large organizations all the tools they need to create a marketplace of SaaS solutions. If you've used a marketplace from Comcast, ADP, Zendesk or Deutsche Telekom, you've used AppDirect’s platform.

I've spent a lot of time with AppDirect over the years and have always come away impressed that the company has convinced these organizations -- many of which have an antipathy to buying a solution rather than building it -- to go with a third-party marketplace offering.

So I was interested to see a new survey that AppDirect is releasing today. The survey, conducted at the end of last year, surveyed IT decision-makers within hundreds of SMBs to get their take on technology choices.

Now, it has to be said that this survey is somewhat self-serving. The findings very much play into AppDirect's hands. But the results are inline with what I'm seeing out in the marketplace. That -- and the fact that the survey was undertaken by an independent survey company -- gives me faith in the accuracy of the findings.

The key finding of the survey is that the majority (61%) of U.S.-based SMBs have a desire to use more cloud services (as, in my view, they should). But, worryingly, close to 75% report that they are overwhelmed by the huge number of options that are available to them and are searching for help to make the right decisions. 85% of respondents want to talk to a real-live person to get advice on the best solutions for them.

This is interesting given the prediction that end-user spending on public cloud services will rise to well over $200 billion by 2020. There is a corresponding opportunity for those organizations that have an existing relationship with end user SMB (surprise, these classes of organizations -- telcos and banks, etc. -- are precisely AppDirect's target market).

And this channel approach to acquiring software seems to be a real thing. The survey found that while roughly half (49%) of small businesses buy their software from individual software vendors, the other half (48%) buy their software from either their internet and/or telecom service providers (27%) or a local IT reseller (21%).

Other findings of note include:

  • 62% of small businesses say they expect their spending on cloud services to increase in the next year.
  • 70% of small businesses say they would be more likely to buy their software from their telecom company if they could pay for all their services on just one bill. Similarly, 68% say they would be more likely to buy software from their local IT reseller if they could pay for all the services on just one bill.
  • Over 80% of small business IT decision-makers (84%) say it is important for their company that they have an array of options when it comes to what cloud services they purchase.
  • 69% of small businesses say that when it comes to their cloud services, they are looking for variety, including applications that are specific to their industry.
  • Finally, 32% of respondents reported that they wish they had an easy way to buy bundled apps together to save on price.

MyPOV

As I said, this survey is entirely self-serving. That, however, does not mean that the findings are not accurate. They do, in fact, mirror closely what I have seen from the SMBs that I am involved with or have talked to.

While individual software vendors can do some of the heavy lifting to resolve the respondents' stated issues (better integration, deeper partnerships, clearer documentation about appropriate use-cases for their software), the survey clearly indicates that there is an ongoing huge opportunity to empower large existing vendors to be the storefront for cloud apps.

And that will be music to AppDirect's ears.

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