78% of Australian SMEs Say Software Will Be Critical To Their Survival

Published on 10/06/2020 by Anna Hammond

Australian businesses have faced one of their hardest years to date. As a result, companies are leaning heavily on software acquisition to survive. Based on Capterra’s latest survey results, we reveal how technology in Australia (such as collaboration software) was prioritised during the pandemic, and what lessons businesses can apply to the new challenges ahead.

Usage of technology in Australia during a crisis

The state of Australian small and mid-sized businesses in 2020

Official figures reveal that the economy decreased by 0.3% in the first three months of the year due to the bushfires and early stages of the outbreak. This shrinkage officially pushes the country into a recession. Governor Phillip Lowe said Australia is facing the toughest conditions since the Great Depression but notes that ‘it is possible that the depth of the downturn will be less than earlier expected.’

Capterra looked into the crucial business decisions that have been made by small or medium-sized enterprises (SMEs) to survive the economic downturn so far. We surveyed* 458 Australians currently employed by an SME. Three-quarters of the survey panel represent decision-makers so that we can take a deep dive into the rationale behind the business decisions. 

To read the full methodology of this research, skip to the bottom of the page.

62% of SMEs don’t expect to survive another six months

The survey revealed some concerning statistics: 62% said they don’t believe their business can last another six months under current conditions (government aid aside). 

More positively; most see technology as the ally that will help see them through. 78% of decision-makers said the software purchases they make will be critical to their survival during (and after) the pandemic. 

Technology in Australia
Infographic 1: How technology in Australia has been used by SMEs during the epidemic

Now, as Australia enters the first recession in 29 years, small businesses are under even greater financial pressures. To survive, SMEs must apply what they’ve learned during COVID-19. 

3 key lessons we can take from the pandemic and apply to future economic challenges

1. Plan for the worst 

The pandemic caught most SMEs in Australia off-guard. In fact, many didn’t prepare for a crisis in any form according to Capterra’s research. Less than half (49%) had a business continuity plan in place before the outbreak. As a result, business leaders had to react fast—making decisions that previously took weeks or months in a matter of days. 

Capterra’s research highlights how SMEs in Australia were rapidly forced into a back-to-basics mentality. Investing in fundamental technologies (such as remote work software) to allow them to operate virtually was a key response during the pandemic—and one that will continue helping them weather the storm during the recession.

Why it’s important: Your company office may never set fire, but you’ll certainly want a fire extinguisher there anyway. The same applies to a business continuity plan. Hope to never use it; but make a plan that will enable you to survive the unexpected regardless.

2. Focus on short-term priorities

With budget allowances tightened, small businesses reprioritised resources to make them stretch further. For example, rather than hiring new help into the business, 58% of managers say they reassigned the roles of existing employees to focus on mission-critical tasks.

But small businesses are still spending where necessary, such as investing in essential technological resources. 79% of respondents say their business needs new software to stay productive in a virtual working environment. Below is a breakdown of where respondents said their businesses had to (or still need to) invest in software:

  • Collaboration: 39%
  • Internal processes: 25%
  • Product delivery: 15%

Note: 19% already had the software they needed, while 1% weren’t sure. 

Why it’s important: By making these changes now, businesses better position themselves to thrive in emerging digital landscapes. 

3. Adjust spend allocation and timelines to fit with new market conditions

An overwhelming majority of SMEs made decisions to reallocate budget to mission-critical tasks. SMEs made adjustments in three main ways:

During COVID-19, 84% of SMEs adapted their 2020 planned spend 

Three months into the year and planned spend went out the window for the majority of businesses. Almost a third (31%) of SMEs increased their spend but the majority (53%) said the pandemic caused them to make temporary reductions. Just 14% said the pandemic didn’t impact their planned spend.

Planned spend adaptions during COVID-19
Infographic 2: A breakdown of spend adaptions in Australian SMEs due to COVID-19.

68% moved budget to other areas of the business

More than two thirds (68%) of respondents said the pandemic forced them to change where they invested money within the business. Of this number, 48% didn’t have software acquisitions or upgrades in their plan before the lockdown—but say their hand was forced. A fifth of respondents (20%) already had a budget allocated to software but had to move it to a different area of the business.

The most popular software acquired during the pandemic includes:

  1. Remote desktop software
  2. Video conferencing software
  3. Collaboration software
  4. Live chat software
  5. Webinar software.

40% sped up software acquisition to pay for unexpected business needs

More than half (52%) of SMEs have had to delay their planned spend in the medium and long-term. However, 40% say the opposite: Covid-19 bought their timeline forward. 

Timeline adaptions
Infographic 3: How spending timelines were adapted by SMEs due to COVID-19.
Why it’s important: In a crisis, it’s sensical for companies to be more conservative with their budget. Making non-essential investments isn’t bad spending. However, business leaders should first feel confident that they have the fundamental resources (and finances) to withstand another crisis (such as a second wave of the epidemic.)

What drove business-decisions during the coronavirus crisis?

Three main factors influenced the products selected by SMEs during the pandemic. We’ve listed them below in order of what respondents felt were most important:

1. Pricing

Respondents referenced a software product’s price and range of plans available as the biggest influencing factor in their software purchase decision. With 53% of SMEs reducing their spend as a direct response to challenging market conditions, it’s natural for buyers to be mindful of price. 

The second most attractive feature for buyers was the availability of a free trial. This not only suggests that software buyers are getting savvier with their budget, but also that they’re putting more thought into investing in the right software.

Tip: We have put together a list of software vendors that are offering users a free version of their platforms to help them navigate challenges brought about by COVID-19.

2. Ease of use

Usability refers to “the extent to which a product can be used by specified users to achieve specified goals, with effectiveness, efficiency and satisfaction in a specified context of use.” according to ISO 9241 Ergonomics of Human System Interaction.

According to our respondents, ease of use was the third most important aspect of product selection. With 57% of SMEs now working from home, this preference is an unlikely coincidence.

Businesses need to select software that their team will respond well to. Platforms that confuse or frustrate users will only deter them from using them.

3. What other people said about the product

31% of respondents referenced the perceptions of other buyers (and existing customers) as important. For example, reviews on software comparison websites and opinions posted on social media platforms. 

It’s common for us to turn to online reviews for consumer purchases, so it makes sense that this is being mimicked in the B2B software buying decision. According to our online reviews survey, 98% of Australians read online reviews before they make a business purchase, and 94% believe them to be trustworthy.

Critical business investments put SMEs in good stead 

At the beginning of the year, Gartner predicted that spending on technology in Australia (both for products and services) would increase to AUD$99.6 billion in 2020. Information technology (IT) services were expected to take precedence, with a predicted AUD$36 million spent during 2020.  Communication services would follow closely behind at $28.8 million. 

The crisis appears to have fast-tracked these digital advancements, putting businesses in a less vulnerable position while the country navigates through the recession. It’s likely that business-critical software will continue to take precedence over non-essential software until market conditions improve.

The digitalisation of basic business functions will be key to the survival of smaller businesses in Australia. In particularly challenging conditions, businesses can take comfort in the fact that the moves made now have the potential to make them more robust in the future. 

Looking for remote work software? Check out our catalogue.

*Survey methodology: The current usage of technology in Australia

Capterra wanted to understand the current usage of technology in Australia as well as the strategies that functioning small and mid-sized companies took to navigate the pandemic. 

We surveyed people living in Australia and employed by an Australian SME. The panel included part-time employees (22%) and full-time employees (78%). Due to the COVID-19 crisis, 88% of survey participants were working remotely full-time or part-time. However, 12% were not working remotely due to various restrictions; such as not being able to perform their job remotely or not having authorisation from their employer.

Of the total respondents, 75% of them held management positions with decision-making power. A quarter (25%) were junior or intermediate level workers (with little to no influence over business decisions.) The participants come from various business sectors and levels of seniority.

We conducted an online survey around how SMEs are utilising technology in Australia between 19th and 21st of May. Capterra defines SMEs as companies with fewer than 200 employees, and more than one.

This article may refer to products, programs or services that are not available in your country, or that may be restricted under the laws or regulations of your country. We suggest that you consult the software provider directly for information regarding product availability and compliance with local laws.