So there’s a new competitor out there, that we haven’t seen in a long time
- No, it’s not That Other Vendor that you directly compete with.
- No, it’s not that Huge Vendor that claims to do everything.
- No, it’s not that scrappy new player that just raised a round.
It’s Inflation.
The reality is for most of us for all time eternal in business software the biggest competitor wasn’t another vendor doing sort of the same thing, but really, all the other vendors a customer is now paying for or planning to pay for. Because the overall IT and CIO budget is always fixed. Yes, there’s usually a discretionary budget new vendors can tap into, but even that is fixed.
But direct inflation hasn’t been a huge deal.
Now it is. With vendors in SaaS all beginning to or looking to raise prices, in some cases for the first time ever, really … inflation may consume a lot of the expansion budget in SaaS next year.
Gartner is predicting overall business software spending will rise a stunning $100B to $900B total next year. But if all the top vendors raise their pricing 10%, that could consume a large chunk of that increase. Even a 5% average increase would.
Another way to look at it is tougher times often favor incumbents. More money goes to existing vendors. Inflation may exacerbate that in the next 6-12 months or so.
I wish I had a great set of recommendations on what to do. Other than that when times favor the big incumbents, lean in there. Do more on the Salesforce, Shopify, ServiceNow, etc. platforms. Because they tend to get the most budget when budgets are under pressure. And The New Guys get more attention when innovation and digital transformation is all the rage. For now, both are true. So we’ll see how that cuts.
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Jason Lemkin, Khareem Sudlow
