Enterprise software bundles were once a sure path to office productivity. But as these software bundles became bloated and competition emerged from best-of-breed, purpose-built apps that met distinct needs, SMBs realized they’re paying inflated prices for tools they won’t use. Steve Davi, EVP, software engineering, product management and technical operations for Synacor says it is time small business owners give their software spend a closer look. Â
Business owners are starting to recognize a concerning software trend they probably first noticed as video consumers. They remember when their cable subscriptions started to get packed with channels they didn’t ask for, only to see costs rise and perceived value fall. Now, a similar story is unfolding in their business as they watch unwanted features (and costs) get jammed into their office collaboration software bundles. Expect a backlash as businesses seek to cut costs by spending only on the services they want and ditching the rest.
Cloud Software Has Changed the Office Productivity Game
Cloud-based services were just a small portion of IT spend a few years ago. Now? They’ve exploded to nearly a quarter of the overall SMB IT budget, according to the latest Spiceworks Ziff Davis 2021 State of IT reportOpens a new window . Productivity solutions, online backup and email are 42% of the micro-business cloud spend, and this is anticipated to grow by double-digit percentages this year. If you are a small business owner, you may be so busy actually running your business that you don’t even realize prices are creeping relentlessly upward.
Small business owners used to be stuck with a handful of big companies for their software needs. There were a few choices, mostly expensive bundles. But SaaS-based models have changed the game now that:
- Innovation abounds as new SaaS-based office software companies roll out “must-have services†that focus on solving one specific problem, like storage, collaboration or conferencing.
- Costs are shifting to more palatable monthly payments.Â
- Product enhancements happen on a rolling basis, even if businesses don’t want or need them.
Yes, progress has brought with it a mixed bag. SaaS offerings mean businesses are paying more for more services, but on the flip side, they are getting exactly the best-in-class software they want, with higher perceived value.
It’s no surprise then that the big email and office productivity guys figured out that they could capitalize on this new dynamic. They started acquiring or building their own services that compete with third-party offerings. Then, they bundled services like collaboration and file sharing with business “must-haves†like email and calendaring. The kicker came when rates started to get hiked to account for all this “new†functionality. For instance, just last year, Google raised the price of its G Suite Business edition by $24 per year per user.
Learn More: 5 Drivers for Moving Business Communications to the Cloud
Costs Keep Going Up, Up, Up
Just like in today’s streaming video world, businesses often subscribe to multiple enterprise software services to meet all their needs. They are stuck with their bloated bundle from the big guys and also sign up for best-of-breed services. Services they really like and that their employees and customers already use to drive their business.
The net businesses are paying more than ever for enterprise software. They pay individually for the services they want, plus even more for expanding, redundant productivity bundles with limited perceived value.
Let’s say Sophie, a small business owner, has 25 employees and is using Google’s G Suite. She also subscribes to Zoom for video conferencing (even though she has access to Google Meet) and is paying Dropbox for file storage and sharing (even though she has similar services through Google Drive). She can drop Zoom and Dropbox to cut costs, but she really liked those services and her staff and customers already know how to use them. So Sophie is either stuck paying more or settling for the Google services she doesn’t love. If she keeps everything, her checks to Google, Zoom and Dropbox are likely a whopping $1,000 a month.
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These ever-rising prices are causing more and more small businesses to look at their spending, especially at the cost of email and collaboration bundles. And it’s not just small businesses. Governments, universities, and financial organizations are also feeling the squeeze and looking for a change. ZimbraOpens a new window has seen this trend play out in real-time with our global partners reporting an uptick in users eager to migrate to office software that offers more flexibility.
Businesses are no different from consumers. They don’t want to pay inflated prices for what they don’t want, don’t need and won’t use. What they do want is mission-critical software, cost savings, and stability. Give your enterprise software spend an audit and see if it’s time you cut the enterprise software bundle cord.
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