Which software companies are most vulnerable in the light of the Coronavirus?

According to a recent review of the software sector by economists at Credit Suisse, software companies requiring close connection to customers and those providing low priority solutions are most at risk.

In the review, Credit Suisse believes that software companies that have the following elements are most at risk:

  • Their system has integrated hardware as part of their solution or are exposed to the hardware sector;
  • Companies that are more dependent on face-to-face meetings for business development;
  • Lower priority software solutions;
  • Software solutions that can be postponed with minimal business impact or without any impact.

In most situations where a software company also includes hardware as part of their solution, there is a requirement for onsite support. The inability to provide this onsite support due to travel restrictions may have a negative impact on the ability of the software vendor to service their clients. In addition to providing on-site support, these companies may also face supply-chain issues as hardware manufacturers slow or shut down production.

International face-to-face business meetings have all but stopped now. Companies are not prepared to take the risk of sending their employees abroad to attend sales meetings and most international¬† technology events such as MWC and Google Cloud Next conference have been cancelled. ¬†Tal Barnoach, a partner at VC firm Disruptive VC commented in a recent article on the effects of Covid-19, “If we reach a situation in which borders are closed, many companies will experience several months of slowdown. A situation will arise in which anyone not adapting will not survive. Companies are telling us that this is a tough year for them, and a year for survival, not a year of sales and growth.”

As budget constraints kick in, companies need to prioritise their expenditure. Priority will be given to mission-critical solutions. Solutions that are less critical or can be postponed with minimal business impact will be side-lined.

Over the past few weeks, Escrow London has seen a large increase in enquiries from companies that are concerned regarding the continuity of their critical cloud-based applications. As more and more companies are adopting SaaS software solutions, business continuity becomes even more critical as the company data is also typically held by the vendor. These companies are looking for SaaS escrow solutions usually hosted within AWS, Microsoft Azure or Google Cloud to mitigate potential downtime and to create a stand-by version of their application that can be fired up seamlessly in the event that their hosted services become unavailable.

Feel free to contact us to learn more about Escrow London or our experience in handling complex business continuity requirements.