So are we in some sort of downturn — or aren’t we? One thing that is clear is that public SaaS and Cloud stock prices are way down.
But is spending? I’m not so sure. In my own portfolio, more of my investments had a record month in October than a rough month. Still, I see almost all the ones that are struggling blame “the economy”, rather than themselves. No doubt, something is clearly happening. Sales tools seem under more pressure right now than infrastructure, for example. But everyone great that isn’t having a post-Covid hangover (e.g., Zoom and Shopify) is still growing at top-tier rates. If no one is buying sales and marketing tools, why are ZoomInfo and HubSpot growing at record rates, for example? If a recession is hurting HR spend, why is Paycom accelerating after $1B ARR? Be honest. Is it a few bumps in the economy — which always happen. Or is it you?
So what does Gartner say? They aren’t perfect, but given how many CIOs they interview — over 2,200 for this survey — they’re one of my favorite sources for what’s happening in 2023.
And they say 2023 will be a banner year for enterprise software spend at least — growing a stunning 11% to $880 Billion. (Note this doesn’t include SMB spend, it’s enterprise focused):
In a slightly more dated survey, Gartner found in July 69% of CFOs plan to increase their digital spending in 2023. That’s not 100%. But it’s still most.
Gartner didn’t dispute the impacts of both inflation and “economic turbulence”. But their CIO surveys say that while some areas like infrastructure will benefit, and others will be impacted, overall CIO spend on business software will be way, way up in 2023. And software is the biggest beneficiary, up 11.3%, even as other spend areas like devices are being put more on discretionary hold.
CIOs’ top areas of increased investment for 2023 include “cyber and information security (66%), business intelligence/data analytics (55%) and cloud platforms (50%). 32% are increasing investment in artificial intelligence (AI) and 24% in hyperautomation”, per Gartner.
“Economic turbulence will change the context for technology investments, increasing spending in some areas and accelerating declines in others, but it is not projected to materially impact the overall level of enterprise technology spending.” John-David Lovelock, Distinguished VP Analyst at Gartner
Look, if you want an excuse to not grow, you have one right now. Blame inflation, blame the stock market, blame whatever. But SaaS spending is still growing. So if you want to be intellectually honest, don’t make it too much of an excuse.
Instead — Go Make It So.
Go to Publisher: SaaStr
Author: Jason Lemkin