The Impact of COVID-19 on UK’s Business Applications and Software Market

Businesses and organizations alike are facing great pressure on revenue and cash flows. A dash for cash in March saw over 130 of the largest companies in Europe and the Americas resort to $124bn in credit lines. A few examples include General Motors ($16bn),  Ford ($15.4bn) and AB InBev ($9bn). In the UK, although no figures have yet been formally published, companies such as Arcadia, Nissan, and British Airways have also resorted to financial aid packages.

Despite a grim outlook, IT and Software providers have shown solidarity with industries, companies, organizations, and students, enabling them to continue their operations through free access to software and applications which support, for instance, emergency services, education, and remote working. 

ServiceNow has developed emergency response management applications with four community apps for its customers and others. These apps consist of Emergency Response Operations, Emergency Outreach, Emergency Self Report, and Emergency Exposure Management. The apps were developed by co-innovating with the State of Washington but are available to other regions around the globe. ServiceNow also relied on its partner network, including Accenture, Deloitte, DXC, EY, and KPMG, for distribution and support of the community apps. Over 1,000 organizations worldwide have already implemented the company’s free range of emergency response apps. Furthermore, ServiceNow has said that it is committed to delivering virtually 100% uptime for ServiceNow instances.

Many other IT providers have also offered similar capabilities. Before ServiceNow, Salesforce provided a free of charge COVID-19 Care Response Solutions with access to technology for emergency response teams, care management teams, and health systems. These services have been expanded to health insurers and other healthcare and life sciences organizations. The solutions will be available for free for at least the next six months and include a pre-configured Health Cloud powered by Salesforce Health Cloud; encryption, audit trails and monitoring powered by Salesforce Shield; a self-service resource center powered by Salesforce Community Cloud and the Salesforce Customer 360 Platform; and a learning platform powered by Salesforce myTrailhead.

Another example is Adobe, which is temporarily providing free access to Adobe Creative Cloud, and web-based PDF Services to help alleviate the impact of student campus closures and to help struggling businesses. The company will also be extending the renewal grace period to 60 days for the Creative Cloud, depending on the type of customers. Furthermore, Adobe is eliminating additional license charges for Creative Cloud for the next 60 days and offering greater flexibility with Adobe Experience Cloud.

In the UK, the NHS is making use of Google’s G Suite to compile and assess real-time data in its response to COVID-19. Google is supporting remote working, and remote education through its G Suite for Education with a comprehensive collection of productivity apps and tools such as Hangouts Meet for video conferencing and Google Classroom for remote schooling. Google has stated that features in its Enterprise edition of G Suite and G Suite Enterprise for Education will be available until July 1, 2020, at no extra cost to all existing customers. 

With the sudden movement en masse of remote workers, companies such as Zoom have seen a significant jump in users as the demand for video and web conferencing soared, doubling the company’s value in a matter of a few months. However, not everything has been plain sailing, as recent reports suggested that the video conferencing platform suffers significant security flaws with users reporting hacking of video streams. Zoom as since said to be freezing product development and channeling its focus on boosting the security of its services.

COVID-19 will undoubtedly send shockwaves through businesses that are in the midst of IT projects and digital transformation be that for application modernization or migration services. IT vendors will feel the consequences, albeit it is services companies that will likely suffer the most as organizations postpone digital initiatives, and cancel or suspend payments for related services.

teknowlogy Group’s estimates* for the business applications, and the software segment is split into two scenarios: optimistic and pessimistic. During the period of 2018/19, our estimates show a decrease in growth by -3.9%, which under normal circumstances for the period 2019/20 would result in -4.6%. However, the impact of COVID-19 has significantly exacerbated the outcome as our optimistic estimates now suggest a -10.2% growth for 2019/20, and under a pessimistic scenario, this would result in -18.5% growth.

These estimates** further show that the impact of COVID-19 on application-related services will be most felt in verticals such as Transport, Service & Consumers, Retail & Wholesale, and Manufacturing under both the optimistic and the pessimistic scenarios.

Many manufacturing companies in the UK, and those in other industries, too, are in survival mode. If these businesses survive, during a post-COVID-19 era, they will likely undergo a company-wide assessment of which areas of the company were hit the hardest and why. Most likely, one of the areas that will see an increase in investments is single real-time visibility. Real-time analytics provide near-instant actionable insights to make critical decisions in a time of need. Most companies today lack clarity in their supply chain. Many lack a good overview of tier 2 and tier 3 suppliers, which during a pandemic causes a domino effect where a business will see the pieces tumble without enough time to react. This is one area where the teknowlogy Group expects an increase of investments, particularly in applications and platforms to support companies going forward. Furthermore, a surge in cloud infrastructure-related services, industry-specific software, and remote working hardware will also be on shopping lists.

*teknowlogy Group’s estimates will be updated regularly as the COVID-19 outbreak develops.
**teknowlogy Group also published its revised SITS market figures and forecast for six countries (Belgium, France, Germany, Netherlands, Switzerland, and the UK) based on COVID-19.