As an “armchair analyst” in martech, my favorite content comes from “aggregate” platform companies, who publish data about what their customers are actually doing. Unlike surveys, which can be extremely biased and inaccurate, aggregate usage data is empirical truth. Like martech landscape, you can argue “why” and “where next”, but you cannot argue “what” the data is now.
Zylo is one of the leading companies in this category, with more than $21 billion in SaaS spend and more than 29 million licenses under management. Their size has important implications for the aggregate data statistics they have shared in their index.
Of course, the headline index is the average size of the technology stacks, which continues to expand:
- Small and medium-sized companies have an average of 217 applications
- Enterprise companies have an average of 330 applications
- Large enterprise companies have an average – Woof – 609 applications
In fact, is it even worthy of the title now? A few years ago, sharing such a status would generate a significant amount of responses, “Bull-honkey!” or “Well, it's obviously going to collapse!” (Admittedly no one ever said bull-honkey, but hey, this is a family martech blog.) But now? I suspect that most of you are unintentionally nodding your head in confirmation.
Blue sky. Wet ocean. The technology stack has a wide variety of applications.
Another trend from Zylo's index that may not surprise you is that only 27% of SaaS spending was managed by IT – down 35% year over year. Instead, business units managed 66% of their own SaaS spend, an increase of 22%. (Zylo does not specify how the remaining 7% is managed. Perhaps by individuals or outside service providers?)
I can’t imagine anyone calling 66% business unit-owned SaaS “shadow IT” anymore. But if they do, it's the kind of shadow a towering landmark makes in the bright light of day. Tourists pay to tour it and take selfies.
But perhaps closer to the original definition of shadow IT, Zylo's index reveals that a large number of individual employees now purchase their own SaaS tools at their own expense. About 1/5.
In small companies with up to 100 employees and in mid-sized companies with up to 500 employees, the ability to expand individual SaaS subscriptions is very common, 26.2% and 31.3% respectively . However, at larger enterprises, this ratio drops below 10%. (I hypothesize that it is inversely proportional to the number of compliance officers on staff.)
But a more interesting correlation Zylo found was this: the more employees in a company spent on their own SaaS applications, the greater the adoption rate of SaaS applications throughout the company. The patterns in the left and right graphs are almost identical.
(Quick aside: I've long argued against martech adoption rate as a meaningful metric. But that's when it comes to the usage of features and capabilities in a particular SaaS product (Zylo's metric, usage rate appears to be more of a binary measurement: whether the app is being used by each person who has a license to use it.)
Does increased choice – choose your own apps and costs – increase usability?
The data do not demonstrate causation. In fact, since both are correlated with the size of the business, from small to corporate, there are many other explanations. But I still see it as a viable argument.
People use the tools they like and that they have chosen to help them do their best work. Any other tools selected by the central command that are unfamiliar or less loved will be less likely to be used. That doesn't mean most of the stack shouldn't be standardized. It should be. Bring-Your-Own-CRM is probably an even worse policy than Bring-Your-Badger-Work Day.
But allowing individuals and teams to enhance your core stack platform with their favorite additional specialist applications? With reasonable railings, it makes sense. Integration and increasing interoperability make that possible.
One of the tech trends for 2022 that I wrote about earlier this month is the rise of the “in-house creator.” Independent creators leverage the full range of no-code apps and tools – along with their own creativity and drive – to quickly build amazing things on shoestring budgets, often when Late night hustle and bustle. They are the model of productivity.
So why not invite such people to work in a company?
Creator creativity and productivity. Exaggerated by the size and reach of the corporation. It's not without cultural and compliance challenges. But, wow, the potential energy that combination has. And in the endless war for talent, inviting creative types to bring both their imagination and their fancy tool belt to a steady, high-paying gig with the potential for huge amplification giant is not a crazy idea.
One final stat to leave you with from that Zylo report, the average number of new applications a company adds to their SaaS stack every 30 days:
In small companies with up to 500 employees, 4 applications added per month equates to one new application per week. In large enterprises, with 11-13 new applications per month, it's like a new application is added every day – somewhere, by someone, for something.
In short: Your stack is not static. It is a living organism.
I know, to some it seems horrifying, like The Thing. For me, it was awe and wonder, like a coral reef.
Original post: https://chiefmartec.com/2022/01/saas-stacks-keep-growing-is-there-also-a-relationship-between-choice-and-utilization/
Translated by: Phan Cong Duy
