How Has the 2021 Technology Landscape Changed?

July 22, 2021
Contributor: Rupal Bhandari 

B2B buyer preferences and shifts in technology budgeting were revealed in the Gartner Digital Markets 2021 COVID-19 Impact on Business Strategy survey. Here’s what software and SaaS providers need to know.

Global software spending in 2021 is expected to grow by 8.8%, according to the Gartner Q4 2020 forecast. Software represents the fastest-growing segment in IT spending in 2021, closely followed by devices at 8% and data center systems at 6.2% (full research available to Gartner clients). 

While technology spending is an imperative line item for businesses, software providers can expect small businesses and some B2B buyers to continue to exhibit extreme caution with their software spending, as cost savings will remain a top priority in most industries in 2021. On the other hand, software providers can expect midsize businesses to be comparatively less strained as they place priority on business continuity plans, innovation, strategic growth opportunities and corresponding software spending. 

How the global technology landscape could shift in 2021

With more than a year of handling the pandemic under their belts, software providers can expect businesses to be more adept at managing the crisis and related technology and business changes. 

COVID-19 had forced businesses to defer spending and divert budget to standing up or maintaining remote work infrastructure, including software tools such as collaboration, online meeting and virtual private network. Businesses in some industries, such as hospitality and fast-moving consumer goods (FMCG), had to undergo digital transformations and manage significant changes to their business models to go online. Others had to upgrade technology infrastructure to maintain any competitive advantage. Software providers can expect those categories’ technology spending to continue in 2021 as digital-driven business models become more permanent. 

While COVID-19 resulted in many businesses shuttering, many new digital-first businesses are coming into the market as well. Those businesses place greater emphasis on technology as well as software spending. Software providers can expect such digital-first business models to gain momentum and increase business technology demand through the rest of the year. 

Top technology trends that could influence the software landscape in 2021

1. More than 20% of the businesses that adopted software in response to COVID-19 intend to use it permanently.*

That means that software providers can expect subscriptions or contracts with such businesses to continue through 2021. Some providers may also see increases in subscription or contract scope, as more employees onboard or train on the software, or businesses shift from using a basic plan to a more advanced service agreement. 

Software that businesses adopted in response to COVID-19, that they intend to use permanently

2. 41% of businesses prefer software providers they have already worked with; 38% prefer well-established software brands.

With only 21% of businesses being open to any provider with a solution that could meet the needs, the software market will continue to be tough for newer entrants. On the other hand, providers that are already leading or have a large user base can expect business customers to favor them while evaluating new solutions.

Businesses prefer software providers they have worked with in the past

3. Nearly 29% of businesses prefer one-year commitments when buying new software, 20% prefer two-year commitments and 19% prefer two-year commitments with a cancellation clause.

Software providers should expect those preferences to continue through 2021 as businesses review contracts or subscriptions up for renewal or consider new software altogether.

Businesses prefer 1 year or longer commitments

New software categories in 2021 identified

Observers expected software categories to emerge in line with macro developments in the technology landscape. Gartner Digital Markets identifies those software categories using various primary and secondary research methodologies, including:

  • Identifying search trends: As the demand for a software category grows, the number of people searching for it online grows. Gartner Digital Markets tracks search trends to understand and identify any new software category that becomes relevant. 
  • Software provider suggestions: Gartner Digital Markets stays in close contact with software providers from around the world to identify and understand any development in existing software categories or new and emerging trends. 
  • Buyer questions: Gartner Digital Markets stays in touch with B2B software buyers on a global scale, to understand their software requirements and the need for any new software categories. 

Once potential software categories are shortlisted, they are closely evaluated against guidelines to ensure their relevance as a standalone category. Those guidelines include an evaluation of core features, distinctions from existing software and a minimum threshold for the number of searches online. 

New software categories emerge every year. For instance, remote work as a software category saw exponential increases in demand in 2020. 

Unlock Global B2B Buyer Trends

Unlock Global B2B Buyer Trends Webinar Series

Keys to tech buyer behavior in 2021 and beyond

Rupal Bhandari

Rupal Bhandari covers sales and account management markets. She received her master’s degree from the University of Delhi, India, and has created content for some of the world’s leading technology products and companies. Connect with Rupal on LinkedIn.

___________________________________________________________________________________________________________________

*Gartner Digital Markets 2021 COVID-19 Impact on Business Strategy

Results presented are based on a Gartner Digital Markets study conducted to understand the current practices around demand, buying practices, and investment practices pertaining to software solutions. The research was conducted online from November through December 2020 among IT decision-makers across companies in Germany, United Kingdom, Australia, Canada, France, Italy, Spain, Portugal, Brazil, Mexico, Belgium, Netherlands, Luxembourg, Sweden and India. 

Get the Gartner Digital Markets Newsletter

By clicking the "Subscribe" button, you are agreeing to the Gartner Terms of Use and Privacy Policy.

Connect. Convert. Thrive.

Connect to millions of in-market software buyers around the globe with our all-encompassing suite of marketing services.