How COVID-19 has affected Australian financial software users’ plans

An industry survey revealed more sales for some, less for others, but mostly flat results.

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A recent survey found that 29 percent of Australian financial software vendors experienced a small increase in customer numbers during COVID-19 while the vast majority (42 percent) saw no changes in customer numbers.

Still, more than half of the respondents (52 percent) were expecting a decrease in revenue while 32 percent said they did not expect revenue impacts at all and only 16 percent expect to see some revenue growth.

The survey, which took place during the last two weeks of May 2020, was conducted among members of the Australian Business Software Industry Association (ABSIA). Most of its members are tax and accounting and payroll and employees services software vendors and, of its 77 members, 50 answered the survey.

An uncertain business climate is reflected in customer impacts

Most companies suffered some impact due to COVID-19, with 54 percent claiming to have faced “considerable to major impacts” and 35 percent experiencing “few or minimal impacts”.

One survey respondent said the business had seen some increase in clients—specifically those using legacy products but who were trying to move to cloud-based software so they could run their businesses remotely. “However, overall there has been a decrease in clients, as there have been a number who have been forced out of business and many existing clients have, for example, downgraded the number of software licenses to save money.”

One of the biggest concerns among the surveyed companies was that customers’ downsizing or looking to reduce costs could hurt future revenues. Other main concerns included how day-to-day operations on the customer side and cash flow could affect their software acquisition decisions.

According to ABSIA, some respondents have had their expansion plans put on hold, and it predicted that a slow-moving market and falling consumer confidence may affect providers considerably over the next six months.

Some 30 percent were not optimistic about the next 12 months, saying that innovation and technological change may vary depending on government’s policy directions.

Overall software spendig expected to fall

Overall enterprise software spending in Australia is expected to fall. In January, Gartner had predicted a $2 billion increase in spending on enterprise software in Australia for 2020, which was expected to reach a total of $18.8 billion. In May, Gartner updated its forecast in response to COVID-19, with spending now expected to drop 3.6 percent, totalling $16.3 billion. In 2019, enterprise software spending in Australia was up by 12 percent, with a total $16.9 billion spent.

Separately, Gartner’s May 2020 estimate for total Austalian annual enterprise IT spend for 2020 is $90.1 billion, down from $94.9 billion in 2019. Gartner does expect a rebound in 2021, to $93.8 billion in IT spend.

As previously reported, the Australian Information Industry Association (AIIA) Building Australia’s Digital Future in a Post-COVID World white paper touched on the concerns among local software companies and R&D incentives. AIIA suggested a non-R&D-based innovation tax incentive be created as 50 percent of innovation are not R&D-based.

Copyright © 2020 IDG Communications, Inc.

  
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