The Covid-19 pandemic has consolidated the data economy

Giuseppe Donvito, Partner at P101 | November 2nd, 2020

Data, data, data. They are at the center of the economy, they are the most important asset today. And the companies that know how to make the most of them will be only ones thriving. This year’s edition of Saastock Emea – one of the most important global conferences about software-as-a-service – was particularly emblematic, as for the first time it was held online. P101 took part to the event, together with companies and research institutions, the whole world of venture capital funds, and many global companies in the field of software-as-a-service for business. The topics of the event were closely linked to the pandemic and the effect it is having on digitization.

It is quite a promising time for the world of Italian innovation: in 7 years our innovation ecosystem has gone from 0 to 1.4 billion euros in terms of turnover. In 2019, around 600 million euros were invested in innovative start-ups, and this trend did not stop even during lockdown. Open innovation has also been growing, and start-up investments by Corporate Venture Capital have increased by 23% in 2020. These are the latest numbers of the Italian CVC Observatory by InnovUp – Italian Innovation & Startup Ecosystem.

These figures show that the global pandemic has brought an acceleration in terms of innovation, starting from the digitization of businesses, that will continue in the way that Saastock has outlined and which we will see below.

The sky isn’t clear yet (but the cloud… can clear it up!)

In 2020, widespread digital transformation has opened up new opportunities for some companies, but it has also created an unprecedented threat for others. Now, all those who have won and those who have lost the digital race must think of new strategies and build their business on the basis of data, streamlining processes and choosing an empathic managing style. This will require more and more cloud space and a more “as-a-service” approach to software.

Product is King (and customer too)

Creating a great product that “sells itself” is every entrepreneur’s dream. Now that businesses are struggling with money, it is not surprising that product-driven growth has been implemented even more widely. But a product that works must guarantee high quality and a smooth user experience: to make it happen, entrepreneurs need to listen carefully to customers and align their entire teams to their evolving needs. Retaining customers and finding new ones, who will become loyal advocates, requires breaking down the internal “silos” of every company, to provide a holistic experience. And this can only be done through data: having them and knowing how to transform them into information.

Companies need to make sure that customers (the lifeblood of every business) think of the product as a must-have and not as a nice-to-have thing. However, in a volatile market, how are price and positioning decisions made? How do they decide whether to launch a freemium offer, creating a bear market, or to completely change their pricing strategy? The answers to all these questions can be found in product usage data and channel metrics.

A new way to sell

As the world was moving online, selling suddenly became a virtual experience. The champions of this new world are those companies that quickly stepped out of their comfort zone, finding new, digital, ways to connect with customers. Those who fell behind struggled to change their selling strategy. Now that the situation seems to be somewhat cooler, companies still need to understand how the decision-making process of buyers has changed, in order to design selling propositions that work in the new normal.

Working from home: will it be forever?

In 2020 there has also been the largest home-work experiment so far. We have found new ways to collaborate, communicate, and be productive. But now companies need to understand whether working from home is frustrating or liberating for their team. And if they chose to work from home permanently – which is possible thanks to technology – they need to create a real corporate culture and work as a team, protecting employees’ emotional health, awareness, and preventing burnout. Far away but close, as they say in Italy in the Covid era.

Boom of glocal economy

This year we have been more isolated physically, but also more connected digitally. Indeed, in a “shrinking world”, there is an enormous potential for SaaS companies to be successful internationally. But how can they overcome cultural differences? Growing internationally is like starting a new company. Hence, you need to master local and regional markets first, then grow internationally.

It is time for sustainable growth

We have also experienced a real shift from “growth at all costs” to “sustainable growth”. But, in an unpredictable economy, how can a company be sure that its business is healthy? By abandoning “vanity metrics” and focusing on those that matter: for example, on the effect that a weak dollar will have on exports, rather than focussing on adjusted profits. Data, data, more data, and above all, the meaning of data.

Venture Capital is growing faster

Earlier this year, it seemed that VC funds were more cautious about investing, but as the lockdown spread like wildfire, most SaaS companies started showing that they had good prospects. And hence, investors picked up their pace: the result of this is that SaaS companies will find it easier and easier to get funded and grow, because they have exactly the tools that make the new economy happen.