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While the business landscape continues to leverage a remote or hybrid working model, there will always be a demand for collaboration software. This is made evident by a new report from The Brainy Insights, which shows the collaboration software market size increasing from $18.9 billion in 2021 to $56.14 billion by 2030 at an annual growth rate of 12.86%. Businesses have a wide array 0f uses for these platforms, including organized communication, file sharing, and document co-creation, all of which can be performed remotely.
The market’s growth originated at the onset of COVID-19 in 2020, a period of explosive demand, thanks to the popularity of remote work at the time. Providers of collaboration tools during COVID-19 experienced an unprecedented 263% rise in market value. Organizations were forced to adopt SaaS applications like CRM, collaboration software, project management tools, and video conferencing platforms if they were to stay operational with a remote workforce.
However, by mid-2022, the threat of the pandemic has since diminished, to the point that many companies summoned their employees back to the office. Although hybrid work is still the dominant model, many employees already report to the office for at least a few days each week, decreasing the demand for collaboration software. This has led to a 49% slide in the collective market value of providers.
But The Brainy Insights’ report shows that the demand for collaborative platforms, albeit reduced, remains high. There is a sizable window of opportunity that welcomes new players and furthers the growth of existing ones, especially those that diversify their offerings and take note of investment-related collaboration software trends. So what are these growth areas in particular?
Adoption of AI
A report by Zion Market Research found that artificial intelligence (AI) is one of the key drivers of the global cloud-based collaboration software market. AI, when harnessed by collaboration tools, can automate the activities surrounding workflows, improve communications, and power customer-facing tools like chatbots. In a nutshell, the technology further enhances the operational efficiency imparted by collaborative platforms to business users.
For instance, sales teams can leverage a collaboration system to map out customer journeys, which account for all the activities a customer will encounter when transacting with a brand. AI enters the picture by automatically executing these activities, from scheduling posts and emails to prompting actions for both users and customers. As a result, all the steps in the sales process are fulfilled and delivered in a timely manner.
Given the numerous benefits that AI brings to the table, a McKinsey survey revealed that 56% of organizations leveraged AI for at least one function in 2021. This percentage has likely gone up this year and a part of it involves AI’s enhancement of collaboration tools.
Enterprises Still Heavily Invest in Collaboration Solutions
Research firm Morgan Stanley discovered that the value of the collaboration software market has returned to pre-pandemic levels. It might be lower than during the onset of COVID-19 but the market is still flourishing, with a significant number of buy-ins from investors. Areas of collaboration solutions that have been receiving a lot of attention from investors are video conferencing, cybersecurity, telephony, and remote desktop technologies.
Recent online collaboration software statistics show that the usage of virtual desktops grew by 25% since the start of the pandemic, accounting for 67% of organizations, and is slated to reach 78% in two years. Similarly, video conferencing solutions remain popular as 75% of organizations continue to use these. Moreover, 40% of business users elected to upgrade their plans amid high inflation, a larger share than those who scaled back their contracts (25%). Meanwhile, 80% of organizations upgraded their cybersecurity platforms in the past three months.
What collaboration solution providers can do is further develop these areas or adopt them in their platforms to make them more attractive to investors.
Diversified Solutions
Many established SaaS platforms have gone on to develop new features and adopt advanced technologies to diversify their toolsets. As a result, these systems have gone beyond their initial software categories, as they have incorporated collaboration, business intelligence, and task management solutions, among others. The extensive upgrades have increased their value to organizations, especially those with large operations.
A foremost example would be Zoom. With 75% of organizations using video conferencing software and 69% relying on the same platform for live messaging, the company developed team chat, email, calendar, and intelligence solutions for the platform to maintain its status as the video conferencing software industry leader. Likewise, Canva, Oracle, and Salesforce made significant upgrades to their platforms to cast a wider net for business users looking for remote collaborative solutions.
Ample Room for New Players
Unlike other software category types, the collaboration solutions market isn’t dominated by one or just a few players. Based on collaboration software market share, the top five collaboration platforms are Microsoft, Zoom, Google, Cisco, and Goto. While these systems collectively have a large share of the market, the collective share of other platforms isn’t far behind the top five. This leaves the door wide open for new players to emerge and develop unique solutions.
What’s more, Morgan Stanley’s research reveals that 56% of organizations intend to maintain two or more video conferencing platforms to address the varying needs of teams and departments. New players can adopt a similar approach to the collaborative solutions they provide to serve as many business needs as possible. Besides, Zoom has already laid out the blueprint with its new features. They can adopt something similar or even build on Zoom’s strategy if they have the capacity to do so.
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