COVID-19 Hampered MSP Digital Commerce Service Initiatives

The pandemic hindered MSPs’ attempts to roll out digital commerce services, according to a new study.

AppDirect this week unveiled results of its “State of B2B Subscription Commerce in the New Normal” study.  The survey examines organizations’ initiatives around subscription selling, digital commerce and how COVID-19 affected their strategies.

Respondents nearly unanimously (97%) reported a pandemic-related disruption in their digital commerce initiatives. Another 83% report concerns about their ability to continue their digital transformation plans.

However, the plurality of respondents said COVID-19 sped up their digital commerce service initiatives. Two in five (40%) reported an acceleration.

Source: AppDirect’s “The State of B2B Subscription
Commerce in the New Normal” Study

The technology services industry may be a exception, however. AppDirect examined different verticals and found that 44% of responding managed service providers delayed or canceled their digital commerce rollout.

Undoubtedly, we can attribute some of that statistic to the fact that MSPs and other channel partners were first on the scene in helping their customers adapt to the pandemic. Otherwise, the study found that 77% of business leaders are working toward long-term digital strategies than short-term responses to the pandemic.

Wakefield Research surveyed 500 senior executives on behalf of AppDirect.

A New Era?

AppDirect stated in its report that we have arrived upon an “era of subscription commerce.” For instance, 95% of respondents said they sell at least one subscription-based offering. For another 67%, subscriptions entail the majority of their products and services.

AppDirect’s Dan Saks

“It’s clear that companies today face unprecedented challenges, and embracing a recurring revenue model is key to driving resilience in uncertain times,” AppDirect CEO Daniel Saks said. “This report shows that many organizations recognize just how critical subscriptions are, but significant challenges to implementing and scaling a digital subscription business remain.”

And what sort of companies are most dedicated to subscription services? The study found that younger companies and those with higher revenues sell most or all of their products through subscription. Eighty-six percent of these subscription-focused companies have existed for less than 10 years. Seventy-nine percent of those earn yearly revenue of more than $500 million.

But despite the widespread movement toward subscriptions, this model comes with challenges.

“At a high level, we found that enthusiasm for subscriptions is no antidote for the challenges that transitioning to a recurring model brings,” the report authors said. “In fact, the more subscriptions a company offers, the more complexity its team has to manage — and the more worries they have about being able to sustain the pace of digital transformation and innovation.”

AppDirect last month announced a $185 million funding round. The money will support organic growth, acquisitions and hiring. AppDirect owns AppSmart, the master agent/B2B commerce platform.