If you've been listening to enterprise software vendors over the last two years, the shift to hybrid work is inevitable and only they hold the tools to make it successful. But in reality, customers are still all over the place when it comes to hybrid work solutions.
Marc Benioff, who spent $27.7 billion on Slack last year and also owns one of the most expensive pieces of corporate property in San Francisco, declared that Salesforce's "digital headquarters are more important than our physical headquarters." Meanwhile, Satya Nadella insisted that hybrid work is the "biggest shift to the way we work in a generation," right before touting the latest updates to Teams and Microsoft 365.
The stories are abundant. Thanks to the pandemic, businesses had to instantly grapple with the stark reality that it would be months, and likely longer, before their employees would again work together side by side in a physical building. Suddenly, the most valuable real estate in business became the 14 to 16 inches between the casing of a laptop.
"We truly want our team members to be able to work from anywhere," said Rock Central senior director of engineering Andy Picmann. "Whether it's on your laptop in the office, or from home, or having similar features and functionalities right on your mobile device as well."
Companies rushed to adopt new tools or expand the use of existing systems — many that, prior to the pandemic, were viewed as "nice-to-haves" but not critical tech — to help connect employees who were not only now widely geographically dispersed, but also working under vastly different conditions. While some workers flourished, others suffered.
The phenomenon sent enterprise tech into a frenzy. Every provider worth its salt immediately began marketing its software as magic, providing new levels of productivity and collaboration that would solve any disparity caused by the pandemic.
Businesses appeared to buy the pitch. Industry giants like Microsoft saw their sales boom, while startups like Notion scored tens to hundreds of millions of dollars in new investments. The shift was so profound that vendors like Salesforce and Adobe spent billions to reap the benefits of the sudden surge of interest in collaboration and productivity software. Overall, while this demand created some problems, like insane sticker-shock, the stampede in adoption may have helped support increased output at some of the largest corporations.
"Our pandemic plan told us to expect a 40% reduction in productivity. And the reality is, across most of our business lines … we saw an increase in productivity," said Nationwide Chief Technology Officer Jim Fowler. But if Microsoft Teams "is down more than a minute or two, work comes to a grinding halt."
Suddenly, the most valuable real estate in business became the 14 to 16 inches between the casing of a laptop.
And now, the maturing needs of end users has tempered 2020's sugar high and early leaders are emerging in a sector that's expected to reach $26 billion by 2027. As hybrid work becomes more common — if not exactly mainstream — enterprise software buyers have become much more discerning.
Organizations like American Express, Nationwide, Ford and Capital One better understand which applications will be needed to empower employees to work across the virtual and real worlds, which ones have been overhyped and where gaps exist in the marketplace — a shift that could have a profound impact on the future of the collaboration and productivity software market.
It's starting to have an effect on enterprise software vendors. Zoom, for example, faces an existential crisis over what role it will play as some workers return to the office. That uncertainty has underscored a 23% decline in its share price over the last year.
Meanwhile, shares for Microsoft, which has a growing stranglehold over the market, have risen roughly 60% in the same time frame. Other smaller, but growing vendors like Atlassian and Asana have also seen huge sales gains that drove up their stock.
While the market is still booming, there are questions of whether the future touted by Salesforce, Microsoft and others is even going to be a reality — at least, to the extent advertised. The amount of workers operating remotely full-time decreased from 54% in May 2020 to 25% in September 2021, per Gallup, while the portion of individuals that went into the office occasionally grew from 15% to 20%.
'Equity in collaboration'
Prior to the pandemic, tools like videoconferencing, virtual whiteboards, online document management and instant messaging were becoming more prominent, as many enterprises were already introducing more flexible work policies.
But all collaboration tools saw a significant rise in adoption in the last two years and are now fierce battlegrounds in the world of enterprise software, pitting players like DocuSign, Miro and Figma against giants like Microsoft and Adobe, which bought Workfront in November 2020 for $1.5 billion.
"Everybody has access to web-based videoconferencing [and] group chat with history. Anybody who needs access to a smart whiteboard has it. Almost everyone has access to cloud-based document storage," said Brian Saluzzo, the executive vice president of global infrastructure and digital workplace at American Express.
As the world of work grows more complicated, however, companies are also uncovering new problems that threaten to undermine the benefits of the evolving hybrid or fully-remote policies.
Increasingly, meetings are split between those in the office, those dialing in from home and workers who may be on the move — whether that's in the car on the way to pick up the kids or in an airport getting ready to board a flight. That's creating a need for more sophisticated videoconferencing capabilities to bridge the conversation divide between the real and virtual worlds, as well as tools that help organizers know where everyone will be located.
The dispersed workforce also means employees are using a larger array of hardware. An individual might use just their iPad when working out of a coffee shop or while traveling and a laptop when back at their desk. So employees need to be able to access documents across all those devices and share them within the enterprise.
Notably, while investors fear slowing sales in the future, DocuSign just posted 50% year-over-year revenue growth as it builds out a suite of products to tackle that challenge. Meanwhile, revenue last quarter at Box, which is facing a formidable challenge in trying to expand deeper into DocuSign's world, rose just 10% to $202.4 million. While that may be solid growth for other sectors, that's not the case in the world of enterprise tech.
The maturing needs of end users has tempered 2020's sugar high and early leaders are emerging in a sector that's expected to reach $26 billion by 2027.
Even physical offices are getting a revamp to incorporate tech that better supports hybrid work. Deutsche Bank was already in the process of moving to a new office when the pandemic hit, and took the time to outfit the building with upgraded equipment. Now, each office can switch between a private room and a conference room, complete with a giant screen and wide-angle camera designed to help remote employees feel as if they're in the room.
It's all part of an effort by corporate technologists to make sure all employees have an equal chance to succeed in the new world of work — or what Maru Flores, Ford's global collaboration and productivity services manager, called "equity in collaboration."
The goal is to level "the playing field of both remote and onsite participants to create, contribute, add whatever that is on an equal ground — which is a change now from totally being remote," she said.
New possibilities, new challenges
At some businesses, it's no longer expected that all employees stay online during designated hours.
Organizations are giving workers more flexibility to work when it's most convenient, like after a child goes to bed at night. And while some businesses are implementing a four-day workweek, others say employees want to elongate it to seven days, offering up the option to hunker down on Outlook on Saturday while waiting for friends to come over in exchange for leaving earlier during the week.
Those shifts are ultimately helping to craft a more thoughtful approach to the software stack. A tool like Slack, for example, gives workers the ability to get caught up on messages at their own speed — whether in real time or by spending 30 minutes in the evening backtracking through the day's conversations. Some workplaces have even prioritized asynchronous communication over traditional methods like email, while others see the two continuing to co-exist.
But there are gaps that organizations are waiting eagerly for vendors to fill.
At AmEx, Saluzzo wants software that can help remote employees navigate a complicated organizational structure to more quickly find in-house experts on specific topics. For Ford's Flores, it's a videoconferencing platform that supports 360-degree views that can follow those walking around the physical room. And others are eagerly waiting for promising tech, like virtual reality, to improve.
VR "is really going to revolutionize a lot of how we collaborate within enterprises," said Flores. But "the technology is still not mature enough."
Avoiding a single software ecosystem
In some cases, however, the benefits provided by the explosion of software are partially undermined by the added challenges imposed on internal tech teams.
After democratizing the ability for leaders to buy the tools that worked best for their teams, for example, some are now clamping down on so-called "shadow IT" in an effort to better connect a highly fragmented suite of applications across the enterprise.
While software vendors increasingly tout the ability of their systems to connect to others, many are still very far from being integrated right out of the box, and require engineering resources to manage. It's a huge area of investment for organizations that increasingly want to share data across applications in an effort to inject automation and advanced analytics into the most common business tasks.
Picmann, for example, said the ultimate goal at Rock Central is to have all its tools in one spot. Microsoft is the primary IT vendor across all of Rocket Companies.
"A large piece of feedback that our team members provided to us years ago is 'Well, we had a tool for this, and a tool for that, and I don't remember what I should use,'" Picmann said. "So we said, 'You know what, let's take a look at the Microsoft product.' And that's the direction we went maybe five, six years ago."
While the market is still booming, there are questions of whether the future touted by Salesforce, Microsoft and others is even going to be a reality.
It's why the whole industry is rushing to build new partnerships with the most in-demand providers — even if that means working more closely with a fierce competitor. But in some cases, tech chiefs avoid going too deep into a single vendor's ecosystem, deflating the ultimate goals of providers like Salesforce.
"Our goal is not to get to one," said Nationwide's Fowler.
IT leaders are also hesitant to invest too heavily in tools from startups that have yet to prove their systems can scale to the breadth needed to support organizations with potentially 50,000 or more employees.
For example, AmEx has a test lab outfitted with all the hardware and other tech a regular employee would use to do their job to run potential software deployments through the ringer. Rock Central, too, has a comprehensive vetting process using scorecards to evaluate multiple products at the same time.
So instead of rushing to deploy a tool that may be useless in a few years, customers are more comfortable waiting and working more closely with existing vendors to help plug holes in the product suites.
"Yes, the tool that you have today may not have the newest feature. But if you are willing to wait a little bit, it will get there," said Fowler. "We've seen that between Zoom and Teams, there's been leapfrogging that happens back and forth. But even the Microsoft Teams product doesn't have all of the features we might get in Zoom, it's good enough … and we know it will catch up."
It's more than just the software itself. The pivot to the virtual world has completely revised workplace cultures. But even seemingly basic changes to daily workflows can face internal resistance, according to IT leaders.
The move to cloud-based storage "was simple," said Saluzzo. "The lift to teach the company how not to send attachments around was much bigger. But there isn't one person in the company that can envision going back to what we were doing."
Ultimately, the saving grace for many tech leaders navigating the challenge of outfitting their enterprise with the applications needed to support what is, in many cases, a dramatic shift in the way work gets done is tapping into a robust network of other IT professionals.
"The process is to have a tech strategy, know that is going to change, reach out and always stay outwardly focused," said Capital One managing VP Maureen Jules-Perez. "Sharing is fun: You don't feel like you're on your own."