When the coronavirus outbreak hit in March, cloud solutions company SADA Systems had many customer deals halt, leading to a "massive slowdown" that caused the firm to prepare for the worst — only to experience a complete turnaround the following quarter.
SADA System's experience reflects larger trends in the enterprise tech industry: Early on, businesses struggled to figure out how the pandemic would affect their businesses and paused projects while their IT teams were tasked with helping employees adapt to working from home.
As a result of that pattern, many large technology deals that SADA Systems expected to sign went cold, causing the firm to miss its first quarter sales goals. As it saw customer deals slow down, it put in place a hiring freeze as a precautionary measure.
"We had great momentum with a lot of customers," Tony Safoian, president and CEO of SADA Systems, told Business Insider, reflecting on the first few months of the year. "Everything stopped, and we got really worried."
For SADA Systems, that period of panic didn't last long: Things started to pick up midway through the second quarter. Once the situation stabilized and people got more used to working from home, companies started thinking about what their broader priorities were.
Many decided they needed to invest in cloud services to cut costs, including in Google Cloud Platform (GCP), the cloud unit that SADA partners with. Ultimately, SADA Systems sales in the second quarter were 300% higher than the targets that it had set for itself last year, according to Safoian.
"It surprised everyone – the volume of deals, the size of the big commits to GCP," Safoian said.
Customer cut costs with cloud during the coronavirus pandemic
The pandemic-related downturn actually ended up accelerating the transition to the cloud that many companies were planning, according to SADA.
"For the segment of our customers who are more traditional companies who are trying to save money, they are looking at cloud as a way to do that," Safoian said.
What's more, many industries now need to build cloud apps to make it easier for customers to buy their services, such as a restaurant adding features to order delivery and takeout.
"Whether that's retail, healthcare, media entertainment, if I don't change the way I serve my customers, I'm dead," Safoian said. "We're seeing that urgency. I don't think it's a Q2 blip, but only time will tell."
A study by Snow Software found that 82% of IT leaders have increased their cloud usage in response to the pandemic, and 91% plan to change their cloud strategy because of the current economic crisis. And according to Gartner, the public cloud services market is forecast to grow 6.3% in 2020 to $257.9 billion
It's not the first time SADA Systems grew during tough economic times. Safoian says that during the last economic downturn, the company saw "good growth years."
"When there's retractions in the economy, more of the IT strategy shifts to cloud because it's definitely a way to save money," Safoian said.
Safoian hopes that the company's second quarter results are a promising sign for the rest of the year, but that the company is only "cautiously optimistic" because while customers may be spending more on cloud, there may still be an overall decline in IT spend.
"We hope this wasn't a Q2 anomaly," Safoian said. "We hope the rest of the year maintains this level of momentum."
Some customers have moved from AWS to Google Cloud
SADA Systems is a Google Cloud partner, meaning that it resells Google's products and helps customers use them.
Safoian says that he's seen customers move from Amazon Web Services to Google Cloud as a way to cut costs during the pandemic. For example, he says that customers picked Google Cloud because it allows them to re-architect their applications in a way that's more efficient, such as by using the open source cloud computing project Kubernetes to easily move their workloads between the cloud and private data centers.
"Google overall is going to have some strong performance in their cloud business because of COVID-19," Safoian said.
SADA also says that because of increased flexibility in Google Cloud's partner program, it now has greater ability to give customers discounts and consumption credits in order to get them to commit to longer-term deals.
"I've seen Google get very very aggressive with pricing," Safoian said. "Whereas a $50 million customer for AWS might not be that meaningful, Google really wants to compete for those. They'll get aggressive in how they go after customers that AWS might have forgotten about."
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