Will a single productivity platform like Google Suite or Microsoft Office 365 become dominant? Or will best-of-breed applications like Slack and Zoom — the parent companies for both enjoyed successful IPOs this year — continue to gain market share?
Recent survey show that adoption of Microsoft Teams is greater than Slack among both small and large enterprises. Whether or not this trend continues will depend on the extent of which the applications’ functionality is utilized as well as how much people are willing to spend. These questions are relevant for non-investors, this matters for two reasons. First, like us, you probably use these tools to some extent. Second, widely used software has to be continually integrated with these and other competitive tools.
Plans to initially adopt Slack and to increase spending with the company have decelerated dramatically according market research firm ETR, which conducts conducts quarterly surveys of senior IT executives. Actual use of Slack dropped from 15% in October 2018 to 7% in July 2019 among respondents working at large companies. The drop is partly because companies that experimenting with free Slack implementations have stopped the pilots. Slack’s remaining large company customers’ outlook also dimmed, with 16% planning on either decreasing spending or using the product altogether. Normally that wouldn’t be considered a bad number, but it was a dramatic increase from just 4% in ETR’s April study. It appears large companies have reacted negatively to recent changes in Slack’s go-to-market offering this spring.
It is important to note that Slack is still growing, just not as fast as Microsoft Teams. As Slack attempts to convert free plans to paying customers, it faces a challenge in that many of its current and prospective customers also use Microsoft’s Office 365 and plan to utilize Microsoft Teams because it is bundled for free with Office 365.
Adoption of Slack, Zoom and other enterprise-level collaboration and communication tools has been driven by bottom-up demand for specific functionality. If that dynamic continues, they have a good chance of success. If not, compatibility with an organization’s existing IT footprint and adoption by a large mass of existing users are both factors in which Microsoft, Google and a few other companies have a leg-up.
Feature image via ETR.