Industry Environment

Despite the continued impact of the COVID-19 pandemic throughout 2021, the operating environment and outlook for the global software and cloud and IT services markets remained attractive. In fact, as a direct consequence of the pandemic, organizations continued to increase IT spend and prioritize digital transformation strategies, enabled by cloud-based solutions and services.

However, along with the increased strategic importance placed on technology, organizations often struggle with the rising costs and complexity associated with procurement, cloud migration journeys and the emergence of hybrid and multi-cloud environments. As a consequence, organizations increasingly look to experts, such as SoftwareONE, as they lack the internal resources to address these challenges themselves.

Meanwhile, vendors require partners to help them access a dispersed audience of SME customers, support them in adopting their purchased technology, consuming cloud resources and renewing subscriptions with the ongoing shift from on-premise to Saas and public cloud. As a global software and cloud-only platform with strong IP-driven offerings, SoftwareONE is able to provide solutions to these challenges, making it a partner of choice for vendors of all sizes.

Well-positioned to deliver both customer and vendor value

The global software and public cloud market

According to Gartner, the global software and public cloud[1] market was valued at USD634 billion in 2020 and is expected to grow at a CAGR of 14% up to 2025, with consistent growth across all major geographies.

At SoftwareONE, gross profit from Software & Cloud grew 3.0% YoY ccy to CHF533.6 million in 2021, compared to CHF519.5 million during the prior year period, driven by a recovery across the key hyperscalers (Microsoft, AWS, GCP) and ISVs. Gross profit growth in H2 2021 corresponded to 8.8% YoY ccy.

In terms of Microsoft gross billings, which amounted to CHF14.7 billion in 2021, SoftwareONE’s business developed in line with the overall Microsoft market, with positive momentum across all customer segments. However, as SoftwareONE continues to shift customers from multi-year agreements towards pay-as-you-go subscriptions, e.g. XSimple bundles, this had a temporary negative impact on gross profit in Software & Cloud. Pay-as-you-go involves a lower upfront payment, but significantly increases the life-time customer gross profit through a combination of increased recurring revenue and incremental services, primarily recognized in Solutions & Services.

Looking ahead, SoftwareONE remains well-positioned to either grow in line with or even outperform the software and cloud market, with steady growth expected across the hyperscalers and ISVs. In addition to leveraging its existing portfolio of more than 7,500 vendors, the company plans to continue to invest in PyraCloud, with the launch of Marketplace in 2022, as well as its Digital Supply Chain offering. Both seek to capitalize on the trends of customers wanting to either self-service or outsource their tail-end software spend.

[1] Defined as Infrastructure as a Service (Iaas) spend

The global IT and Iaas-related services market

In 2020, IDC estimated the value of the global IT services market at USD1.1 trillion. SoftwareONE’s addressable market is focused on the high-growth segments of this sector, in particular Iaas-related services which are driven by growth in the public cloud market. In 2020, the Iaas-related services market was valued by IDC at US$64 billion, with expected growth of 32% CAGR up to 2025.

With SoftwareONE’s portfolio resonating well with customers, the company achieved growth in gross profit of 53.5% YoY ccy in 2021, including the impact of the acquisition of InterGrupo.

SoftwareONE continues to invest in capabilities to scale out its next-generation Solutions & Services business and capitalize on market opportunity to further address customer painpoints along their digital journeys to the cloud. The company will leverage PyraCloud, industrialization, automation and the optimization of its delivery model to drive profitable growth.

SoftwareONE believes that its integrated and IP-enabled offering across its business lines positions the company well to drive share of wallet with existing customers, while increasing the proportion of recurring revenues.