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Archive for November, 2008

Are We Closing in on Saturation for Some SaaS Segments?

Posted by Bob Warfield on November 12, 2008

While a vocal group continues to dither on whether SaaS is a permanent fixture, whether their on-premises company should get involved, and many other questions, the SaaS industry has been marching along.  I noted some interested statistics in an article from MyCustomer.com gleaned from a Software Satisfaction Awards survey:

–  60% of SME businesses are using a SaaS solution for CRM.  1/3 of Medium and Enterprise use SaaS for CRM.

–  50% of Medium businesses use a SaaS HR solution with the figure rising to 75% for talent management.

Those are much higher adoption rates than I would have guessed.  One starts to wonder with numbers like 60% and 75% whether some of the segments aren’t getting pretty fished out.  The survey represents 5,000 respondents, but I have no idea how representative it really is.  If accurate, it would imply that companies like Salesforce or perhaps SuccessFactors need to open new market segments pretty soon.  Salesforce, of course, is moving up market into the Enteprise to an increasing extent.

Another tidbit:  one of the key ingredients for customer satisfaction was the ability to act on their suggestions quickly.  SaaS companies move a lot faster than others.

Posted in saas | 3 Comments »

It May Not Be the Best of Times, But Times Are Not Bad For SaaS

Posted by Bob Warfield on November 12, 2008

I took fellow Enterprise Irregular Larry Dignan and a few others to task for rallying around Netsuite’s earnings announcement as a sign of weakness for SaaS.  Larry said of SaaS, “It should be the best of times, but it isn’t,” and I said that (along with remarks by some others) was curmudgeonly behavior.  I pointed out that SaaS companies including NetSuite were doing pretty well compared to the likes of On-premises companies, particularly when you view it through the lens and perspective of the worst recession we have seen in 70 years.

Along comes Concur’s earnings announcement today after market close, and I have to say that it is a ringing endorsement both for Concur and for the SaaS model in general.  As I look, Concur is up 10% in after hours trading on a day when everything else I monitor was in the red and the DJIA in general was down 176 points.

A few details from the announcement:

–  Total revenue for fiscal 4Q08 was $57.5M, up 61% year on year and up 5% sequentially.  At a time when most companies are projecting a deepening recession Concur managed to grow sequentially.

–  Total revenue was $215.5M for fiscal 2008, up 67%.   When was the last time you heard of an on-premises public software company that had grown 67% in annual revenues?

–  Net income is growing and cash flow is way up 222% from the year ago quarter.  I’m with Warren Buffet and others in being more interested in cash flow than net income.

Of course this beats the street handily, and that’s one reason the company is up after hours.

The company is giving guidance for growth in 2009.

So once again, for the SaaS doubters out there, which On-premises companies are posting results like this? 

Clearly customers and the market are voting their pocketbook, at least for Concur.  It’ll be interesting to see how well Salesforce is sustaining their momentum with the next announcement.

These are not the best of times for anyone, but the times are not bad for SaaS companies.

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The Invisible Hand is Neither “No Hands” Nor “Firm Hands”

Posted by Bob Warfield on November 11, 2008

It’s a great pity the world’s economy lays in tatters from the perspective of people’s perceptions of the efficiency of Free Markets (as well as many other more tangible and immediate tragedies).  The tragedy is that the financial ruin that surrounds our economy is being shackled to the notion that Free Markets have failed.  The conclusion being pushed is that this disaster is as a result that the markets were in fact too free.

I’m inspired to write this both after numerous lunchtime conversations and after reading Dale Dougherty’s piece, “The Visible Hand.”  While we’re on the subject of hands, my title comes from Adam Smith’s notion of the Invisible Hand that guides Free Markets to do the right thing.  Hard core capitalists and entrepreneurs are often proponents of Free Markets, but its hard to be excited about them at the moment.  The trouble is there are some subtleties at work here that are being lost.

Is this disaster really a result of too much market freedom?  I don’t think of it that way, but perhaps it is because I have an odd view of what it means to be a Free Market.  Smith’s notion of a Free Market was that individuals acting in their own enlightened self-interest would produce behavior that collectively results in the greatest good for their community.  This collective result is that “invisible hand.”  Milton Freedman calls this “cooperation without coercion”, an expression I love, because it speaks to the idea that everyone can benefit through natural cooperation that is not forced.

That’s all well and fine, but there was a tendency to assert that a Free Market meant one free of any regulation. That’s the “No Hands” reference in the title of this piece, and it is where my own peculiar view perks up, because I don’t believe a Free Market implies no regulations.  In fact I think that is categorically wrong and that’s where the real blame lies for our current circumstances.  A Free Market requires effective competition and a relatively level playing field.  Based on that, for example, I would argue that there is a real need for anti-trust regulation.  Too much monopolization eliminates the “Free” and “competitive” aspects of a Free Market, and so inhibits the action of the Invisible Hand to produce much collective good.

I look at this as being similar to physics, where scale matters.  When there is enough competition, the markets behave smoothly and positively deliver the benefits commonly ascribed to Free Markets.  This is a competitive scale where Newtonian physics work.  When there is too little compeition, we see quantum effects trickle in and life is suddenly much harder.  Newtonian physics no long works, and we see completely unintuitive results where very sudden and drastic changes an occur, often to the worse.

It is no surprise to me that Free Markets keep failing catastrophically around financial markets, and in particular, that it keeps happening around financial markest where accurately predicting the future matters.  Take the 1987 Black Monday crash.  Experts are still arguing about it, but two of the leading cause contenders are Program Trading and Illiquidity,  Both are cases where was appeared to be an efficient free market was in fact not.  WIth program trading, if too many of the algorithms become too similar and are executed in rigid lock step by computers, suddenly what appear to be independent operators are all acting as one single large entity.  Illiquidity is simply an example of a market that such large transaction volumes going on that it outstripped the liquidity, another non-Free Market scenario.  The Long Term Capital fiasco is very similar in scope, and I will argue so too is the current crisis around mortgages.

What keeps happening is we allow relatively few people to get too much of the market.  For the manufacturing world we largely cured this through anti-monopoly means.  But, the financial world allows iceberg-like behavior where much of the danger lies beneath the surface and invisible.  it is as a result of allowing too much leverage. 

I read somewhere that the mortgage brokerage industry had access to 40:1 leverage.  If you had $1M, you could write mortgages to the tune of $40M.  Isn’t that absurd?  I recall well my father explaining to me the evils of trading on the margin for stocks.  As he put it, if you borrow to the full margin amount, not only are your gains doubled, but so too are your losses.  If a stock goes down by half, you’ll be wiped out with a margin call.  Most people in my generation regard margin like this as evil, but now imagine that 40:1 advantage mortgage lenders enjoyed.  It took comparatively little swing in housing prices before everyone was incented to default on the mortages and wealth started evaporating like cool water on a hot summer sidewalk.

We’ve built up in modern times a series of financial markets that encourage this kind of leverage.  Look at energy prices.  Look at the swing in gasoline prices we’ve seen just in the last 12 months.  Isn’t it hard to believe that much swing was due to demand?  Do you believe enough people are driving less than half as many miles to change demand so much?  Me neither.  I wonder how much gasoline one can control with $1M properly deployed in the futures markets?  Is it the 40:1 mortage brokers enjoy?  More?  Less?

All of this contributes to the erosion of competition because relatively few people in very specialized businesses gain control over extremely large markets.  They can make a lot of money if things go as they plan (there’s that dependence on predicting the future that I mentioned), or they can leave the rest of us holding the bag if things don’t go so well.

Can it be as simple as tightening the “margin requirements” on some of these financial instruments?  Maybe so.  I’m sure there will be those that argue this leverage is needed to allow legitimate businesses to hedge risks cheaply, but if they had to build more of that risk into their prices wouldn’t it be better than the cost this latest finanical disaster has placed on us?

Let’s make sure we don’t throw the Free Markets baby out with the bath water.  The Invisible Hand means neither Free Hands nor Firm Hands.  it means hands focused on maximizing competition and ensuring a truly free market.

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Great post in ongoing about this tawdry business.

Posted in business | Leave a Comment »

SAP Admits that SaaS is Cheaper for You Too

Posted by Bob Warfield on November 10, 2008

By now you’ve probably heard that SAP is delaying their SaaS offering (called Business By Design) for 12 to 18 months.  It’s a heck of a time to announce be talking about such a thing right in the teeth of Dreamforce.  As Vinnie Mirchandani reports, both Marc Benioff and Netsuite’s Zach Nelson wasted no time in suggesting SAP’s could fix their problems most expeditiously by moving onto Salesforce or (respectively) Netsuite’s platform instead.  Dennis Howlett speaks favorably of the product, but questions SAP’s executive commitment to the whole thing.  The selling has apparently been a bit understated, to say the least.  And, Phil Wainewright notes that by first putting the stamp of approval on the SaaS model and then delaying SAP is only helping SaaS competitors to take share.

This was really not unexpected news.  SaaS is a disruptive business model that’s hard for any On-premises software vendor to embrace.  it is especially tough in hard times.  The reason is that it forces the software vendor to push out revenues and bring in costs.  That’s a nasty combination even in the best of times.  However, if the vendor can stomach a couple of years of really terrible performance, it can emerge at the other end transformed into a much healthier business.

But here is the real irony of the SAP announcement, and it’s a doozy that benefits the SaaS world even more if the news gets out very widely.  It seems that Joshua Greenbaum spoke to the two men at SAP responsible for bringing BBD to market.  They would be Hans-Peter Klaey and Jeff Stiles.  What these two gentlemen had to say boggles my mind that they would admit it publicly, but it does not surprise me.  Essentially they’ve said that the existing release of BBD, which is in use by about 150 customers, cannot be scaled up to handle thousands of customers in a cost-effective way.  The italics are all mine, and let’s examine them carefully.

Can’t scale up to handle customers in a cost-effective way.  What do you suppose are the chances that it isn’t scalability that is the issue, but cost?  What are the chances that BBD is not cost effective for even the 150 odd trial customers who are using it?  Or put another way, it is cost effective for the customers at the price SAP is offering, but costs SAP so much to run that they can’t make a profit. 

Think about that for a minute.  SAP can’t sell it’s software at competitive SaaS prices and make money.  Now let’s turn the math around the other way.  What are the chances you can run SAP in your own data center as cheaply and efficiently as SAP can run it in their data center?  After all, they wrote the software.  Do you see where I’m going with this?  SAP has essentially proven SaaS is cheaper than On-premises software for the customer.  They’ve done so by taking their own On-premise software and incompletely moving it in the direction of SaaS and then stumbling because they can’t even run it cheaply enough to be competitive.

Just to underscore how much cheaper SaaS can be, Zoli Erdos reports that NetSuite is offering a program called Business ByNetsuite (cute name, BTW) that offers their SaaS ERP solution for 50% off what customers would pay SAP just for maintenance.  If they can make money at that price point and SAP can’t make money at full SaaS pricing that’s telling you something right there.

This at a time when customers are screaming as On-premises vendors including SAP are raising maintenance fees.  I am not about to say SaaS is recession proof here, but in this economy, why wouldn’t you want to get the cost savings that SaaS so clearly offers?

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Meanwhile, SAP is bringing John Wookey in to be the EVP of On-demand for Large Enterprise, but he’ll have nothing to do with BBD.  It never ceases to amaze me how much confusion large organizations are willing to deal with both externally and internally.

Posted in saas | 9 Comments »

Who Should Obama Hire To Be America’s CTO?

Posted by Bob Warfield on November 7, 2008

There’s a discussion making the rounds of several groups I frequent (including the Enterprise Irregulars) as well as Techmeme about who Barrack Obama should get to be America’s CTO.  It comes in the wake of John Doerr saying he thought Bill Joy should get the job.  This was in response to a question supposedly sent indirectly to Doerr via New York Magazine writer John Heilemann.

If indeed Obama asked for a CTO, Bill Joy might be a good choice, but I don’t think the government has any business needing a CTO.  At best, an agency like DARPA might need someone with vision to decide where to allocate scarce research money, but even there, the job makes more sense to turn over to a group of people who are up to speed many different disciplines.  Sticking with the CTO theme for a minute longer, others suggested candidates such as Vinton Cerf, Ray Kurzweil, Danny Hillis (where is he now that the multicore crisis is upon us?) or Marc Andreesen.

My problem is I just don’t believe the US government needs a CTO.  I can’t imagine how that role makes any sense whatsoever because a technology visionary is by definition not going to have vision that is broad enough (find me one who spans everything the US government may want or need vision about).  An entrepreneur as some of these folks are (Kurzweil and Andreesen at least) will have had zero experience pushing the rope that is any high level government job where you have minimal ability to just mandate what you want, so that doesn’t work either.

Others suggested Bill Gates or Steve Ballmer.  I’m not sure anyone sees Ballmer as any kind of visionary, but even if he was (and Gates has been, though not recently), these two are CEO’s.  They won’t work for reasons similar to why the entrepreneurs don’t work–they expect far more control over getting people to jump on command than the job is likely to deliver.  Meg Whitman was briefly discussed as a political participant not too long ago and suffers the same problem.  It’s this mindset that causes Seth Godin to say of CEO’s:

Trying to convince a CEO of anything is a little like trying to convince a cop not to give you a ticket. It’s possible, but rarely worth the effort, given the odds.

To be effective, I have to believe this person needs to be someone who listens, who can work the system politically, who can manage outwardly and upwardly, and who is more of a conductor/orchestrator than great visionary.  After all, do we need this guy to invent the equivalent of the warp drive, or do we just want the government to screw up their IT projects a whole lot less and avoid damaging the tech industry and US innovation inadvertantly through foolish policies?

Richard Brandt wants to hire Nathan Myhrvold.  I can’t think of a worse choice, and I can’t imagine why Brandt (a journalist of some repute) things he is a good choice.  Why is Nathan the worst choice possible?  Because he is running perhaps the Mother of all Patent Trolls.  He is exploiting the system to a prodigious degree for personal gain at the expense of innovation in a way that I wouldn’t want any public servant to ever emulate.  The mere association with such a venture would kill any possibility I’d support him.

TechFlash, coming from Seattle, suggests Jeff Bezos or Ballmer, and even puts Jerry Yang (yikes, did I say Nathan was last, hate to choose between Nathan and Jerry right now!) on their poll of who to choose.  Bezos is a smart man who would fail because he is an entrepreneur and CEO for the reasons I’ve discussed.

One thing I think Doerr has gotten right in terms of the role of this person is to create programs that produce more technologists (specifically he wants more engineers and scientists).  But here again, I don’t think Bill Joy, some technologist, or some CEO is likely to understand that.  This is a person that would understand how large organizations behave and how to incent them to do the right thing despite themselves.

Richard Koman has the right idea about this when he says:

These, as well as Hillis and Joy, are ridiculous choices. The CTO job is a political job, a bureaucratic job. The person who succeeds in that job will be someone who can bring an entrepreneurial spirit into a government setting. They will have to familiar with the CTO positions at the whole range of federal agencies; they will have to know their way around Washington to some extent; they will know how to work with large, combative constituencies; and they will expect to be held accountable.

So what sort of person has all of the right qualities? 

1.  They have to be political animals, able to manage and motivate those who are not even in their organization. 

2.  They have to be able to deal with significant accountability, so they must actually produce results.

3.  They have to be able to get smart people of the technology geek persuasion rallied and all moving the right direction.

4.  They have to be able to execute hugely complicated projects that are over constrained and come out of it with real ROI’s and as few failures as possible.

5.  In all likelihood their organization won’t build any technology.  They must successfully manage a gaggle of outside vendors to do what’s best for their country and get over their own self-interests and desire for pork.

I’m surprised Ed Cone at CIO insight didn’t recognize this job description when he wrote about this story.

Aren’t describing the job of a corporate CIO rather than a CTO?  They do #’s 1 through 5 all day long.  I’d look for one that has been with a company with a particularly large scale and a reputation for having used IT to gain a real edge.  Check the GE’s, Dell’s, and Wallmarts of the world.  Heck look for Maynard Webb for than Meg Whitman if you’re going to look to eBay.  Look to Rick Dalzell (was the CIO) of Amazon rather than Werner Vogells (the CTO).  No others need apply.

Posted in strategy | 3 Comments »

SaaS Curmudgeons Rally Around Netsuite

Posted by Bob Warfield on November 5, 2008

“It should be the best of times, but it isn’t”, says fellow Enterprise Irregular Larry Dignan.  “Online software not recession proof”, echoes Ben Worthen of the WSJ.

They are taking delight in Netsuite’s recent announcement that missed analyst’s expectations by a penny and added insult to injury by downplaying the likelihood for renewed success in Q4.  Worthen adds to that Kenexa’s announcement, which predicts down revenue, something that only happens to a SaaS company if they lose customers.  Oddly, Larry Dignan views his impression (and I want to emphasize it is his impression) that there was no big news at Dreamforce as a data point to further this curmudgeonly hand wringing.

What the heck does one’s impression of what’s new at Dreamforce have to do with how good the times are for Salesforce?  That one’s a little week for me.  Perhaps it is a little more obvious as Dignan connects the dots from UBS Analyst Heather Bellini’s remark that, “Salesforce.com expects to derive revenues primarily from selling more seats of its core offerings,” with Dignan’s obsevation that:

Salesforce.com is increasingly going after large enterprise accounts. SAP and Oracle dominate those accounts. In addition, those large accounts are the same ones that are freezing IT spending. In theory, the money should bounce Salesforce.com’s way, but even SaaS is under pressure . The buying cycle is being delayed at best.

But wait, where was the evidence that Salesforce isn’t getting a lot of that business? 

Missing from the Worthen’s WSJ piece was mention of SuccessFactors great quarterly results wherein they posted excellent growth and even raised guidance.  For more on SFSF, check another EI, Dennis Howlett’s piece.

Meanwhile, i want to go back and look a little bit more to the evidence at hand and the arguments being made.  I’m not sure who may have said SaaS is recession-proof, but I wonder whether even they were saying it is proof against the worst financial crisis the nation has seen in 70 years.  Guys, I have a newsflash:  you are doing the financial crisis a real disservice by simply referring to it as a “recession” and wondering why SaaS companies are impacted at all.

I am tremendously impressed that any software company, SaaS or otherwise, can turn in a result like SuccessFactors has.  I would go on to argue that when Salesforce.com announces their results shortly, if they are at all positive, I would have to mark that up as another win for SaaS.

Here’s another one to consider that neither Dignan nor Worthen weighed in on: Taleo.  They beat analyst estimates by 10 cents, but, because they project profits will be lower in 2009, the markets gave the stock a haircut to the tune of about 10%.  Obviously more evidence SaaS doesn’t work in a recession, right?  But wait a minute.  Take a look at a 5 day chart for TLEO and you’ll see that the 10% drop was really just off the pre-earnings speculative runup.  They ended up far better than they had for most of the week before the announcement and are more like flat than 10% down.  I take TLEO as another company that seems to be doing reasonably well despite the incredibly bad economy. 

And what about the on-premise software world?  These articles are about the contrast between SaaS and the old school, yet neither actually tells us anything about the relative performance of the two.  It’s not hard to go through the last 2 reported quarters numbers for these companys and see how their revenues have grown (or not grown).  Let’s start with the two posterchildren for the on-premises world:

– Oracle managed to grow sequential revenue 0% for the last two quarters.

– SAP posted -4% growth.  Their cutbacks in the wake of this performance have been well documented elsewhere.

How does a small flock of SaaS companies fare by comparison?

– Salesforce grew 6% the last 2 quarters.

– Concur grew 2%

– Teleo grew 4%

– SuccessFactors grew 9%

– Netsuite, the company that prompted these two negative SaaS articles grew by 7%

Now which business would you prefer to be running?  Is it the best of times for SaaS?  Maybe not, but it is a heck of a lot better for SaaS than for the perpetual llicense world as far as I can see. 

If this were an ordinary recession instead of a once-in-a-century monster it might actually be the best of times for SaaS.

Posted in saas | 3 Comments »

Yahoo Sound and Fury Evidently Signified Nothing

Posted by Bob Warfield on November 5, 2008

Google has announced its not moving forward with the joint advertising deal that had been struck with Yahoo.  Apparently they feel there are too many objections from government regulators and even some advertisers.

Who wins?  Everyone but Yahoo, which now looks weaker than ever.  Microsoft wins for having dodged the bullet of paying way too much for damaged goods, and for likely getting another chance to buy in at cents on the dollar if it even still wants to.  Google wins for having delayed or prevented an effective partnership with Microsoft at very little cost to itself, and for having helped demonstrate for all to see that Google was really Yahoo’s only hope.

What now Jerry Yang?

Posted in saas | Leave a Comment »

Customer Relationship Experience: The Strategy Behind Salesforce Sites

Posted by Bob Warfield on November 3, 2008

The big announcement at Dreamforce this year is Sites.  At the simplest level, Sites brings the ability for companies to have Salesforce.com host their corporate web sites.  On the face of it, that sounds pretty tame, almost a flash back to the oldest of cloud computing directions: web hosting.  There is more to it, of course.  As Ben Worthen reports from the WSJ, this makes it easy for companies to develop applications to connect their users to back office applications such as Salesforce.com’s CRM/SFA flagship.  Bernard Lunn thinks the timing is right to attract a lot of developers to the platform because of this proposition. 

Salesforce has sweetened Sites and Force.com further by tying into both Facebook and Amazon Web Services, making it possible to build hybrid applications that span all three platforms.  The combination of these outwardly facing applications and the connections with other Cloud platforms is causing some like TechCrunchIT to speculate that the announcement means closer ties with Microsoft and Google.  While Salesforce is already pretty close to Google, they’ve kept their distance from Microsoft.  Will they support Silverlight and Mesh in this new framework?  Time will tell.

But is this announcement, as an article in CNet implies,  simply about making it easier for customers to deal with the infrastructure needs of a modern web site?  Is it really about quick and easy mashups between Salesforce applications and your web site?

Actually, there is a lot greater potential than is being discussed.  Salesforce has a shot at getting control of what I call the “Customer Relationship Experience.”  We’ve all heard about CRM or Customer Relationship Management.  CRE is related, but what is it?

It’s related to the term “User Experience” that is commonly used to describe an interaction with software.  Great User Experience can be a major contributor to commercial success.  We all know Apple has built a number of fabulous franchises around User Experience, and no software company ever wants to be know for software that is hard to use or has a bad Use Experience.

Relate that back to your customers.  Customer Relationship Experience is the sum of experiences that go into creating a relationship between a business and its customers.  In the Web Millenium, it is at least as important as User Experience.  Over time that Customer Relationship Experience will have more and more to do with a company’s web presence. 

Now let’s take that perspective and consider what it means to bring the corporate web site onto the same platform as the corporate CRM system.  Are you beginning to see the potential of a high quality integration between these two?  Imagine if your CRM system absolutely knows all about every one of your customers, and about every interaction they have have had with your corporate web site since before they were even customers.  Is it beginning to make more sense?  Consider the implications for improving your sales efficacy and really driving home that single point of contact 360 degree view of the customer that CRM vendors have always talked about but never delivered.

In fact, through Sites, Salesforce is creating a ready channel and test bed for a whole range of new application modules that will be powerful and compelling.  Tomorrow I’ll post about some of the work we’re doing at Helpstream that dovetails nicely with this view of the world and brings even more power to the CRM system.

Posted in Marketing, saas, strategy, Web 2.0 | 2 Comments »

Enterprise SaaS is Mainstream. Today.

Posted by Bob Warfield on November 3, 2008

It’s the High Holy Week for SaaS this week with the faithful attending Dreamforce.  While that event is focused on Salesforce.com and its ecosystem, most companies that have anything to do with SaaS or an interest in SaaS will at least peek in online to see what’s being announced there.  As Bernard Lunn puts it in his RWWeb post:

Enterprise SaaS is going mainstream, it is a big market to get into right now.

The italics are mine, but I think they’re important, because there is considerable SaaS and Cloud uptake today among Enterprises and not just small businesses.

We’ve all heard the list of objections about the cloud or SaaS many times.  Chief among those arguments are security, reliability, and portability.  And no sooner do you get past those with some technical stratagem or two than someone brings up regulatory issues, which only impact very narrow markets.

But here is a newsflash: the Enterprise is in the Clouds today and loving it.  How do I know this?  Let’s consider a couple of stories that recently popped up. 

First, was the story of GE launching Aravo, a SaaS Supply Chain solution.  I was surprised to see this one pass so quietly, because it is so symbolic of the uptake of SaaS among Big Enterprise.  There aren’t many companies who can serve as a better poster child for this than GE, for example.

Second, I was perusing the latest good quarter’s results from my old Alma mater Callidus, and chanced upon some fascinating figures for their SaaS business:

  • 59 customers
  • 73,000 seats
  • $24.8M in annual recurring revenue

A quick look at the math reveals an average deal size of over 1200 seats.  Not only is that quite large by SaaS standards, but think about what it means.  Callidus is a sales compensation application, so the average SaaS customer has over 1200 sales people.  No small company that!

I called up Steve Apfelberg, SVP of Marketing at Callidus to ask about the numbers and got the following response:

“While our Callidus On-Demand solution has been critical to our growth in the mid-market, the demand for it has by no means been limited to that segment.  Many large, global enterprises prefer to manage the mission critical business processes of sales performance and incentive management in an on-demand environment.  Callidus Software’s almost 60 on-demand customers, with average annual revenues of greater than $1 billion, are a good proof point that large companies are adopting SaaS.” 

“We’re strong believers in the benefits that SaaS and PaaS bring to customers and are excited to showcase Callidus Plan Communicator, our first native Force.com application, at next week’s Dreamforce event in San Francisco.”

Well there you have it.  The average customer for Callidus’ SaaS solution is a company with over $1 billion in annual revenues.  Note that the data in the Callidus system is extremely sensitive–it tells you everything there is to know about the revenue side including best salespeople, best customers, pricing, best products, territories, etc., etc.  Callidus has gone to some extraordinary lengths to safeguard all this and as a result, they’re winning big enterprise deals. 

As I say, SaaS is mainstream in the Enterprise today.  Perhaps not for every enterprise, but there are enough out there that we’re way past establishing a beachhead and getting them to try it.  I suspect the current economic climate will accelerate the process further.  SaaS does nothing better than save costs and increase the likelihood projects will be successful.

Aside from the economy, it’s important to note that all the key players are anxious for a seat at the Cloud table before the incumbents gobble too much share.  Microsoft in particular is making some interesting moves.  Making large parts of their Azure Cloud API’s REST enabled will ease their connection to the non-Microsoft world and is a canny move.   Robert Scoble further underscores how effective Microsoft’s sales and evangelism can be in helping to spread the word.

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Vinnie Mirchandani boils it down to dollars and cents in a great post where he says:

A few years from now, I have a feeling I will be telling some other client “If you could be like GE…you could drop a billion to your bottom line through aggressive use of SaaS and clouds”.

Posted in platforms, saas | 1 Comment »