The majority of 22 publicly traded software vendors demonstrated solid year-over-year (YoY) quarterly growth from Q2 2009 (see Figure 1). Every SaaS vendor in the Software Insider Index® drove 14% to 26% growth (see Figure 2) despite the pick up in on-premises license sales. Highlights for the 2010 CY Q2 2010 results:
On-Premises Trends
- JDA Software (59.19%) and Manhattan Associates (32.93%) continue to ride the CPG, retail, and supply chain investment wave. Manhattan solidified a significant turnaround in 2 quarters of growth.
- Large mega vendor bellwethers Oracle (12.95%) and SAP (12.34%) showed significant double digit growth. SAP’s license gains of 17.31% demonstrate a turnaround in the sales team. All indications point to BOBJ and the non-EMEA regions driving sales growth.
- The SMB vendors shared mixed results with Epicor (8.68%), Lawson (5.81%), and CDC Software (3.92%) continuing to grow key license revenues. While IFS total revenue gains were low in the 1.40%, IFS grew license revenue by a whopping 19.77%.
- Unfortunately, other SMB vendors Exact (-4.99%) and Deltek (-7.07%) showed negative revenue momentum. These vendors not only lost ground in license revenue but also saw declines in traditionally stable maintenance revenue.
- Maintenance fee growth remains healthy for most vendors as new programs to show value to customers gain traction.
SaaS Trends
- SaaS vendors continue to grow in mid to high double digit growth rates for subscription revenue. SuccessFactors (26.81%), Salesforce.com (24.78%), and Concur (20.49%) moved past 20% year over year quarterly growth.
- Ariba ($93.2M) nears the $100M per quarter revenue benchmark as Blackboard ($101.5M) continues to grow from this achievement in Q1 2010.
- RightNow (19.58%), NetSuite (16.83%), Ultimate Software (15.67%), and Taleo (14.63%) all showed solid quarters of growth, though these growth percentages show slight declines.
- Figure 1. Software Insider Index® On Premise Vendors: Q2 CY 2010
- (Right click to view full image)
- Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.
- Figure 2. Software Insider Index® SaaS Vendors: Q2 CY 2010
- (Right click to view full image)
- Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.
- The Bottom Line – IT Budgets Have Opened Up For Software Purchases, Hybrid SaaS Models The Norm
Despite the rocky recovery and potential for double digit recession, pent up demand drives the current on-premises vendor revenue growth. Organizations continue to invest in technology despite the lack of job creation. However, on-premises vendor gains have not impacted SaaS vendor growth. In fact, most organizations continue to adopt Scenarios 1 to 3 in their Cloud/SaaS strategies. As hybrid models reach tipping points, successful apps strategies must focus on SaaS integration, SOA adoption, and information governance.
Your POV.
Can we help you work with a specific vendor? Please post or send on to rwang0 at gmail dot com or r at softwareinsider dot org and we’ll keep your anonymity. Further, let us know if you need help with your next gen apps strategy, overall apps strategy, and contract negotiations projects. Here’s how we can help:
- Designing a next gen apps strategy
- Providing contract negotiations and software licensing support
- Demystifying software licensing
- Assessing SaaS and cloud
- Evaluating Cloud integration strategies
- Assisting with legacy ERP migration
- Planning upgrades and migration
- Performing vendor selection
- Renegotiating maintenance
Disclaimers* Not responsible for any math errors or erroneous revenue information.
1. Calendar year estimates based on the quarter nearest the calendar year.
2. Why these vendors than others? Easy – because I cover them.
3. Exchange rates as of February 25th, 2010 for vendors who have not published quarterly conversions. Not responsible for currency flux.
4. Estimates created for privately held vendors, when listed.
Not sure? Please read the quarterly filings yourself =)
Related resources and links
Software Insider Index™ (SII): 2009 SII Top 35 Enterprise Business Apps Vendors™
Reprints
Reprints can be purchased through the Software Insider brand or Altimeter Group. To request official reprints in PDF format, please contact r@softwareinsider.org.
Disclosure
Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy please refer here.
Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.
13 Comments »
Ray,
Thanks for tracking this. This trend will accelerate. SAP is spending a whole lot of money to tout the benefits of SaaS. I welcome it and believe Plex and other SaaS vendors will benefit.
[...] indexes give a picture of the market's health. The Software Insider Index includes both on-premise and SaaS services. SaaS Index Insights is a pure SaaS index. Bernard Lunn [...]
[...] indexes give a picture of the market's health. The Software Insider Index includes both on-premise and SaaS services. SaaS Index Insights is a pure SaaS index. Bernard Lunn [...]
Mark – we agree! SAP’s go-to-market and Oracle’s potential will accelerate the shift to subscription pricing models as well as SaaS. What are other people seeing in the market? – Ray
[...] indexes give a picture of the market’s health. The Software Insider Index includes both on-premise and SaaS services. SaaS Index Insights is a pure SaaS index. Bernard Lunn [...]
Ray,
I think that the SaaS growth numbers may look better when considering organic growth. Large vendor acquisitions can mask low or negative organic growth. There seems to be a half life of cross-sell after acquisition where BusinessObjects or Hyperion sales to SAP & Oracle customers go up and then fall to nominal levels. It may turn out that the larger vendors are experiencing the same growth, on average, with the smaller ERP vendors.
Doug
Doug – yes. If we look at contract value, we can see a huge spike in the next 2 to 3 years. Also, there is a mix of data. For example, SAP is mixing netweaver, bobj, and other database revenues in their numbers. In fact, Oracle may have more rev in apps by end of this year than SAP – Ray
Ray –
Interesting read, I haven’t seen on premise vs SaaS trends compared that way before.
Christian
Christian – thanks. new index scores coming soon as well comparing the past 2 years. how are things going with escrows? – Ray
[...] This post was Twitted by MikeFrichol [...]
[...] indexes give a picture of the market’s health. The Software Insider Index includes both on-premise and SaaS services. SaaS Index Insights is a pure SaaS index. Bernard Lunn [...]
[...] in technology despite the lack of job creation. However, on-premises vendor gains have not impacted Saas vendor growth. I think that the Saas growth numbers may look better when [...]
[...] in technology despite the lack of job creation. However, on-premises vendor gains have not impacted Saas vendor growth. I think that the Saas growth numbers may look better when [...]
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