Posts Tagged ‘NetSuite’

News Analysis: ERP Arrives To Signal The Era Of Best Of Breed Cloud Suites

FinancialForce Debuts Its Full ERP Suite

On February 19th, San Francisco headquartered, announced the launch of its full suite of ERP offerings built on the Salesforce1 platform.  Backed by investments from UNIT4 and, the cloud based vendor began as a single ledger financial management system built on the platform.  The announcement and product launch shows how FinancialForce:

  • Delivers a full ERP suite on the Salesforce1 platform. The platform brings together a series of organic products and recent acquisitions in HR, supply chain, and project management (see Figure 1).  The December 2010 acquisition of Appirio’s professional services automation assets form the Professional Services Automation offering.  The 2013 acquisitions of Vana Workforce and Less Software brought the human capital management (HCM) and supply chain management (SCM) capabilities.

    Point of View (POV):
    The management team at was smart to bring in acquisitions built on the original platform.  Post merger integration was greatly simplified as the products shared a common architectural base.  More importantly, the acquired solutions were easily upgraded to the Salesforce1 platform to create an end to end ERP cloud based ERP suite.  Customers gain the full advantages of the Salesforce 1 platform and integration with the core Salesforce CRM offerings.
  • Demonstrates focus on long term growth and viability . showed 80% year over year growth in revenue run-rate compared to 2012.  Headcount grew 62% year over year with over 260 global employees.  Furthermore, customers represent a global base with 27 countries and users in 45 countries.

    Cloud has gone mainstream and customers now expect their cloud companies to demonstrate viability.  The mergers and acquisitions required to build a full cloud ERP suite signal a maturity by and the market.  Early customers of the full suite provide positive references on both the synergies of the ERP offering and the flexibility of the Salesforce1 platform for extensibility.

Figure 1. Launches A Full Integrated ERP Suite


News Analysis: Oracle’s Cloud Disruption Webinar Recording

Oracle’s recent partnership announcements to supply Oracle technology to key cloud vendors such as Microsoft, NetSuite, and create serious implications for the market. 

On June 28, 2013, Esteban Kolsky, Holger Mueller, and R “Ray” Wang discussed the implications  of Oracle’s recent partnerships for:

  • Salesforce customers
  • Microsoft customers
  • NetSuite customers
  • Oracle customers
  • Cloud competitors such as Amazon, Google, IBM, SAP, VMWare, and Workday

Join us at Constellation’s Connected Enterprise, October 30 - November 1, 2013


Research Summary: Constellation Cosmos – Cloud Bill of Rights for SaaS Apps, Actian and Netsuite Achieve Epic Status

Constellation Certifies Vendors On How Well They Perform To The Cloud Bill Of Rights

The Enterprise Cloud Buyer’s Bill of Rights provides a tool for clients and vendors to change the tenor of contract negotiations from user subservience to an equal and collaborative long-term partnership.  This Constellation CosmosCertification for the Cloud Buyer’s Bill of Rights: SaaS Applications is intended to help buyers and prospective buyers of enterprise cloud applications identify the vendors that meet the spirit of the Cloud. The certification applies four of the six Cosmos categories and includes ownership experience, use case support, corporate vision and ecosystem feedback. Constellation rates vendors on a 0- to 5-point scale.  Constellation’s goal is to recognize vendors for honoring these rights upfront in their existing contract language and throughout the buyer and ownership experience.

Behind The Scenes On How The Cosmos Works

Constellation CosmosTM is Constellation’s flagship quantitative and qualitative product and solution comparison tool.  A typical Cosmos contains 50 to 150 exception-based criteria used to help buy-side clients with product and solution selection across the galaxy of choices.  The evaluation comprises of six major categories on a 0 to 5 point scale where Constellation evaluates key criteria in:
  1. Ownership experience. Criteria evaluated include assessments on vendor executive advocacy and accountability, timely and meaningful interactions, professional customer support, overall sales cycle and buying process, quality of product and service, and ongoing transparency.
  2. Solution offering. Criteria evaluated include assessments of functional requirements, technical requirements, architectural considerations, and deployment options pertinent to the category.
  3. Use case support. Criteria evaluated include assessments on the ability to support anywhere from 3 to 12 popular use cases requested by end user clients.  Use cases typically align with a business process. Considerations include geographical requirements, market size requirements, and industry requirements.
  4. Market execution. Criteria evaluated include assessments of the total number of live customers, total number of customers including prospects, total number of customers over 1B in revenue, funding raised to date (if a startup), total annual revenues, total number of external trained professional service staff, total number of internal trained professional service staff, number of updates per year, and geographic penetration
  5. Corporate vision. Criteria evaluated include assessments of the strength of management team, product direction, level of innovation, market leadership, community stewardship, and investment in R&D.
  6. Ecosystem feedback. Criteria evaluated include assessments of vendor-supplied references (at least 3), direct customer feedback from inquiries and interactions, and partner feedback.
The final ratings place solutions into 5 categories
  1. Epic. Composite scores typically above 4.25
  2. Stellar. Composite scores typically between 3.25 and 4.24
  3. Emerging. Composite scores typically between 2.25 and 3.24
  4. Nascent. Composite scores typically between 1.25 and 2.24
  5. Laggard. Composite scores typically between 0 and 1.24

The Constellation CosmosTM graphic is a three-dimensional visualization tool built from three axes:

  • Capability represents the X-axis. Capability includes the use case support and solution offering categories.
  • Strategy and execution drives the Y-axis. The score comprises of market execution and corporate vision.
  • Reputation forms the Z-axis. The scores come from the ownership experience and ecosystem feedback categories.
  • Weighted score defines the radius of the sphere. The scores are the composite from capability, strategy, and reputation.


Constellation updates Cosmos’ periodically as client demand dictates.  Some reports may be deprecated over time based on lack of market interest.  Constellation reserves the right to determine when reports are updated and in what manner.

NetSuite and Actian Corp Achieve Epic Status In the First Of Many Certifications Of Cloud Companies
For the Cloud Bill of Rights: SaaS Applications, the application and the vendor contract were evaluated on 61 criteria.  Constellation evaluated the vendors based on the experience of over 1500 software contract negotiations.

Netsuite provides an end-to-end cloud business application suite and was certified against the 61 criteria listed in Constellation’s Cloud Bill of Rights and the Constellation Cosmos methodology. Netsuite achieved a 4.48 weighted score and achieved the highest certification – Epic for its achievement in meeting the 61 requirements of the Cloud Buyer’s Bill of Rights category

Actian Corporation was certified against the 61 criteria listed in Constellation’s Cloud Buyer’s Bill of Rights and the Constellation Cosmos methodology.  Actian Corporation’s acquired Pervasive Software on April 11, 2013. Constellation evaluated Pervasive Software prior to the merger. The cloud based integration application known as Actian DataCloud and its contract were evaluated on 61 criteria in the Cloud Buyer’s Bill of Rights: SaaS Applications.. Actian DataCloud achieved a 4.77 weighted score and achieved the highest certification – Epic for its achievement in meeting the 61 requirements of the Cloud Buyer’s Bill of Rights category.

Report Links

Download a snapshot of the reports at the Constellation Research website:

Constellation Cosmos – Cloud Bill of Rights: Saas Apps Actian Corp.

Constellation Cosmos – Cloud Buyer’s Bill of Rights: SaaS Apps – Netsuite, Inc.

Your POV.

How’s contract negotiations with your Cloud Vendors? Let us know your experiences.  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.


Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact sales (at) ConstellationRG (dot) com.


Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

Copyright © 2001 – 2013 R Wang and Insider Associates, LLC All rights reserved.


Executive Profiles: Disruptive Tech Leaders In Cloud Computing – Zach Nelson, NetSuite

Welcome to an on-going series of interviews with the people behind the technologies in Cloud Computing.  The interviews  provide insightful points of view from a customer, industry, and vendor perspective.  A full list of interviewees can be found here.

Zach Nelson – President and CEO, NetSuite


Zach Nelson has more than 20 years of leadership experience in the high-tech industry, where he has held a variety of executive positions spanning marketing, sales, product development and business strategy with leading companies such as Oracle, Sun Microsystems, and McAfee/Network Associates. Nelson has been CEO of NetSuite since 2002. One of top 10 visionary CEOs in the Silicon Valley, Nelson led NetSuite’s successful IPO in 2007. Under his leadership, NetSuite has become the leading provider of cloud computing business management software suites in the world. Nelson holds B.S. and M.A. degrees from Stanford University

The Interview

1.     Tell me in 2 minutes or less why Cloud Computing is changing the world for your customers

Zach Nelson (ZN): The original idea behind Information Technology (IT) departments within corporations was to apply technology to gain competitive advantage. But the client/server application paradigm hijacked IT and forced those resources to spend most of their time and energy managing vendors’ products. Many studies show that a vast majority of IT resources and investments have historically been spent on maintaining legacy technology, and that does little to advance your own business. Cloud computing frees IT to make your own business better, instead of enriching the software companies. And it happens much, much more quickly, which is how Groupon was able to deploy the NetSuite financials/ERP suite in 26 international subsidiaries in just three months, instead of the years it would have taken them with conventional software.

2.     What makes cloud computing disruptive?

(ZN): The cloud – or more specifically web-native applications — eliminates all of the effort that used to be necessary to make technology work. Once you’ve done that, you can start accomplishing things which were impossible with client/server systems. The early conventional wisdom said that you couldn’t run complex processes in the cloud. I disagree. It is obvious from what NetSuite’s customers have accomplished that you can actually run more complex processes in the cloud than you could with on-premise software. And the fact that you can do so faster, better, and cheaper is tremendously disruptive.

3.     What is the next big thing in Cloud Computing?

(ZN): Obviously the mobile device trend will become more important for the cloud, and from our perspective that means making it easier for buying, selling, ordering and customer servicing to happen from a myriad of mobile devices. The ability to aggregate large amounts of data across multiple companies and industries will make it easier for companies to benchmark their performance versus their rivals’ as well.

4.     What are you doing that’s disruptive for Cloud Computing?


Executive Profiles: Disruptive Tech Leaders In Social Business And Cloud Computing

Executive Profile Series Delivers The Inside View On Disruptive Technologies

Starting this week, we’ll be kicking off an on-going series of interviews with the people behind the technologies in Cloud Computing and Social Business.  The interviews should provide insightful points of view from a customer, industry, and vendor perspective.  The transcript of the 30 minute Q&A’s will follow a common format:

Cloud Computing

  1. Tell me in 2 minutes or less why Cloud Computing is changing the world for your customers
  2. What makes cloud computing disruptive?
  3. What is the next big thing in Cloud Computing?
  4. What are you doing that’s disruptive for Cloud Computing?
  5. Where do you see technology convergence with Cloud?
  6. If you weren’t focused on Cloud Computing what other disruptive technology would you have pursued?
  7. What’s your favorite science fiction gadget of all time?

Social Business

  1. Tell me in 2 minutes or less why Social Computing is changing the world for your customers
  2. What makes social computing disruptive?
  3. What is the next big thing in Social Business software?
  4. What are you doing that’s disruptive for Social Computing?
  5. Where do you see technology convergence with Social?
  6. If you weren’t focused on Social Computing what other disruptive technology would you have pursued?
  7. What’s your favorite science fiction gadget of all time?

Scheduled Interviews Include A Who’s Who List Of Industry Thought Leaders And Market Makers

Cloud Computing

Social Business More…

Research Summary: Best Practices – The Case For Two-Tier ERP

Forward And Commentary

Legacy optimization remains a key component for funding future innovation.  Two-tier ERP emerges as one strategy to optimize existing systems while adding innovation.  The report capitalizes on the recent Software Insider survey of 235 companies looking at future strategies.

A. Introduction

Organizations continue to face an onslaught of business requirements that their existing ERP systems can no longer address.  Stuck in the past century, these ERP systems are expensive to run, difficult to upgrade, and impossible to modify for today’s fast changing requirements.  Two-tier ERP has emerged as a strategy to enable legacy optimization while reinvigorating the organization’s existing ERP systems.

B. Research Findings

Two-tier ERP refers to a business and technology strategy that enables organizations to keep existing ERP systems at the corporate level while empowering divisions or business units to innovate with a second ERP system.  Consequently, two-tier ERP deployments continue to gain favor.  Why? Organizations must optimize legacy systems while delivering on business value.  In fact, in a recent Constellation Research survey, 48% of respondents indicated that they are considering at two-tier ERP strategy (see Figure 1).  These results reflect a 27-point increase from 2009.

Figure 1.  Two-Tier ERP Growing In Popularity As A Key Strategy

While today’s two-tier strategies mostly involve on-premises solutions, cloud based solutions will gain favor over the next 18 to 24 months because of their rapid deployment capabilities, constant innovation qualities, and subscription pricing.  Organizations challenged by diverse lines of business, multiple localization requirements, or needs to phase in legacy system modernization will find a two-tier ERP strategy one that can reduce costs and provide better business value than a one-size-fits-all solution.  Whether SaaS, on-premises, or hybrid, a two-tier ERP strategy will reduce costs, meet new business requirements, and provide better business value. More…

Quarterly Financial Tracker: Q3 CY 2010 Enterprise Software Vendors Solidify Performance Turnaround

The super majority (26 of 27) of publicly traded software vendors in the Software Insider Index® delivered turnaround stories for Q3 Cy 2010 year-over-year (YoY) performance.  SaaS vendors and middleware vendors led the charge with solid double digit gains against tough comps.  Performance of on-premises apps vendors reflected the easy comps from a dismal 2009 downturn.  An analysis of the 2010 CY Q2 2010 results show:

SaaS Vendors Continue To Crush All Expectations In Subscriber Growth (Figure 1.)

  • SaaS vendors showed massive gains in subscription revenue at on-premises vendor expense.  SuccessFactors (33.22%) continued the lead in quarterly revenue gains followed by a record breaking quarter (29.81%).  Kenexa (25.97%) and RightNow (25.46%) also demonstrated above 25% YoY quarterly gains.
  • Subscription license growth has become the norm for both SaaS and On-Premises vendors looking at SaaS revenue.
  • On premises vendors w/ subscriptions showed traction.  SAP reported $101M of subscription revenue and JDA software reported $5.758M in subscription revenues.
  • Of note, Saba (3.89%) and Kenexa (25.97%) were added to the Software Insider Index® this quarter

Figure 1.  SaaS Vendors Continue To Crush All Expectations In Subscriber Growth (Right click to view full image)

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Traditionally On Premises Apps Vendors Fare Well As Technology Spending Picks Up

  • JDA Software (65.29%) continues to benefit from retail and supply chain vendor consolidation.  However, JDA’s growth came from maintenance revenue, not new license gains.  In fact, the ratio of maintenance to license revenues remains dangerously high at 3.94.  The good news – focused efforts around SaaS options also grew.   Meanwhile, rival Manhattan Associates saw gains with (13.35%) YoY quarterly growth with respectable new license gains.
  • SAP (19.74%) showed a huge turnaround with significant gains.  However, new license growth came mostly from analytics revenues and not from core apps such as ERP, CRM, SCM.
  • Traditional bellwethers CA (17.21%) and Oracle (15.82%) showed above 15%, healthy YoY quarterly gains.
  • SMB vendors showed mixed results with Epicor (16.28%) leading the pack through gains in Epicor 9 and significant new license growth of 47.07%.  Epicor and Microsoft Dynamics (not listed) have been beneficiaries of the two-tier apps strategy movement.  On the other hand, IFS (5.34%), Lawson (3.35%), and Deltek (1.74%) barely moved the needle in revenues.  Deltek’s 21.38% new license growth reflected a structural shift in the business as new license gains make up maintenance losses.
  • Four vendors continue to enter dangerous trends with maintenance to license revenue ratios above 3: Manhattan (4.42), JDA (3.94) Lawson (3.86), Oracle (3.24)

Figure 2. On Premises Apps Vendors Fare Well As Technology Spending Picks Up (Right click to view full image)

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Middleware Vendors Benefit From Optimization Mandates (Figure 3.)

  • VMware (45.84%), Informatica (30.68%), and Software AG (28.89%) crush numbers as demand for middleware, virtualization, and integration continue to gain traction.
  • All middleware vendors maintain healthy maintenance to license revenue ratios below 2.0:  SoftwareAG (.65), VMware (1.08), Informatica (1.31), Progress (1.82).

Figure 3. Middleware Vendors Benefit From Optimization Mandates

(Right click to view full image)  Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.
The Bottom Line – Enterprise Software Is Back

Refresh cycles, demanding business requirements, and shift to hybrid deployment options fuel growth for this quarter.  Organizations continue to free up budget to support legacy apps optimization to fund innovation projects.  SaaS will be the predominant entry point for new innovation while organizations seek two-tier approaches to consolidate legacy apps.  The theme for enterprise software customers remains “Show us the business value!”

Your POV.

Are you increasing your spending on enterprise software?  Want to know more about a specific vendor’s financial health? 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

2010 Calendar Year Q2

2010 Calendar Year Q1

Software Insider Index™ (SII): 2009 SII Top 35 Enterprise Business Apps Vendors™

2009 Calendar Year Q4

2009 Calendar Year Q3

2009 Calendar Year Q2

2009 Calendar Year Q1

Software Insider Index™ (SII): 2008Software Insider IndexTM (SII): SII Top 30 Enterprise Business Apps VendorsTM & SII Top SaaS Business Apps VendorsTM SII Top 30 Enterprise Business Apps Vendors™

2008 Calendar Year Q4

2008 Calendar Year Q3

2008 Calendar Year Q2

2008 Calendar Year Q1


Reprints can be purchased through the Software Insider brand or Constellation Research, Inc.  To request official reprints in PDF format, please contact


Although we work closely with many mega software vendors, we want you to trust us.  A full disclosure listing will be provided soon on the Constellation Research site.

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Research Report: How The Five Pillars Of Consumer Tech Influence Enterprise Innovation

Most Enterprise Software Vendors Fail To Deliver Innovation

Despite hundreds of billions wasted on failed research and development projects, most market influencers would agree that enterprise software vendors have produced a dearth of innovation over the past decade.  Vendors often cite UI re-skins, major functionality additions, integration of acquisitions, technology re-platforms, and weak attempts at faking cloud computing as innovations.  In fact, let’s call it what it is.  Only a handful of enterprise software vendors have truly innovated.   Many enterprise software vendors are fast followers.  Most are innovation laggards living off fat maintenance revenue streams.  Ask any product strategist where they gain their inspiration and they will all cite advancements in consumer technology; and not peer enterprise competitors.

Innovative Enterprises Push Forward Mostly On Their Own

During this year’s Information Week 500 event, conversations with over 50 leading business technology leaders highlighted the growing gap in innovation.  These next gen leaders demonstrated how they were turning to consumer tech advancements to influence their custom development efforts; and/or seeking emerging vendors with innovative offerings.

For example, Bill Martin, the CIO of Royal Caribbean showed how design thinking coupled with real-time analytics and on-board mobility could improve the cruise experience on the largest ship ever built.  Shawn Kleim, Director of Development at WetSeal, provided proof points on mobility and social convergence in driving retail sales and eCommerce in the highly competitive teen apparel market.  Dave Bent, Senior VP of eBusiness services and CIO of United Stationers, proved how a company could deliver cloud services to partners and create competitive advantage across a value chain.

A number of CIO’s showcased how they were taking advantage of the cloud with SaaS apps and private clouds. Others discussed their efforts to optimize costs using third party maintenance to pay for innovation.  The common lessons learned – most did not expect to gain market advantage from their existing and legacy vendors.  Innovations came from the consumer tech side and next generation solution providers.  Consumer tech advancements influenced business driven technology advancements.

Software And Tech Vendors Rush To Incorporate The Five Pillars Of Consumer Tech

Ten elements drive key design points for next generation apps.  These design points showcase how advancements in consumer tech now permeate the enterprise.  Design thinking concepts drive dynamic user experiences, business process focus, and community connectedness.  Based on existing research, deep dives into major vendor road maps, and validation with clients, five pillars of consumer tech have emerged as the foundation for future inspiration in the enterprise (see Figure 1):

Figure 1.  Five Pillars Of Consumer Tech Will Influence Enterprise Software Throughout The Next Decade


Polls And Surveys: Insider Insights™ – Customer Centric Cloud Agreements

Annual Evaluation On SaaS Satisfaction Begins This Fall

The Software Insider Insights™ solution evaluation and buyer comparison tool will launch this Fall.  The first report focuses on Customer Centric Cloud Agreements – Software-as-a-Service (SaaS).  This evaluation will:

  • Identify the leading seller/vendors delivering SaaS based applications that adhere to the spirit of the cloud
  • Evaluate seller/vendors performance against the latest provisions in the Customer Bill of Rights: Software as a Service (see Figure 1)
  • Recognize seller/vendors who deliver a customer centric approach to SaaS solutions.

Invited Vendors Represent Today’s SaaS Leaders

The 2010 Customer Centric Cloud Agreements- SaaS evaluation ranks the most popular vendors by inquiry and contract frequency.  The invited participants also qualified based on overall total number of subscribers.  The current list of evaluated vendors will include:

  • Ariba
  • Concur
  • Epicor Lite
  • FinancialForce
  • Intacct
  • Microsoft Dynamics CRM OnDemand
  • NetSuite
  • Oracle Siebel OnDemand
  • Plex Systems
  • RightNow Technologies
  • SAP ByD
  • SuccessFactors
  • Taleo
  • Ultimate Software
  • Workday

Your POV: Your Input Makes The Difference

As part of the Insider Insights evaluation process, input from users will be incorporated into the evaluation process.  Please take the time to complete this short 10 question survey.  As an added incentive, 5 respondents will be randomly chosen on September 30th to win a free 30 minute advisory call with R “Ray” Wang to be used by 2010.

Share with us your input here:

Quarterly Financial Tracker: Q2 CY 2010 – SaaS Vendors Still Show Massive YoY Growth

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%), (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.

Research Report: How SaaS Adoption Trends Show New Shifts In Technology Purchasing Power

SaaS Adoption Surveys Often Overlook Audience Composition

Over the past year, analyst firms, tech media, and even mainstream business media have happily showcased positive news about SaaS adoption.  The common theme remains clear – SaaS adoption moves beyond the tipping point in 2010.  Cloud adoption will reach a tipping point in the next 12 months.  All this bodes well for customers and SaaS providers as organizations now embrace SaaS as an acceptable deployment option in their apps strategy.  Unfortunately, recent SaaS/Cloud adoption surveys continue to provide confusing and sometimes contradictory data about adoption.  Close examination of these surveys reveal that not all adoption surveys are equally created.  The unspoken question, who’s answering the surveys?

SaaS Decision Making Firmly In The Hands Of The Business Buyer

Anecdotally, business users drive SaaS decisions, while IT leaders remain skeptical.  To validate this hypothesis, Software Insider conducted a quick survey of 100 Global 2000 organizations.  Starting with the most senior IT leaders, the question was posed, “Are you using SaaS in your organization for major business processes?” (see Figure 1).  Of the 46 organizations who responded, the procurement leaders were then asked the same question (see Figure 2).  After comparing survey results, the following conclusions emerged:

  • IT leaders aware but hesitant on SaaS adoption. A little under a quarter of IT leaders (23.91% or 11/46) responded that they were using SaaS applications.  Key applications deployed include CRM, strategic HCM, expense management and project based solutions (PBS).  Delving deeper into these verbal and in-person interviews highlighted a desire to learn more about SaaS.  As one CIO at a major food and beverage concern stated, “The business heads keep showing up with these SaaS apps and then want us to integrate them.  We need to get a handle on all this!”  Key concerns included, “I don’t know if we can integrate all this in the future”, responded the CIO of a large Fortune 500 retailer and “I think we need better governance and security”, remarked the Director of Enterprise Apps for a Top 25 banking, financial services, and insurance (BFSI) entity.
  • Procurement leaders reveal surprising adoption by business leaders en masse for SaaS solutions. Conversations with the procurement managers highlight how business users have taken matters into their own hands.  Every one of the surveyed organizations (100% or 46/46) had an existing SaaS contract, contradicting the IT leaders who did not respond that they ran SaaS solutions.  In fact – these contracts ranged from five seat deals to 2000 seats at one organization.  As the procurement head at a large professional services firm indicated, “The teams will buy whatever they need now.  IT has no clue!”.  “Business has to go around IT because they are too busy keeping the lights on”, retorted a procurement manager at a global 10 pharma.  A procurement manager for a large multi-national manufacturer stated, “Our main issue with SaaS is finding enough solutions that will support our needs.”
  • Business leaders take charge but fail to communicate with IT leaders.  The key finding – lack of coordination among business, IT, and procurement.   Amazingly, the 35 IT leaders who stated they did not run SaaS apps for major business processes still may not know about the CRM, HCM, Project Based Solutions, and Finances deployments in their organization.  When some of them were shown the results, these leaders expressed amazement and surprise.  Organizations should be alarmed but not surprised by this lack of coordination between business and IT.

Figure 1.  IT Leader Responses Show Muted Adoption


News Analysis: Deltek Offers To Buy Maconomy For $72.7M

Acquisition Consolidates Two Market Leaders In The Project Based Solutions Market

Deltek announced on June 3rd that they would acquire Maconomy for  $72.7M ($3.39/share (DKK 20.50)).  Maconomy is a leading project based solutions (PBS) software company with ~35.6M in revenues (2009) based in Copenhagen, Denmark.  Deltek is a 265.8M revenue (2009) PBS software vendor based in Herndon, VA.   This acquisition is significant because the combined companies:

  • Improve geographic coverage. Maconomy employs over 220 employees with 600+ customers in 58 countries.  eltek reaches 12,000 customers around the world across its portfolio of product lines that includes Costpoint, GCS Premier, Vision, and its Enterprise Project Management suite. Deltek also offers govWin, an online network dedicated to solving common business problems for government contractors.

    Point of View (POV):
    Maconomy’s customers mostly originate from EMEA.  Less than 12% of Maconomy’s revenues come from the US.  Maconomy built good partnerships in Eastern Europe. South Africa, Canada, and India.  Meanwhile, Deltek has a strong base of business in the US public sector and was beginning to move towards greater international expansion.
  • Address a range of PBS vertical industries. Maconomy’s products focus on professional service organizations with about 46% of its revenues coming from consulting and 26% of its revenues coming from marcomm.  Deltek dominates the architecture and engineering space along with government contracting.  The company has shown success in key verticals such as construction services, public sector, and transportation services.

    Deltek can boast that 80% of the Engineering News Record 2009 Top 500 Design Firms are customers.  Maconomy’s products X1 and PeoplePlanner demonstrate a strong professional services focus.  Together, they have an opportunity to expand into research organizations, legal services, and audit/tax firms.