The majority of 21 publicly traded software vendors managed to show year-over-year (YoY) gains over the dismal beating from calendar year (CY) Q1 2009.  SaaS vendor maintained their double digit gains while on-premise vendors mostly showed positive traction (see Figure 1) and (see Figure 2).  Highlights for the 2010 CY Q1 2010 results:

• Big gains in YoY license revenue for on-premise vendors such as Manhattan Associates (188.64%) and  JDA (87.43%) reflect the investments being made in retail and supply chain.  Manhattan's gains are the greatest across the board as they demonstrate a turnaround from last year.
• Meanwhile, SMB bell-weathers Lawson (28.10%), Deltek (24.75%), and Epicor (23.21%) signal return of key license sales in on-premise.  Concurrently, Oracle (20.45%) and SAP (11.oo%) demonstrate a strong recovery in enterprise license revenue growth in on-premise.
• Maintenance fee growth for on-premise vendors hold steady with mostly single digit YoY gains except JDA Software (32.71%) and SAP (11.34%).
• SaaS vendors kept steady growth in the double digits for subscription revenue. UltimateSoftware (27.80%), RightNow (26.80%), Salesforce.com (24.47%), and SuccessFactors (24.29%) led the charge.
• Overall growth rates on a YoY revenue basis have stabilized for most SaaS vendors at the mid teens to twenties.
• Of interesting note, professional services fees for on-premise vendors match or double the license revenue. SaaS vendor professional services revenue are well below 1x license revenues, closer to 10% or less.

Figure 1.  Software Insider Index® On Premise Vendors: Q1 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: Q1 CY 2010*

Good news - new license sales indicate a recovery!  Bad news - recovery will mean less discounting in non-competitive renewals.  Recent deals indicate that competitive deals in both Enterprise and SMB show that vendors will continue to compete for business.  Pricing pressures from the SaaS vendors drive most of the discounting in renewal deals.  However, should the recovery continue, expect less concessions in maintenance fee discounts, financing options, maintenance fee price increases, and flexibility in contract policies.