Is (Or Why Is) SaaS The Survival Strategy In This Down Economy?

Is (or Why is) SaaS the Survival Strategy in this

Down Economy?

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Date : Thursday, May 14th, 2009

11:00 AM ET/ 08:00 AM PT

Panelists:

Merrill R. (Rick) Chapman Managing Editor, Softletter

Richard DymChief Marketing Officer, OpSource

Moderator:

Janaki JayachandranBusiness Manager – SaaS Specialization, Aspire Systems

Agenda

� Introduction

� Key Highlights from Softletter 2009 SaaS Report

� Upcoming Trends in SaaS

� Questions to the Panelists

� Thought leader in Outsourced Product Development

� 1050+ product releases to date

� 80+ customers; 475 producteers

� 63% CAGR over the last six years

� Offices in Chennai (India), San Jose, CA, and Branchburg, NJ

� ISO 9001:2000 certified

Awards

Ranked in the top 500 fast growing technology companies in Asia Pacific for 3 years in a row

Ranked 7th in BusinessToday Survey featuringthe Best Companies towork for in India in 2005

About Aspire

Merrill R. (Rick) Chapman

Managing Editor and Publisher, Softletter

• Author of The Product Marketing Handbook for Software, In Search of Stupidity:

Over 20 Years of High-Tech Marketing Disasters and the SIIA's US Software

Distribution Guide.

• Rick has worked and consulted for such industry pioneers as MicroPro

(WordStar) and Ashton-Tate.

• Consulted for a wide variety of software and high technology firms such as IBM,

Novell, Microsoft, Sun and many others.

Panelist

Key Highlights from the Key Highlights from the

Softletter 2009 SaaS ReportsSoftletter 2009 SaaS Reports

Rick ChapmanRick Chapman

Softletter, Managing Editor and PublisherSoftletter, Managing Editor and Publisher

www.softletter.comwww.softletter.comwww.saasuniversity.comwww.saasuniversity.com

[email protected]@softletter.com

860.657.2838 (EST/EDT, Killingworth, CT)860.657.2838 (EST/EDT, Killingworth, CT)

Brief Intro: SoftletterBrief Intro: Softletter

Softletter is now in its 25th year of publication

Brief Intro: SoftletterBrief Intro: Softletter

� Published twice a month

� Complete coverage of every aspect of running a software business

� Compensation, operating ratios, unique research, timely articles

Softletter is now in its 25th year of publication

Books by Rick ChapmanBooks by Rick Chapman

Softletter Softletter

Research PublicationsResearch Publications

�� 2009 Software as a Service 2009 Software as a Service

Marketing ReportMarketing Report

�� 2009 Software as a Service Report2009 Software as a Service Report�� UpUp--toto--date information and hard data about software publishers adaptindate information and hard data about software publishers adapting to g to

SaaS, the issues they face, and the strategies and tactics most SaaS, the issues they face, and the strategies and tactics most likely to likely to

succeed. Covering Product Development, R&D, Pricing, Channels, succeed. Covering Product Development, R&D, Pricing, Channels, Sales and Sales and

Marketing & Product Management. Marketing & Product Management.

�� 2009 Financial Handbook2009 Financial Handbook�� Contains hard data for: Software industry metrics and benchmarksContains hard data for: Software industry metrics and benchmarks; Mergers, ; Mergers,

IPOIPO’’s, and Venture Finance; Compensation; and Operations. For softws, and Venture Finance; Compensation; and Operations. For software are

companies preparing their yearly business plans and budgets.companies preparing their yearly business plans and budgets.

Softletter Softletter

Research PublicationsResearch Publications

�� 2009 Software Sales and Telesales 2009 Software Sales and Telesales

Compensation Reports (analyzes compensation Compensation Reports (analyzes compensation

and sales efficiency across desktop/retail, OEM, and sales efficiency across desktop/retail, OEM,

on premise, client/server and SaaS application on premise, client/server and SaaS application

sectors)sectors)

Current Surveys of InterestCurrent Surveys of Interest

�� The 2009 Softletter telesales compensation The 2009 Softletter telesales compensation

survey is currently open covering: survey is currently open covering:

compensation, bonuses, close rates, quota compensation, bonuses, close rates, quota

performance and moreperformance and more

�� Company types are desktop/retail, OEM, on Company types are desktop/retail, OEM, on

premise, client/server, and SaaSpremise, client/server, and SaaS

�� All participants receive summary results in the All participants receive summary results in the

upcoming issues of Softletterupcoming issues of Softletter

�� Interested? Go to: www.softletter.comInterested? Go to: www.softletter.com

2009 SaaS Industry 2009 SaaS Industry

Reports HighlightsReports Highlights

Primary Market for Your ProductPrimary Market for Your Product

* 2007 figures

for B2B were

94%

Why Buy SaaS?Why Buy SaaS?

Most Popular Subscription OptionsMost Popular Subscription Options

Bi-yearly

4%

% Revenues Grew Over the Last % Revenues Grew Over the Last

12 Months?12 Months?

Profitable Over the Last 12 Profitable Over the Last 12

Months?Months?

Yes

67%

No

33%

2009 SaaS Direct Sales 2009 SaaS Direct Sales

Compensation and Efficiency Compensation and Efficiency Reports HighlightsReports Highlights

Some Key SaaS Compensation Metrics

What is the average time it takes

to close a major sale (On

premise, client/server)?

Percentage

Less than three months 0%

Three to six months 32%

Six to nine months 21%

Nine months to a year 32%

A year to 18 months 9%

18 months+ 6%


What is the average time it takes

to close a major sale (SaaS)?

Percentage

Less than three months 23%

Three to six months 40%

Six to nine months 21%

Nine months to a year 11%

A year to 18 months 4%

18 months+ 0%


What percentage of your sales

representatives exceeded quota last

year?

Percentage

On premise, client/server 30%

SaaS 50%


Of the sales representatives that

exceeded quota, by what average

percentage did they exceed quota

last year?

Percentage

On premise, client/server 15%

SaaS 25%

2009 SaaS Operations Metrics 2009 SaaS Operations Metrics

HighlightsHighlights

SaaS Operating Metrics

� Publicly held SaaS companies enjoy a distinct advantage in R&D

� 4% as % of revenue

� Enjoy some advantages in sales and marketing: about 2 - 3% as % of revenues

2009 Marketing Report 2009 Marketing Report

OverviewOverview

262 companies participated from U.S., Europe, 262 companies participated from U.S., Europe,

Eastern Europe, Latin America, Australia and Eastern Europe, Latin America, Australia and

Far East.Far East.

�� 211 questions211 questions

�� 22 separate marketing categories covered22 separate marketing categories covered

�� Respondents: 90% CEORespondents: 90% CEO’’s and Senior Marketing s and Senior Marketing

and Sales Executivesand Sales Executives

2009 SaaS Marketing Report 2009 SaaS Marketing Report

Overview (cont)Overview (cont)

�� SaaS companies results broken out and SaaS companies results broken out and

analyzed separatelyanalyzed separately

�� Results were analyzed and cross tabulated Results were analyzed and cross tabulated ““drill drill

downdown”” by company size and phase of by company size and phase of

developmentdevelopment

�� Detailed look at marketing practices, program Detailed look at marketing practices, program

results, trends, and current and forecasted results, trends, and current and forecasted

expenditures. Most comprehensive report of its expenditures. Most comprehensive report of its

kindkind

Research Summary HighlightsResearch Summary Highlights

Most Popular ProgramsMost Popular Programs

Most Effective ProgramsMost Effective Programs

Top Programs by InvestmentTop Programs by Investment

www.SaaSUniversity.comwww.SaaSUniversity.com

�� This presentation is available as a free This presentation is available as a free

download at download at www.saasuniversity.comwww.saasuniversity.com

�� Sampler of the 2009 SaaS Report also Sampler of the 2009 SaaS Report also

availableavailable

�� If you wish to further discuss points raised If you wish to further discuss points raised

in this presentation, please post questions in this presentation, please post questions

and observations on the SaaS U forumsand observations on the SaaS U forums

�� You will receive an answer!You will receive an answer!

SoftletterSoftletter’’s SaaS University: s SaaS University:

Marketing, Selling, Infrastructure, and Marketing, Selling, Infrastructure, and

Financing, Chicago, June 30Financing, Chicago, June 30--July 2July 2

�� 30 sessions30 sessions

�� Five tracksFive tracks

�� Four keynotesFour keynotes

�� Three SaaS workshopsThree SaaS workshops

Special Aspire OffersSpecial Aspire Offers

�� Offer Codes for todayOffer Codes for today’’s attendees:s attendees:�� $100 Off the Financial Handbook: ITAFIN100$100 Off the Financial Handbook: ITAFIN100

�� $150 Off SaaS Report: ITASAAS150$150 Off SaaS Report: ITASAAS150

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Thank You for attendingThank You for attending

SoftletterSoftletter’’s SaaS University: s SaaS University:

Marketing, Selling, Infrastructure, Marketing, Selling, Infrastructure,

and Financing, June 3 and Financing, June 3 –– July 2July 2

Panelist

Richard Dym

Chief Marketing Officer, OpSource

• He has held senior executive positions in fast-paced technology companies

ranging from venture backed start-ups to global public enterprises

• Prior to working with technology and technology-related services companies,

Richard was a Senior Economist with Chase Econometrics, Inc. (a subsidiary of

Chase Manhattan Bank, N.A.)

• Richard also founded Dym, Frank & Company, a quantitative money management

firm.

© OpSource 2009 Slide 36

• OpSource provides complete Cloud operations infrastructure and services for

SaaS and Cloud businesses

• Technical & Application Operations that reduce operational costs

• Business Operations that increase revenues

• Founded 2002, privately held

• Corporate headquarters: Santa Clara, CA.

Global offices: U.S. (Santa Clara; Herndon, VA); Dublin; London; Bangalore

• Unmatched industry experience

• Hundreds of applications

• Millions of end-users

• Billions of transactions every day

Certified

The Business in the Cloud


Purchasers' Perspective : Is SaaS the Survival

Strategy in this Down Economy?

• The shift to SaaS or On-Demand is inevitable

• The down turn will only accelerate the transition by focusing

purchaser attention on the short term cost advantages of buying

on-demand

• Elimination of CapEx

• Reduction in OpEx

• Fixed to variable cost

• Buying only what you need

• SaaS projected to grow 22X the overall software market (IDC)

• But Cloud noise will add confusion

• Bottom line, more opportunity today than a year ago. Strike

while the iron is hot


Carpe Diem: Do it Yourself SaaS Delivery Means

Slow Investment Return

Substantial Upfront

Investment

Break Even Point


IDC Software Megatrends

Structural Changes Accelerated by the Financial CrisisStructural Changes Accelerated by the Financial CrisisStructural Changes Accelerated by the Financial CrisisStructural Changes Accelerated by the Financial Crisis

• New Delivery Models:

• Software as a Service/On-demand

• Open Source

• e2.0 (social networking, Web 2.0)T

• New Architectures:

• Service-oriented Architecture (SOA) T

• Event-based

• Unified access to content and data

• New Ways to Source a Business Process:

• Build (mashups, process modeling, business rules, Web 2.0))T

• Buy (“good enough” suites vs. best-of-breed)

• Integrate (software/services convergence)J

• Outsource (asset-based delivery)T

• New Targets:

• SMB (intensifying competition for applications)T

• Channels

• Partnerships (with partner-partner collaboration)TSource: IDC 2008


IDC: Future Trends (Next 2–3 Years)

• SaaS is evolving, and sticking to a strict taxonomical definition may be

limiting — many ways to approach:

• Pure SaaS versus hybrid SaaS?

• On-premise + subscription? (Teleo, BlackBaud, others)

• Single-tenant? (Oracle, Siebel, many others)

• IDC sees a hybrid combination of software and services as a likely

evolution of on-premise desktop apps with a services component

• Finished apps + callable apps

• The future of application consumption will likely be a hybrid of pure

SaaS, Software+Services, plus a hybrid patchwork of on-premise apps,

custom/verticalized apps, software appliances, hosted AM, etc.


Revenue ($M)

57%

41%

63%

54%

� By 2012 EMEA will be 24% of WW revenue

� EMEA and AP combined equal 60% of WW Hosted AM activity: hosted apps is a common scenario

� After 2010 AP growth doubles, 2x speed of NA, driven in part by mobile Web

Source: IDC, 2008

IDC Worldwide Software on Demand Forecast:

Regional Segmentation, 2006- 2012

•IDC has increased its SaaS growth projection for 2009 from 36% growth to 42% growth over

2008.

•The percentage of U.S. firms which plan to spend at least 25% of their IT budgets on SaaS

applications will increase from 23% in 2008 to nearly 45% in 2010.


Worldwide Software as a Service Forecast by Customer Segment, 2006–2012

Source: IDC, 2008

52%

40%

45%

50%

Revenue ($M)

Overall 2006-2012 CAGR: 33%

� SaaS spending grows 4x faster than “all applications”spending

� After 2009 Large Enterprise spending will grow 14% faster than small and medium


SaaS Firmographics: US Market by App Type

Approx 12% of

US CRM Apps

Approx 3% of

US ERM Apps

Approx 5% of

US Other Apps

Approx 22% of US

Collaborative Apps

SaaS Apps by App typeUS, 2007, based on revenue

Approx 2% of

US O&M Apps

6%

Approx 4% of US

Engineering Apps

Approx 5% of US

SCM Apps

Source: IDC, 2008

Questions

Richard Dym

CMOOpSourceE-mail: [email protected]. No: +1-408-567-2031

For more details

Merrill R. (Rick) Chapman

Managing EditorSoftletterE-mail: [email protected]. No: +1-860-663-0552

For more details

Janaki Jayachandran

Business Manager – SaaS SpecializationAspire SystemsE-mail: [email protected]. No: +91-44-67404000

For more details

Is (Or Why Is) SaaS The Survival Strategy In This Down Economy?

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