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Bma Presentation 3.19.2009
- 2. Agenda
Overview of SaaS Industry
•
SaaS Marketing
•
Lessons from SaaS
•
Lessons for SaaS
•
© Creeside Consulting, 2009
- 3. What is SaaS ??
“Software-as-a-Service”
Cloud
Computing
A working definition
Internet Software
“A model for software sales and
delivery over the internet, which is
subscription-based and delivered
by the provider with a single
instance, multi-tenant approach
with upgrades, support and
maintenance included for the
customer”
© Creeside Consulting, 2009
- 4. What makes SaaS unique relative to Traditional Software
Traditional
SaaS
Software
Pay as you go, as you need “I need a big check today for
Payment all of it”
No IT project “Meet my consulting partner”
Installation
“Obvious”
SLA’s and Uptime guarantees “You’re on your own”
Service Level Agreement standard
Regular updates, instantly “See you in 2 years, I hope
Innovation available to everyone you’ve kept patches current”
Easy and no cost to provision “I’m sorry we don’t do that, but
Trial Use to a prospect for a fee …”
Real time visibility into “I’ll call the customer and see
Customer Usage
“Less customers usage patterns how they’re doing”
Obvious” Real time, often built right into “We’ll convene the customers
Product Feedback the platform at the annual user meeting”
Almost exclusively on the “new “Has anyone installed the next
Engineering Focus thing” generation yet?”
© Creeside Consulting, 2009
- 5. SaaS on the adoption cycle
Saa
S
Source: Chasm Group, IDC, Creekside Analysis
© Creeside Consulting, 2009
- 6. SaaS on the Hype Curve
Saa
S
Source: Gartner, Creekside Analysis
© Creeside Consulting, 2009
- 7. Relative equity performance – SaaS vs. Traditional
$240
SaaS Group
• Salesforce
• Omniture
• Concur
$200
• Netsuite
Portfolio Value (2007 = $100)
• DemandTec
• Taleo
• Success Factors
• Vocus
$160
$120
$100
$90
Traditional Group
$80
• Microsoft
• Oracle
• SAP $60
• Symantec
• QAD
$40
• Epicor
2007 2008 2009
• JDA
• i2
Source: Yahoo, Creekside Analysis
© Creeside Consulting, 2009
- 8. SaaS has been growing dramatically faster than traditional software
60%
Year-over-Year Revenue Growth by Quarter (%)
SaaS (Median = 52%)
50%
SaaS Group
• Salesforce
Traditional Group
• Omniture
40%
• Microsoft
• Concur
• Oracle
• Netsuite
• SAP
• DemandTec
• Symantec
• Taleo
30% • QAD
• Success Factors
• Epicor
• Vocus
• JDA
• i2
20%
Traditional (Median = 11%)
10%
0%
Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08
Source: Edgar, Creekside Analysis
© Creeside Consulting, 2009
- 9. SaaS revenues are less volatile than traditional software
SaaS Group
• Salesforce
20%
• Omniture
• Concur
• Netsuite
• DemandTec
15% • Taleo
• Success Factors
• Vocus
10%
SaaS (Median = 10%)
5%
Traditional (Median = 2%)
0%
Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08
Traditional Group
• Microsoft
-5%
• Oracle
• SAP
• Symantec
• QAD
-10%
• Epicor
• JDA
• i2
Source: Edgar, Creekside Analysis
© Creeside Consulting, 2009
- 10. Sample Firm – SalesForce [The SaaS Leader]
Fast Facts
Revenues ($M)
$1,500
CAGR
$1,077 M
Headquarters: San Francisco, CA 47%
• $749 M
$1,000
Founded: 1999 $497 M
•
$500
Focus: CRM/SFA + PaaS
•
Revenues: $ 1,077 M (2008)
• $-
Net Income: $ 43 M (4%)
• 2006 2007 2008
Customers: 55,400
• CAGR
55,400
Customers
60,000
36%
41,000
40,000 29,800
Strategic Initiatives 20,000
-
• Platform-as-a-Service
2006 2007 2008
• Offering “cloud computing” services to
Rev/Customer ($)
others
$19k
$25,000
$18k
• Development Platform
$17k
$20,000
• Target ISV’s and corporate developers
$15,000
$10,000
• Application Marketplace (AppExchange)
$5,000
• Complementary Applications
$-
• SaaS Applications
2006 2007 2008
Source: Edgar, Creekside Analysis
© Creeside Consulting, 2009
- 11. Sample Firm – Intuit [The Hybrid]
Fast Facts
$2,000
Revenues ($M)
Services
CAGR
$1,500
Headquarters: Mountain View, CA 28%
•
$1,000
Founded: 1983
•
Focus: Tax and Small Business $500
•
Revenues: $ 3,071 M (2008)
• $-
Net Income: $ 477 M (16%)
• 2006 2007 2008
Services
$1,000
Revenues ($M)
Customers: 50,000,000
• CAGR
& TurboTax
QuickBooks
$800 22%
$600
$400
Strategic Initiatives $200
$-
• Connected Services Strategy
2006 2007 2008
• Connecting to Online (SaaS)
Gross Margins (%)
• Connecting to Services 90%
100%
74%
• Connecting to Community 80%
60%
• Acquisitions 40%
• Digital Insight (Financial Institutions)
20%
• ECHO (Payment processing)
0%
• Homestead (Website creation)
Services Products
Source: Edgar, Creekside Analysis
© Creeside Consulting, 2009
- 12. SaaS marketing fundamentals
• The customers are on the web – use it for “everything”
• B2C marketing mentality
• Fortune at the bottom of the pyramid (and the top)
• Integrated sales and marketing
• Sell a whole solution
• Customer satisfaction as a product attribute
• Pay as you go, for what you use, pricing
© Creeside Consulting, 2009
- 13. SaaS techniques in a down economy
• Inside sales / Web selling – no T&E budget to cut
• Try before you buy / Trial
• The “lay-away” plan
• Expense versus capital expenditure
• Start small
• Give it away
© Creeside Consulting, 2009
- 14. 5 Tips from SaaS you can apply to any business
1. Integrate feedback mechanisms into
your product / service
2. Offer a trial and/or free product
3. Make the Internet your best friend
4. Sell the whole product / service
5. Increase pricing via editions
© Creeside Consulting, 2009
- 15. A few things SaaS Companies still need to learn …
• It’s a customer war, not a religious
(technology) war
• Services are not (always) evil
• There’s a channel out there, what are you
going to do about it?
© Creeside Consulting, 2009
- 16. Sales and Channel Coverage
Sales
Team
~ 1,500 ~ 15,000 ~ 3,000 ~ 13,000
Channel
Partners
< 1,000* ~ 20,000 ~ 60,000 > 500,000
(AppExch& referral)
Source: IDC, Edgar, Creekside Analysis
© Creeside Consulting, 2009
- 17. A few things SaaS Companies still need to learn …
• It’s a customer war, not a religious
(technology) war
• Services are not (always) evil
• There’s a channel out there, what are you
going to do about it?
• How to grow profitably
© Creeside Consulting, 2009
- 18. Profitability of “Billion Dollar” Software Companies
24 %
23 %
25.0%
20.0%
Net Income (%)
15.0%
10 %
10.0%
4%
5.0%
0.0%
Salesforce Oracle Symantec Microsoft
[2009] [1992] [2000] [1990]
Source: Edgar, Creekside Analysis
© Creeside Consulting, 2009
- 19. Thanks !!
For a copy of today’s presentation, come see us on the web:
www.creeksideconsultinggroup.com/eventsandresources.html