In the current economic environment it is difficult to build a successful software business based on what worked in the '90's.  The rules have changed and you need to run your software business differently today in order to be successful and generate profits. The new term is Software-as-a-Service but what does it really mean to your business?   Montclair Advisors and OPEXEngine offered this webinar on how some of the best software companies in the industry have "Bridged the SaaS Continuum", including SaaS poster children like Salesforce.com, Taleo, Concur and Omniture.

1. Bridging the SaaS Continuum
Presented by
Montclair Advisors and
OPEXEngine
July 2009
© 2009 Montclair Advisors, LLC Confidential Information

2. What’s Different about a SaaS Business?
1. Cash flows
2. Contracts
3. Customer relationships and satisfaction
4. Trackable metrics
5. Management objectives
6. SaaS selling vs. Enterprise selling
7. Sales compensation
8. Internet marketing and social networking
9. R&D management and product development
10. Hosting management
© 2009 Montclair Advisors, LLC Confidential Information

3. Non-Profit
Education
Pharma
CPG
SCM
HCM
© 2009 Montclair Advisors, LLC Confidential Information
Marketing
PSA
SaaS Market Landscape
SPM
CRM
ERP
Financials
Collaboration
Office Products
Security
Integration
Infrastructure
Source: Montclair Advisors, 2009

4. The SaaS Poster Children
SaaS Continuum
© 2009 Montclair Advisors, LLC Confidential Information

5. The SaaS Continuum
On-Premise Hosted ASP SaaS
Stage 1 Stage 2 Stage 3 Stage 4
Development
Releases Annually Annually Semi-Annually Quarterly
Upgrades Major Major Minor On-Going
Architecture Single Tenant Single Tenant Mixed or Virtualization Multi Tenant
Deployment
Implementation Customization Customization Some Customization Configuration
Fastest Time Months Months Weeks Hours or Minutes
Team Systems Integrator Systems Integrator Boutique Minimal, Self Service
Delivery On-Premise Internet, In-house Internet, Co-Lo Internet, Cloud
Complexity High High Medium Low
Marketing
Product Launch Major, Annually Major, Annually Moderate Minor, Quarterly
Lead Generation Tradeshows, Email Tradeshows, Email Webinars, Email Social Networking
Communications PR Agency PR Agency PR Agency Viral, Social Networks
Sales
Organization Enterprise, Channel Enterprise, Channel Enterprise, Telesales Telesales, Channel
Approach High Touch High Touch Mixed Low Touch
Perpetual, PS and Perpetual, PS, Subscription, PS,
Pricing Subscription, Set Up
Maintenance Hosting, Maintenance Hosting
Trials No No Very Limited Yes
Source: Montclair Advisors, 2009
© 2009 Montclair Advisors, LLC Confidential Information

6. Bridging to SaaS
Sales
Partnerships Model
Pricing
Integration
Development
Data Center & Upgrades Software
Management Delivery
Marketing
Comp
Strategies
Cash Flow Plans
© 2009 Montclair Advisors, LLC Confidential Information

7. Best Practice Considerations
Montclair’s Top 10 Best Practices When Moving to SaaS
10. Understand Your True Hosting Costs
9. Be Able to Calculate Your Customer Acquisition Costs
8. Know Your Company’s Actual Customer Retention Rate
7. Model What Subscription Pricing Will Do To Your Cash Flow
6. Define Your New Compensation Plan for SaaS Sales
5. Write a Reasonable Customer Service Level Agreement
4. Figure Out How Quickly You Can Deploy Your Software
3. Be Committed to the Software-as-a-Service Model
2. Do You Have the Right Team to Transition Your Company to SaaS?
1. Make Sure You Have Management and Board Support Before Moving
© 2009 Montclair Advisors, LLC Confidential Information

8. Why is the SaaS Business Model Different?
Bessemer’s Top 10 Laws of SaaS
1. Key monthly business metrics: CMRR, Churn and Cash flow
2. Customer Acquisition Costs (CAC) and Customer LifeTime Value (CLTV)
are best indicators of long term value creation
3. Tune Before You Scale.
4. Separate ‘Hunters’ and ‘Farmers’.
5. Focus Your Business Development Efforts on Business Service Channels.
6. Savvy Online Marketing is a Core Competence.
7. Stay Local - Prove Your Business in North America First.
8. Single Instance, Multi-Tenant, Single Datacenter.
9. The Most Important part of Software-as-a-Service isn’t ‘Software’ It’s ‘Service’.
10. Be Prepared to Cross the Desert.
Source: Byron Deeter and Philippe Botteri, Bessemer Venture Partners
© 2009 Montclair Advisors, LLC Confidential Information

9. Key SaaS Metrics
Tracked by OPEXEngine
• Contracted Monthly Recurring Revenue (CMRR)
• Net new customers for full year 2008 and first half 2009
• Cost per customer to acquire new customer
• Cost per customer to maintain a customer per month
• Average contract value per customer
• Average increase in number of seats per customer for 2008 and for first half 2009
• Average up-sell in dollar value per customer for 2008 and for first half 2009
• Customer renewal rate during 2008
(as a percent of customers up for renewal during 2008)
• Dollar renewal rate during 2008
(as a percent of total $ value up for renewal during 2008)
© 2009 Montclair Advisors, LLC Confidential Information

10. SaaS Continuum Benchmarks – Revenue Growth
Confidential Benchmarking
2007 vs. 2006 Profit Leaders Perpetual SaaS
License
Total Recognized Revenue 26.0% 4.3% 70.9%
Growth
Total Recognized Product 22.0% 2.1% 70.7%
Revenue Growth
Total Recognized Service 23.6% 4.4% 43.8%
Growth
Average Recognized Revenue $101,476,187 $110,134,500 $70,719,442
2007
© 2009 Montclair Advisors, LLC Confidential Information

11. Taleo: 3 Year Comparison - Part 1
OPEXEngine FINANCIAL
DASHBOARD TLEO TLEO TLEO
01/01/06- 01/01/07- 01/01/08-
Period Start Date and End Date 12/31/06 12/31/07 12/31/08
$000s
Market Cap (priced as of the period end date) $273,824 $856,979 $215,865
Recognized Revenue $94,980 $128,070 $168,419
Product Revenue $79,116 $105,032 $138,628
Services Revenue $15,864 $23,038 $29,791
Product Revenue as % of Recognized Revenue 83.3% 82.0% 82.3%
Services Revenue as % of Recognized Revenue 16.7% 18.0% 17.7%
Recognized Revenue (Prior Period) $78,410 $94,980 $128,070
Revenue Growth / Prior Period 21.1% 34.8% 31.5%
3 Year Revenue CAGR na 29.7% 29.0%
Short-Term Deferred Revenue (This Period) $18,547 $45,866 $70,642
Deferred Revenue as a % of Recognized Revenue 19.5% 35.8% 41.9%
Total Cost of Revenue $32,158 $40,582 $57,573
Cost of Revenue: Product $19,351 $22,577 $32,390
Cost of Revenue: Services $12,807 $18,005 $25,183
Total Cost of Revenue as a % of Recognized Revenue 33.9% 31.7% 34.2%
© 2009 Montclair Advisors, LLC Confidential Information

12. Taleo: 3 Year Comparison - Part 2
OPEXEngine FINANCIAL
DASHBOARD TLEO TLEO TLEO
01/01/06- 01/01/07- 01/01/08-
Period Start Date and End Date 12/31/06 12/31/07 12/31/08
Total Operating Expense $70,497 $83,523 $119,262
S&M Expense as a % of Recognized Revenue 31.1% 28.8% 31.9%
G&A Expense as a % of Recognized Revenue 22.1% 18.5% 19.4%
SG&A Expense as a % of Recognized Revenue 53.2% 47.3% 51.3%
R&D Expense as a % of Recognized Revenue 20.6% 17.9% 18.4%
Total Operating Expense as % of Recognized Revenue 74.2% 65.2% 70.8%
Total Operating Income/Loss ($7,675) $3,965 ($8,416)
Total Operating Profit Margin -8.1% 3.1% -5.0%
Total Net Margin -4.8% 3.0% -4.9%
EBITDA ($3,161) $10,676 $7,885
Total Headcount (Year End) 585 656 878
Total Revenue Per Employee $162 $195 $192
Total Operating Expense per Employee $121 $127 $136
Total Operating Profit per Employee ($13) $6 ($10)
EBITDA Per Employee ($5) $16 $9
© 2009 Montclair Advisors, LLC Confidential Information

13. Concur: 3 Year Comparison - Part 1
OPEXEngine FINANCIAL
DASHBOARD CNQR CNQR CNQR
10/01/2007- 10/01/2006- 10/01/2005-
Period Start Date and End Date 09/30/2008 09/30/2007 09/30/2006
($000s)
Market Cap (priced as of the period end date) $1,854,041 $1,293,360 $569,633
Recognized Revenue $215,491 $129,107 $97,145
Product Revenue $206,304 $115,996 $80,501
Subscription Fees $206,304 $115,996 $80,501
Services Revenue $9,187 $13,111 $16,644
Product Revenue as % of Recognized Revenue 95.7% 89.8% 82.9%
Services Revenue as % of Recognized Revenue 4.3% 10.2% 17.1%
Recognized Revenue (Prior Period) $129,107 $97,145 $71,831
Revenue Growth / Prior Period 66.9% 32.9% 35.2%
3 Year Revenue CAGR 44.2% 31.7% 19.6%
Short-Term Deferred Revenue (This Period) $29,572 $21,560 $15,974
Deferred Revenue as a % of Recognized Rev 13.7% 16.7% 16.4%
Mean Analyst Revenue Estimate (Current Year) $291,874 $291,874 $291,874
Total Cost of Revenue $68,378 $43,711 $37,846
Total Cost of Revenue as a % of Recognized Rev 31.7% 33.9% 39.0%
© 2009 Montclair Advisors, LLC Confidential Information

14. Concur: 3 Year Comparison - Part 2
OPEXEngine FINANCIAL
DASHBOARD CNQR CNQR CNQR
10/01/07-
Period Start Date and End Date 09/30/08 10/01/06-09/30/07 10/01/05-09/30/06
Total Operating Expense $120,453 $71,744 $52,230
S&M Expense as a % of Recognized Revenue 27.8% 26.5% 23.6%
G&A Expense as a % of Recognized Revenue 14.6% 14.5% 14.9%
SG&A Expense as a % of Recognized Revenue 42.4% 41.0% 38.5%
R&D Expense as a % of Recognized Revenue 10.7% 12.3% 12.8%
Total Operating Expense as % of Recognized
Revenue 55.9% 55.6% 53.8%
EBITDA $47,936 $25,665 $14,805
Total Headcount (Year End) 932 575 500
Total Revenue Per Employee $231 $225 $194
Total Operating Expense per Employee $129 $125 $104
Total Operating Profit per Employee $29 $24 $14
EBITDA Per Employee $51 $45 $30
Cash and Cash equivalents $267,725 $168,835 $16,334
Cash Ratio 3.09 3.93 0.41
© 2009 Montclair Advisors, LLC Confidential Information

15. Omniture: 3 Year Comparison - Part 1
OPEXEngine FINANCIAL
DASHBOARD OMTR OMTR OMTR
Period Start Date and End Date 01/01/08-12/31/08 01/01/07-12/31/07 01/01/06-12/31/06
($000s)
Market Cap (priced as of the period end date) $760,313 $1,788,006 $427,075
Recognized Revenue $295,613 $143,127 $79,749
Product Revenue $265,686 $132,010 $74,580
Services Revenue $29,927 $11,117 $5,169
Product Revenue as % of Recognized Revenue 89.9% 92.2% 93.5%
Services Revenue as % of Recognized Revenue 10.1% 7.8% 6.5%
Recognized Revenue (Prior Period) $143,127 $79,749 $42,804
Revenue Growth / Prior Period 106.5% 79.5% 86.3%
3 Year Revenue CAGR 90.4% na na
Short-Term Deferred Revenue (This Period) $101,728 $42,041 $21,885
Deferred Revenue as a % of Recognized Revenue 34.4% 29.4% 27.4%
Mean Analyst Revenue Estimate (Current Year) $416,060 $416,060 $416,060
Total Cost of Revenue $125,940 $53,364 $31,826
Cost of Revenue: Product $110,786 $46,411 $28,827
Cost of Revenue: Services $15,154 $6,953 $2,999
Total Cost of Revenue as a % of Recognized Revenue 42.6% 37.3% 39.9%
© 2009 Montclair Advisors, LLC Confidential Information

16. Omniture: 3 Year Comparison - Part 2
OPEXEngine FINANCIAL
DASHBOARD OMTR OMTR OMTR
01/01/08- 01/01/07- 01/01/06-
Period Start Date and End Date 12/31/08 12/31/07 12/31/06
Total Operating Expense $212,817 $103,085 $56,066
S&M Expense as a % of Recognized Revenue 43.9% 43.0% 44.2%
G&A Expense as a % of Recognized Revenue 15.6% 16.9% 15.2%
SG&A Expense as a % of Recognized Revenue 59.5% 60.0% 59.4%
R&D Expense as a % of Recognized Revenue 12.5% 12.1% 10.9%
Total Operating Expense as % of Recognized Revenue 72.0% 72.0% 70.3%
Total Operating Expense as % of Rev Rec + Change in Def
Rev 59.9% 63.1% 63.2%
EBITDA ($30,112) $7,064 $48,433
Total Headcount (Year End) 1,189 713 353
Total Revenue Per Employee $249 $201 $226
Total Operating Expense per Employee $179 $145 $159
Total Operating Profit per Employee ($36) ($19) ($23)
EBITDA Per Employee ($25) $10 $137
Cash and Cash equivalents $67,020 $77,765 $68,287
Cash Ratio 0.51 1.92 1.63
© 2009 Montclair Advisors, LLC Confidential Information

17. Where Are You On The SaaS Continuum?
Metrics Stage 1 Stage 4
On-Premise SaaS
% Spend on R&D 19-21% 33-35%
% Spend on Sales 26% 39%
% Spend on Marketing 6.5% 20%
% Spend on G&A 15-18% 25-27%
Gross Margin on Product 97% 65%
Delivery On-site Over Internet
Upgrades Major - Once or Twice a Ongoing
Year
Product Trials Not typically Yes
Pricing Perpetual, payment Subscription, priced on a
upfront monthly basis
© 2009 Montclair Advisors, LLC Confidential Information

18. About Us
Montclair Advisors provides personalized OPEXEngine delivers best-in-class, without
exception, financial and operating benchmarks to
Software-as-a-Service advisory services
tech companies to drive profitability and revenue
designed to help SaaS-based and non-SaaS- growth. OPEXEngine was founded by senior
based software companies to optimize their operating executives with decades of experience
business models, improve revenues, control building successful, high growth, profitable tech
costs and deliver world-class software. companies.
Visit us at www.montclairadvisors.com, check out Visit us at www.opexengine.com.
our Smart SaaS blog at
www.montclairadvisors.com/blog and follow us
on Twitter @Montclairadvrs.
Kevin Dobbs, Owner - Managing Partner Lauren Kelley, CEO
Office: 510-336-0019 Office: 781-891-4149
Email: kevin@montclairadvisors.com Email: lauren@opexengine.com
© 2009 Montclair Advisors, LLC Confidential Information

19. Thank You
© 2009 Montclair Advisors, LLC Confidential Information