Market leaders across the rapidly growing Software as a Service market.
To understand a certain market sector, industry observers often create lists of its top vendors. When it comes to Software as a Service, however, pinning down the market is like pinning down a Sumo wrestlernearly impossible.
Because SaaS is a delivery mechanism as opposed to a product itself it spans a number of markets. And SaaS is taking off: the Yankee Group forecasts that 50 percent of software purchased by small- to mid-sized companies in 2008 will be SaaS. A recent Gartner study predicts that
SaaS will enjoy a compound annual growth rate of 22.1 percent through 2011 for the aggregate enterprise software markets more than double the rate for total enterprise software.
With this rapidly changing landscape in mind, here are five vendors deploying SaaS who have attracted the attention of analysts all over North America.
Location: San Francisco
Why its in the top five: When most people think of SaaS, they think of Salesforce.com, the Customer Relationship Management (CRM) juggernaut founded in 1999 by former Oracle executive Marc Benioff. Nearly all research firms cite CRM as one of the largest current applications of SaaS (usually behind content, communications and collaboration).
Salesforce.com isnt the only company in the CRM space, but it certainly is one of the biggest, anticipating an estimated $750 million in revenue in FY2007. The company also estimates it could top $1 billion in revenue this year. Analysts at AMR Research agree, and recently pegged Salesforce.com as a force to be reckoned with.
What to watch for: After conquering the challenge of delivering individual services via SaaS, Salesforce.com entered 2008 with an entirely new approach: platform-as-a-service. This offering, dubbed Force.com, incorporates a smorgasbord of Web services into one, enabling developers to create and deliver any kind of business application, entirely on-demand and without software.
They are heading in the right direction, said David Bradshaw, an analyst with Ovum. The point of being a platform is not just the platform itself; its a healthy ecosystem playing in [the companys] direction. Still, many suggest Salesforce.com better watch its backas the company gets bigger and more successful, takeover attempts from Microsoft, IBM, Oracle and SAP could become more of a threat.
Location: San Mateo, Calif.
Why its in the top five: Like Salesforce.com, NetSuite also has enjoyed double-digit revenue growth in the CRM market and continues to gain momentum. The company was founded by Oracle founder Larry Ellison and protégé Evan Goldberg in 1998, and after a successful IPO in 2007, the company scored $108.5 million in revenue for FY2007.
Sanjeev Aggarwal, senior small- and medium-sized business strategies analyst at The Yankee Group, recently tabbed NetSuite as a company to watch in the CRM, ERP and accounting spaces. In particular, Aggarwal hailed the companys new SuiteFlex offering, which enables customers and third-party vendors to customize and add on to the companys existing SaaS technologies.
What to watch for: In January, NetSuite announced SuiteBundler, a new part of the SuiteFlex offering designed to let third-parties further customize NetSuite's business applications. While many analysts hailed this release as another step in the right direction, others were concerned that the development puts NetSuite into more direct competition with SAP, a much more powerful player in the marketplace.
Others worry that because many companies that implement NetSuite tools must hire consultants to set things up, the software looks and feels like a traditional off-the-shelf enterprise offering. Theyve started to fall off the buzz chart, says Sinclair Schuller, CEO of Apprenda, a SaaS-enablement vendor. In the SaaS business, buzz is everything.
Location: San Mateo, Calif.
Why its in the top five: Most people outside the world of Human Resources have never heard of SuccessFactors. Soon enough, they will. Founded in 2001, the firm uses SaaS to deliver its talent management services, and has managed to increase revenue by 95 percent between FY2006 and FY2007 to $63.4 million.
The company also expects to expand its workforce from 600 employees to more than 1,000 by the end of the year. If all of these numbers arent impressive enough, SuccessFactorss customer base is growing, too; President and CEO Lars Dalgaard says the firm is up to 1,750 customers and is adding at least three new clients per day.
What to watch for: More growth. Ben Pring, research vice president with Gartner, says that SaaS is particularly well-suited for Human Resources because of HRs traditional existence as a standalone business unit. If youre an HR manager, youre not that close to your own internal IT people, says Pring. Theres not a tremendous need or requirement to integrate HR into other applications of the business, and SaaS appeals to those people who just want to get business done quickly and not look for incredibly expensive application.
Like NetSuite, SuccessFactors could grow to become an acquisition target, but one has to love the firms independent spirit; its Rules of Engagement include, I will not BCC (blind copy) anyone.
Name: Adobe Systems
Location: San Jose, Calif.
Why its in the top five: Few can argue with Adobes status as a powerhouse. The company achieved a record $3.16 billion in revenue in FY2007, up from $2.58 billion in FY2006. Still, to consider Adobe a SaaS leader might seem to some as revolutionary; after being founded in 1982, the firm made perhaps its biggest headlines in the world of desktop publishing.
But today, an unofficial 10 to 15 percent of the companys business is in SaaS, and based largely on the success of Acrobat Connect and Adobe Document Center, the firm plans to roll out online versions of many of its other popular products, too.
What to watch for: As online collaboration and Web conferencing become more popular, Adobes plans to supplement existing services with Web-based value-adds look brilliant. Analysts have predicted significant growth for Adobe in these areas, both largely considered to be green fields despite the success of competitor WebEx.
Even after the resignation of former CEO Bruce Chizen at the end of 2007, experts were excited at Adobes prospects for the coming years. Michael Cote, an industry analyst with RedMonk, opines: Adobe doesnt seem to have gotten much attention for the SaaS offerings it has, and that the company uses SaaS more as a feature than the sort of all-encompassing replacement for desktop technologies.
Location: Cleveland, Ohio
Why its in the top five: When companies bill themselves as the world leader in a particular market, its usually hyperbole. Not so with Axentis. Founded in 1999, today the company boasts overwhelming control of the on-demand governance, risk and compliance (GRC) solutions market, and is North Americas most widely adopted solution to achieve compliance with the Sarbanes-Oxley Act of 2002.
While the company is privately held, experts agree the firm is wildly profitable. Driving this success is the unyielding performance of Axentis Enterprise (Ae), a SaaS product which addresses SOX 404, SOX 302, the Health Insurance Portability and Accountability Act and CoBit, to name a few.
What to watch for: Considering that Axentis customers include SunGard, Bombardier, Novartis, and BP Corp., continued growth for this company is a pretty safe prediction. Pring, the analyst with Gartner, says that the companys SaaS approach to compliance is so appealing because at this point, many companies need to get their GRC solutions in place quickly.
When you look at the compliance space, you might be talking about 10 or 15 or 20 divisions in a big business, he says. Trying to do on-premise deployments or rollouts across all those environments is a challenge, and the SaaS model makes deployment easy. Perhaps the companys only challenge: complacency. Not a bad problem to have at all.