"It was the best of times, it was the worst of times", oh wait, this is SaaS news not "A Tale of Two Cities" and I'm certainly no Charles Dickens so...back on target, this was a interesting week from several different angles. There were three events that bear some analysis I think in relation to SaaS. The first was Concur's Q1 earning announcement , which was quite good, especially considering the current economic climate. The second was SAP's Business Suite 7 announcement , which included a curious lack of information on what SAP plans to do in SaaS. The third was news from salesforce.com indicating that its president Steve Cakebread had resigned for personal reasons and that the top two sales executives had left the company because their jobs had been eliminated.
Let's look at Concur first. For the quarter that ended 12/31/2008 (its Q1 FY 2009) it reported that subscription revenue was up 22% year over year, total revenue was up 19% year over year and 2% over the previous quarter for a total revenue of $58.6M and net income was $5.8M compared to same quarter the previous year of $3.4M, exceeding the street's and the companies expectations. To put that in perspective Concur showed strong double digit year over year growth during the 3 months following the start of the financial crisis, a time when most vendors were reporting that many prospects were just not making buying decisions as they tried to digest how bad things really were. Steve Singh, Concur's Chairman and CEO, also reported that NEW client acquisitions were up over 50% over the previous year. Concur gave guidance for Q2, saying that it expected revenue to increase by 6% over Q1. It also pointed out that its partnership with American Express would start to generate new customers in Q2 (basically Amex could be seen as a distribution partner and the relationship should generate quite a bit of business). All of this reenforces my belief that SaaS vendors will in general continue to thrive and grow in this economic climate because of their value proposition. For more on that see my previous post.
Now on to SAP and the BS 7 event. First, if you're interested see my more detailed post on the announcement. But what about SaaS and "cloud". SAP clearly omitted almost any reference to either during the event. When asked about "cloud", SAP Co-CEO Leo Apotheker simply said that SAP was researching cloud but that at present it was not robust enough to be an alternative. Now honestly, what does that mean? IMHO they do not have a good answer yet for what they plan to do around SaaS and cloud.
Lastly salesforce.com's executive shake up. This is only conjecture on my part but I believe that their direct sales model is running up against the same enterprise resistance that the traditional players are feeling. SaaS companies that are moving to indirect, like Intacct, are not seeing a slow down. Also companies that are squarely focused on 1. small and medium businesses (SMB) and 2. industry vertical variants are also not seeing the slow down (Netsuite & Concur for example). Salesforce.com has a few issues working against it IMHO: 1. it has moved up market over the last 2 years, 2. no real vertical focus, it is almost completely horizontal, 3. more agressive competitors, especially in the SMB market (Zoho, SugarCRM) and 4. the PaaS strategy is only an experiment for ISV's, only a handful are doing much business yet (Appirio for example). Salesforce.com's move into social CRM could give them a helping hand but it's to early to tell, companies are doing social experiments and are mostly using the free web 2.0 tools for those experiments I think. I do think that their platform partnerships with Facebook and Google will be a positive factor for salesforce.com this year.
The next event to focus on from a SaaS news perspective is next weeks earnings announcement from Netsuite, scheduled for Tuesday 2/10 @ 2:00PM PST. All the evidence so far points to good solid results but of course we'll have to wait till Tues to see.
