Archive for January, 2009
SaaS is Surging in the Downturn, says IDC
Market researcher IDC has published an upward revision to its market size projections for SaaS in 2009. At a time when most industries and economies around the world are slashing their growth forecasts into single digits or even negative territory, IDC now expects SaaS growth to surge by more than 40 percent in the current year. That’s a significant move up from its previous forecast of 36% growth, published back in July when most economists were still trying to deny the onset of recession.
SaaS’s counter-cyclical boom is entirely due to the enhanced attractions of the model when times are bad, says IDC:
“… the harsh economic climate will actually accelerate the growth prospects for the software as a service (SaaS) model as vendors position offerings as right-sized, zero-CAPEX alternatives to on-premise applications. Buyers will opt for easy-to-use subscription services which meter current use, not future capacity, and vendors and partners will look for new products and recurring revenue streams.”
Don’t you just love that definition of SaaS? “Right-sized, zero-CAPEX alternatives to on-premise.” The report’s author, director of on-demand and SaaS research Robert Mahowald, adds an interesting observation that bears out the uprating:
“… several key vendors finished the year very strong, reporting stable financials and inroads into new customer-sets.”
From my own conversations with privately held SaaS players, I can certainly confirm that business seems to be expanding with continued momentum. Yesterday I was on a call with Phil Fernandez, CEO of marketing automation vendor Marketo, when I heard a bell ring and some cheering in the background. “We ring that bell whenever someone closes a deal in the sales team,” he explained. “Someone’s had a good start to their day,” I commented, noting it was 10am in his timezone. “That’s the third time so far this morning,” he replied. Marketo, which launched its offering just ten months ago, has already signed up its first hundred customers, at subscription levels that start from $1,500 per company per month.
Yesterday, collaboration vendor Central Desktop reported that in 2008 it had seen a 150% increase in user count and revenue over 2007, bringing its user base to the quarter-million mark. Growth continued througout Q4 and the company signed ten new customers in December alone, including urban planning consulting firm IBI Group and on-demand ERP vendor Workday. In a counterpoint to this week’s bleak employment news, Central Desktop says it tripled its workforce last year.
Chris Cabrera, CEO of sales performance management vendor Xactly, which last week acquired its largest rival, blogged about the IDC finding yesterday and picked up on Mahowald’s contention that many of these SaaS purchases are seen as “tactical fixes which allow for relatively easy expansion during hard times.” Cabrera counters:
“I will be surprised, very surprised, if an appreciable number of SaaS customers dump their on-demand applications in favor of on-premise solutions when the economy eventually rights itself. The excellent renewal rates enjoyed by SaaS leaders show that, once bitten by the SaaS bug, there’s little impetus to go back to on-premise solutions.”
I side with that analysis, and it’s interesting that a mainstream market researcher like IDC, even when it can’t deny the success that SaaS is experiencing, still feels it has to qualify it as some kind of blip in the normal scheme of things. I think Cabrera is spot on when he concludes that IDC’s findings show that the tipping-point from conventional software to SaaS “is now a lot closer than anticipated. And once tipped, no matter what brought you to that point, it will be counter-intuitive to go back.”
Speaking the Truth in Troubled Times
The following inspirational passage is extracted from an essay by Kathleen Robinson (www.krobinson.com). While it provides general counsel, it is extremely applicable to manufacturing executives scrambling to improve their bottom-line through improved sales forecasting as well as sales and operations planning processes (S&OP).
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Without a doubt, we have our work cut out for us this year, but really nothing we haven’t seen before. Doing more with fewer resources, managing change at every level, staying close to our customers, finding new opportunities for business growth and development, and covering rising costs are all familiar refrains. While the intensity of these challenges may be stronger than in the past, I believe we’ve trained for these challenges and know how to face them.
In good times, it’s relatively easy for organizations and individuals to grow and flourish. It’s the tough times that really show us what we’re made of! Like athletes who train every day to build the mindset, muscle, skill and endurance that will support them in facing career defining moments, as successful business professionals we are also ready to face the current challenges with the knowledge and skills that we’ve honed over our careers.
The fundamental business strategy of being customer focused in our business practices and decision making is more important than ever. [ Note: Which is why Sales and Operations Planning (S&OP) has moved to the forefront] We all recognize that we’re here to serve our customers and meet their needs. Yet it’s easy to get away from that fundamental principle especially when we’re under pressure to meet short term financial targets. Over time we lose touch with what our customers need and want from us unless we take the time to really listen to them. Our colleague, Linda Sharp, will offer some practical tips for conducting in-depth conversations with customers that uncover not only what customers want but generate even more profitable insights by finding out why they want it.
Speak the truth. Tell it like it is-no posturing, no pretense or spin doctoring. Let others know what we need, what we see, what we care about. But let’s try to avoid fear based language. Instead, let’s focus our attention on what we want to create rather than on what’s missing. We can be both positive in our messaging and truthful. Let’s try to leave everyone feeling a bit better and stronger as a result of working with us.
Focus on helping others succeed. Zig Ziglar once said, “We can all have what we want in life as long as we make sure others are also getting what they want.” The recent economic changes have clearly demonstrated our interconnectedness. We all got here together and we will emerge by working together and supporting each other.
Be the leaders we want to see in the world. Strong leadership is needed everywhere at every level, now more than ever. Skillful leaders focus on abundance, prosperity and positive action rather than on scarcity, deficits and negativity. All of us can commit to taking our leadership game to the next level by building and sustaining healthy working relationships, communicating more effectively, especially under pressure, and inspiring others to be their best.
Tough Economy Requires Better Planning
Warren Buffet
Warren Buffet famously said, “You only find out who is swimming naked when the tide goes out.” The economic tide is certainly waning these days, and a lot of companies have found their Sales & Operations Planning processes to be completely inadequate in this unprecedented environment.
The past does not equal the future. We cannot drive our car by looking only in the rearview mirror, and we cannot manage our companies by looking only at historical data. Effective real-time collaboration with peers, partners, customers, and suppliers is the only way to provide meaningful demand forecast visibility with enough detail (product mix) and time (planning horizon) to enable the organization to react to rapidly changing conditions.
“In preparing for battle I have always found that plans are useless, but planning is indispensable.” Dwight D Eisenhower
Why Salesforce.com Customers Love Steelwedge
With each passing month’s, more Salesforce.com customers are turning to the Steelwedge Software sales and operations planning (S&OP) solution for easy-to-use, robust and flexible OnDemand (SAAS) based solutions for improving their bottom-line. The unique and synergistic combination of SFDC and Steelwedge provides companies with a truly integrated view of their sales opportunities, sales forecasting, product mix plan, build plan, annual operating plan, revenue, and margin plans.
Only Steelwedge offers the unique and powerful capability to manage complex product configurations, product mix, and new products from inception to end-of-life. When coupled with Saleforce.com’s easy-to-use CRM solution for opportunity management, companies are able to tap into “cloud computing” to achieve a level of cost-effective and powerful business decision capabilities heretofore not imaginable.
Improving manufacturing operations during a recession . . . is software really a priority?
The headlines of today’s Wall Street Journal listed the rapid (vapid?) drop in manufacturing across the globe – Japan, Korea, the EC, the US – without exception the incredibly rapid drop in output is horrific. And yet, as history has proven, these are the very times that will sort out the best run businesses. The survivors will be those that make the investments and difficult changes necessary to become the kind of nimble and efficient manufacturer required to thrive during the next economic cycle.
How do know this? Q4 2008 was the best quarter ever for Steelwedge as manufacturers really focused on wringing out inefficiencies, moved quickly to improve agile planning practices, and set short-term goals to put in place the kind of infrastructure required to survive the dramatic downturn and be well positioned to thrive during the next cycle.
However, there is a distinction this time. Companies are not buying the kind of old-school, traditional cumbersome, transaction-focused software offered by the first generation of software companies – SAP, Oracle, Infor and the like. Leading companies already have this kind of infrastructure in place – now they are looking to leverage there investment by improving planning. Moreoever, they cannot wait for an expensive 12 month implementation cycle – they need a solution now!
The net effect of this change in focus has been a dramatic increase in interes in OnDemand (SaaS) software offered by companies such as Salesforce.com and Steelwedge. In fact, our partnership with Salesforce has brough in numerous deals as has our growing partnership with SAP. In each case, their customers were looking for a world-class, highly scalable, yet simple, cost-effective, and subscription-based solution.
This is at the heart of Steelwedge’s best-in-class OnDemand Sales and Operations Planning solution.
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