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Company: CentralDesktop
Started: 2005
Located: Pasadena, California
Geography: Global
Market: Social Technology Platform
Products: Workgroup, Enterprise and Community editions
Key Customers: Humane Society of the US, CBS, US Department of Health and Human Services, Avid Technology, Omniture, Gymboree, InterContinental Hotels and University of Wisconsin-Madison.
Website: CentralDesktop
Blog: CentralDesktop Blog
Twitter: @centraldesktop
Recent News:
Central Desktop Unveils Version 2.0 of Social Technology Platform
Central Desktop and ActiveWord Systems Partner to Provide Customized Version of Productivity Tool
Central Desktop Named 2010 Hot Companies Finalist
Central Desktop Builds Momentum, Poised to Continue Accelerated Growth in 2010
I asked Isaac Garcia, CentralDesktop’s co-founder and CEO a few questions about his business and his view of the SaaS market in 2010.
Did you start out as a Software-as-a-Service company?
Yes, we were very deliberate from the very beginning that we wanted to be a subscription-based product with an architecture based on a single-code base. We were focused on becoming the Salesforce.com of the Collaboration industry. Just how Salesforce was the disruptive force in the highly fragmented CRM market, we wanted to do the same thing for the Collaboration market.
Back in 1999 we founded Upgradebase, which was a large database of information targeted to high-end enterprises but the product was not multi-tenant. We also operated Vendorbase, which was written on a single-code base, and customers paid a monthly subscription fee for usage.
When market tanked in 2002, our enterprise business suffered but Vendorbase did well, because it was affordable, low touch and had a multi-tenant architecture. We kept telling ourselves to avoid the allure of the enterprise software market and stick to the subscription model and that was the right thing to do.
Why do your customers buy from Central Desktop?
Three reasons why people buy our product. First, we offer a lot of tools under a single umbrella including document, collaboration and project management. Just subscribe once and your company gets all these tools.
Second, our delivery mechanism is designed for small and medium sized businesses and can be deployed very quickly. Over the next few years, the SaaS delivery model in our market will need to get faster and easier to use versus some of the more enterprise-focused tools like Jive or Telligent.
The last reason is that since we’re a SaaS company, we really understand and deliver a true SaaS solution. We have SaaS DNA. Our customers expect an easy to use, dependable, affordable solution and we need to win their business every single day. So we spend a lot of our time focusing on providing very good customer service, which is a big difference as compared to a software firm that operates under a traditional on-premise model.
Our customer is typically a SMB with less than 100 employees and the buyer is usually the owner or CEO of the company. These buyers are not only the decision-maker but usually the CentralDesktop administrator too, so our products need to be easy to use.
Sometimes our customers compare CentralDesktop to free or very simple alternatives that are available in the market like Zoho or even 37Signals’ BaseCamp product. Some of these offerings offer good self-service support but no live customer support or professional services. Other products have pieces of the collaborative environment our customers are looking for but don’t offer the breadth of CentralDesktop. This is the opposite problem when customers look at more complex solutions that offer deep functionality, but for our SMB customer, these type of products are too confusing, which makes them hard to use.
What do you see as the key trend emerging in the SaaS industry?
I am seeing many new pricing models emerging, like charging for utilization and usage, instead of by annual commitments for seat counts. Start-up companies are experimenting with charging for bandwidth, storage, uploads and other models. These newer pricing structures are all based on some variation of utility computing, similar to what Amazon.com’s AWS is doing. The original pricing for Salesforce.com was designed to position them more as a utility but over time they shifted back to more of a traditional seat-based pricing model.
We are also seeing more flexibility around contracts. In the future, customers are going to be looking for not only annual pricing around seat counts but also utility-based concepts that will move monthly subscription fees up or down based on utilization, which the industry will need to be ready to accommodate.
What is your outlook for 2010?
CentralDesktop grew by 50% last year and we are predicting 80-100% growth for 2010, as the economy recovers.
Customers are being more aggressive about buying software products, before the job market has really started to improve, which is a little worrisome. I am still being cautiously optimistic but I feel that the overall the market has a false sense of confidence. Even with this type of market, I know that CentralDesktop will continue to be successful.
Company: NetSuite
Started: 1998
Located: San Mateo, California
Geography: Global
Market: Cloud Computing Business Management Suites
Products: NetSuite Accounting/ERP, CRM, eCommerce, NetSuite OneWorld, Suite Cloud Platform and OpenAir PSA
Key Customers: SuccessFactors, Smashbox, Solarwinds, Intuitive Surgical, Isuzu Truck, GestureTek, Virgin Money, Six Apart, Cash Edge, Oakland A’s, Ashi Kasei Group, Cartridge World
Website: NetSuite
Blog: Cloud NetSuite
Twitter: @NetSuite
Recent News:
NetSuite OneWorld Strengthens Links at Wireless Matrix
Independent Survey Finds High Satisfaction Amongst NetSuite Customers
I asked Mini Peiris, NetSuite’s VP of Product Marketing a few questions about their business and her view of the SaaS market as we move into 2010.
Did you start out as a Software-as-a-Service company?
Yes we were founded in 1998 as a SaaS or Cloud-based solution. The company was started Evan Goldberg and Larry Ellison, providing cost-effective business management software for small and medium sized businesses or divisions of large enterprises. We’re now the #1 cloud business management suite, with over 6,600 customers.
Our original focus was on small businesses and over time we have moved up market, . When we started NetSuite, we were based around financial management and we have now developed an entire business management suite across ERP, CRM and Ecommerce. Then in 2008 we launched NetSuite OneWorld for global businesses or their divisions, that are looking for a comprehensive business or financial management suite.
Why do your customers buy from NetSuite?
The value of purchasing NetSuite software is we allow our customers to focus on operating their core business instead of running and maintaining all different types of business management software and infrastructure. Most companies operate a hodge podge of different systems for financials, CRM, support, eCommerce and inventory. This requires substantial initial and ongoing investment, time to manage and resources to upgrade.
Cloud Computing reduces a lot of this IT pain by allowing customers to pay as they go, and eliminating the need to buy, maintain and upgrade expensive hardware, software, and infrastructure. NetSuite offers a fully integrated web-based cloud business management suite, which offers significant business benefits, such as CRM solution that is fully integrated into financials and into inventory, which creates a much more efficient order to cash process. Some of the big benefits include significant ROI because you can do more work with fewer employees and the work is more accurate. Older systems require business analysts who create and maintain sales orders, conduct ad hoc reporting, data management across systems and a lot of re-keying.
Our customers also like that they can centralize their data, centralize their customer data and have a single version of the truth.
NetSuite customers can leverage our standard analytics, run real-time reports, dashboard and fulfillment, without having to try and integrate a hodge podge of information using Excel. All of this all included and completely integrated with our system, so customers don’t have to pay a separate fee.
We typically service companies who have outgrown Intuit’s QuickBooks, struggled with having to maintain Microsoft Great Plains with multiple other business systems, and we’ve even had SAP R/3 customers convert to NetSuite, who have become weighed down by the IT costs, and multi-million dollar upgrade costs.
For example, Asahi Kasei Spandex America moved from SAP R/3 to NetSuite and reduced their IT spend from 3% of revenue to 0.1% of revenue with NetSuite - with NetSuite providing an easier to use, modern, integrated and cost effective completely web based solution. In fact, NetSuite has been shown to be 50%+ more cost effective than traditional on-premise solutions. Our sweet spot in the market is companies with 11-1,000 employees in high tech or software, wholesale/distribution, retail/eCommerce, manufacturing or services verticals, and our solutions are used across the globe.
What do you see as the key trend emerging in the SaaS industry?
A major trend is the enterprise adoption of SaaS. For example, we are seeing significant share of our new business bookings for our NetSuite OneWorld solution, our solution for global companies or divisions of global enterprises.
The increasing media coverage of SaaS and Cloud Computing is definitely a driver, because the significant cost savings and business efficiencies are very attractive to CIOs and they are starting to take a closer look at Cloud-based solutions. Even during the economic downturn, Gartner rated NetSuite for the first time as one of the Top 10 Financial Management Systems vendors in 2008 by market share - and the fastest growing in that Top 10. And IDC recently rated NetSuite one of the Top 10 ERP solutions for sub-1,000 employee organizations .
ERP upgrade cycles are coming up again like they did 3-5 years ago and customers are faced with either upgrading or switching their systems, and NetSuite’s solution provides the ideal solution to slash IT costs, and get off the upgrade treadmill.
Cloud solutions are becoming more highly tailored towards specific industries. NetSuite’s SuiteCloud platform provides the ideal platform for ISV’s to deliver industry specific cloud apps to market. For example, RootStock Software is a NetSuite partner that is building a manufacturing resource planning application on top of the NetSuite platform, because they can take advantage of NetSuite’s native ERP, CRM and eCommerce functionality and their application logic for manufacturers. ISVs can even market and distribute their applications through our marketplace at SuiteApp.com.
Traditional software resellers and solution providers are looking to transform their business models as the traditional on-premise market slows down and buyers become more skittish around large capital outlays. Cloud computing offers the opportunity for resellers to provide truly cost effective and compelling solutions to their customers. This transition is happening worldwide, and NetSuite’s cloud pay as you go solution provides the opportunity for resellers to to build a recurring revenue stream, and better fit with their customers’ needs. With our NetSuite Solution Provider program, partners can leverage NetSuite to make this transition. In fact, we recently announced the NetSuite SP100 Program which enables resellers to get paid 100% of the first-year revenues on new sales of NetSuite.
At our upcoming SuiteCloud2010 event in San Francisco in April, NetSuite partners will be coming together, sharing ideas and best practices and seeing how others have both built natively on top of NetSuite’s platform, as well as integrated with it.
What is your outlook for 2010?
Well, we’re pleased that at NetSuite we just closed out our 2009 fiscal year with record revenues.
In a recent Gartner forecast they are projecting that SaaS ERP/CRM versus traditional ERP/CRM, SaaS will grow at a much stronger growth rate. As Cloud Computing gets more play and enterprises continue to upgrade, this should be good news for us.
On a recent client engagement I was asked to provide a simple set of definitions for basic terms and concepts around Software-as-a-Service and Cloud Computing (which I often use inter-changeably). What was interesting is that there is a lot of buzz out there but I can see why people get confused because there isn’t a standard set of definitions.
So my Friday contribution to the SaaS industry I am publishing the Montclair Advisors’ SaaS Glossary of Terms. I would be interested in your feedback on the definitions and if I miss any key ones.
| Term | Definition |
| ACV | Annual Contract Value of a subscription software agreement. |
| API | Application Programming Interface. |
| ARR | Annual Recurring Revenue. |
| ASP | Application Service Provider. Typically associated with a hosted single tenant software solution. |
| CAC | Customer Acquisition Costs. A key -SaaS metric that measures sales effectiveness based on how long it takes to pay back Sales and Marketing investments. |
| Churn | A SaaS measure of customers who do not renew their annual or monthly subscription agreement. |
| Cloud Computing | A utility computing method that shares many types of computer resources through virtualization and delivers an elastic computing environment over the Internet. |
| CLTV | Customer Lifetime Value. A key SaaS metric that is used to measure customer value, usually over 3 to 5 years. |
| CMRR | Contracted Monthly Recurring Revenue. A key SaaS metric that is calculated for new customers, up-sells, cross-sells and removing churning customers. |
| CoLo | Co-Location facility. A term for leasing a third party’s physical data center infrastructure, which usually includes the building, power, Internet connectivity and security. |
| Cross-Sell | A key SaaS metric measuring new software functionality or modules added to an existing software subscription agreement. |
| Down-Sell | A key SaaS metric that measures when customers remove of functionality, users or capability that lowers the CMRR. |
| Freemium | A business model in which the SaaS or Cloud Computing provider offers basic features to users at no cost and charges a premium for supplemental or advanced features. |
| Hosted Software | Single tenant software that is delivered over the Internet from either the Software vendors own data center or through a third party hosting company. |
| IaaS | Infrastructure-as-a-Service refers to a combination of hosting, hardware, provisioning and basic services needed to run a SaaS or Cloud application that is delivered on a pay-as-you-go basis. |
| Mashup | It is a web application that combines data or functionality from two or more external sources to create a new service. The term implies easy, fast integration, frequently using open APIs and data sources to produce results that were not the original reason for producing the raw source data. |
| MRE | Monthly Recurring Expenses. |
| MRR | Monthly Recurring Revenues. |
| MSP | Managed Services Provider. Usually a hosting or CoLo provider who provides a higher level of application management services (App management, monitoring, reporting, billing and call center support). |
| Multi-tenancy | Refers to a software architecture where a single instance of the software runs on a server, serving multiple client organizations (tenants). Multi-tenancy is contrasted with a multi-instance architecture where separate software instances (or hardware systems) are set up for different client organizations. |
| On-Demand | Is often used as an interchangeable term along with SaaS. |
| On-Premise | Traditional method of installing and customizing software on the customer’s own computers that reside inside of their own data center. |
| Platform-as-a-Service (PaaS) | Platform-as-a-Service solutions are development platforms for which the development tool itself is hosted in the Cloud and accessed through a browser. With PaaS, developers can build web applications without installing any tools and then they can deploy their applications and services (reporting, integration, security) without any specialized systems administration skills. |
| Private Cloud | Employs Cloud Computing principles within a customer’s own internal networks. The term implies that the same virtualization and highly flexible and scalable methods used in huge Internet-based enterprise datacenters. |
| Public Cloud | Cloud Computing conducted using the public Internet outside of any enterprise firewall. |
| Renewal | Agreeing to extend an existing software subscription agreement beyond the initial term. |
| SLA | Service Level Agreement. The contractual terms of service associated with SaaS provider’s offerings. |
| SOA | Service Oriented Architecture. |
| SaaS | Software-as-a-Service refers to multi-tenant software delivered over the Internet and customers consume the product as a subscription service that is delivered on a pay-as-you-go basis. |
| Subscription | SaaS licensing method where customers rent their software from the provider usually over a 1-3 year period. |
| TCV | Total Contract Value. Total value of a transaction as measured over the term of the agreement. |
| Up-Sell | A key SaaS metric measuring additional software functionality, users, or capacity that is sold onto an existing software subscription agreement. |
| Virtualization | The creation of a virtual (rather than actual) version of an operating system, a server, a storage device or other network resources. |
Company: BrightIdea
Started: 1999
Located: San Francisco, California
Geography: Global
Market: On-Demand Innovation Management
Products: WebStorm, Switchboard, Pipeline and Platform
Key Customers: Adobe, AMEX, Bosch, British Telecom, Bristol-Myers Squibb, Cisco, Harley-Davidson, GE, Kraft, UBS , and Nationwide
Website: Brightidea
Blog: Innovation Work
Twitter: @BrightideaHQ or @Brightidea
Recent News:
The cloud: Where bright ideas come to life
Innovation Management Helps Make Your Idea Reality
Wolters Kluwer Using Brightidea Social Innovation Management Software to Drive Future Business
Ketchum Expands Open Innovation Platform, Mindfire, to Accelerate Flow of Ideas for Clients
I asked, Brightidea’s Vincent Carbone, the company’s co-founder and COO a few questions about his business and his view of the SaaS market during 2010.
Did you start out as a Software-as-a-Service company?
Yes, Brightidea was founded in 1999 and from day one our solution was designed on a multi-tenant database architecture that supports our SaaS application solutions. The concept of SaaS was still in its infancy, but with the launch of Salesforce.com and their brilliant “No Software” tagline, we believed SaaS was the future. We really believe Brightidea is the Salesforce.com for Innovation.
Why do your customers buy from Brightidea?
Unlike 50 years ago, companies today must continuously innovate at an accelerating pace to stay competitive. Companies buy from Brightidea because there is a fundamental organizational shift underway in medium and large companies who are moving their core business function from a “how to make” to “what to make” mindset. Most companies currently have no infrastructure or software to help them effectively manage their employee, partner or customer ideas that will lead to the development of future products and services. Similar to how companies implemented Customer Relationship Management solutions 15 years ago to manage and optimize their sales pipelines, companies are now starting to implement Innovation Management Software to better manage and optimize their Innovation Pipeline.
Our customers choose Brightidea because we have over 10 years of experience implementing innovation systems in large, complex organizations. Unlike more generic SaaS social software, like Jive and Lithium, Brightidea’s Innovation Management Solutions are grounded in a core business need around innovation, which delivers a true return on our customer’s investment. These business returns are measured in how our customers can manage large-scale projects, encourage new ideas that can improve innovation around product development, cost cutting and even safety ideas.
What do you see as the key trend emerging in the SaaS industry?
One of the key trends we see is user-adoption of social networking components inside of SaaS software for collaboration. It wasn’t until consumers started to get comfortable with sharing information on Facebook, that the workplace began to feel comfortable sharing information in a similar manner. We believe most SaaS applications will continue to adopt more social and collaborative functionality.
What is your outlook for 2010?
We think the future is bright in 2010 for several reasons.
Acceptance of Cloud Computing is going to grow within most IT organizations, so companies will be looking to adopt more SaaS-based solutions.
As I mentioned, users of SaaS software are going to get more comfortable with social networking and collaboration capabilities and organizations will continue to add internal resources that are focused on driving business value through collaboration. We also believe that innovation is inherently a social activity, which means that all of these trends should be good news for Brightidea.
Company: Patersons
Started: 1996
Located: Salisbury, United Kingdom
Geography: Global
Market: On-Demand Global Payroll
Products: Click4HR, Free HR, and Global HR and Payroll
Key Customers: Constellation Europe, Henderson Global Investors, Interdean International Relocation, Siemens
Website: Patersons
Blog: Patersons Blog
Twitter: @patersons
Recent News:
Patersons Announces New Partnership with Lawson
CEO Honored At Growing Business Awards | APA Article
Patersons Shakes Up the Market Again Adding ESS to Free HR Offering
Patersons Shakes Up The Market Again With ESS Added To Free HR Offering
I asked Karen Paterson, Patersons Chief Executive Officer a few questions about her business and her view of the SaaS market as we move into 2010.
Did you start out as a Software-as-a-Service company?
Yes
Why do your customers buy from Patersons?
Patersons ‘Software-as-a-Service’ payroll platform delivers payroll on one single database, one technology platform worldwide. This is the only multi-tenant, multiple country online payroll processing platform in the world. Clients also only have one global contract with Patersons. The leading-edge platform promotes scalability and we can cater for any size payroll anywhere in the world, whether a client has 1 employee in Kazakhstan to 10,000 employees in China. Patersons Logon2 solution is as feature rich as major ERP solutions. It also delivers instant Sarbanes Oxley and SAS70 compliance with its unique International Payroll Workflow, therefore making sure all local requirements are adhered to in a timely and accurate manner. Patersons comprehensive global consolidated reporting suite allows quick analysis of global client data.
SaaS is based on the concept of ‘Pay-as-you-go‘ on-demand and customers only pay for what they use and nothing more. The solution is regularly updated and developed to stay in the forefront of the industry. There is also no additional expense for customers when upgrades or updates are made to the solution, and as the system is delivered via the Internet, customers receive upgrades in real-time. Patersons technology is developed 100% in-house, therefore we do not have to pay third party fees.
What do you see as the key trend emerging in the SaaS industry?
There is a strong move from on-premise ERP to SaaS as a serious alternative global solution. Many companies are looking for best-of-breed in a vertical industry rather than an ERP which generally gets 20% functional use of what has been paid for. The mistrust of not hosting and relying on an outsourcer to provide an IT function is interesting and an indication that internal IT department have been failing the HR function.
What is your outlook for 2010?
2010 will be the Year of SaaS and the Cloud. Coming out of recession companies are seeking single process outsourcing solutions and best of breed choices from software vendors.
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