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ServiceSource is a leader in an emerging field called Service Revenue Management, which for most technology companies refers to management of their ongoing subscription maintenance streams. The company offers a technology platform and a suite of applications, as well as a managed services capability for some of their largest technology customers. Some of their recognizable customers include Adobe, Cisco WebEx, NetApp and Xactly. Montclair Advisors did a Smart SaaS Business Profile on ServiceSource in 2011 that provides background on the company, their strategy and product portfolio.
Last week I visited the ServiceSource offices in San Francisco to get a sneak peak of their new Avalon platform. Avalon is ServiceSource’s next generation SaaS platform that will pull together multiple capabilities including a beautiful new user experience, integration services with other leading Cloud platforms, a connected ecosystem of ServiceSource managed services and their continuous intelligence capability.
I was very impressed by their new user interface, its very clean and uses info-graphics metaphors along with in-line analytics to create a very easy-to-use, and understand product. The graphics were elegant and provided a lot of drill down and mouse over information for the user. Because ServiceSource is using HTML5, this interface is available on mobile devices as well as through a standard web browser. The charts and graphs are all available inside of the product, which makes it easier to use than other CRM-like systems. The design point was to create a system that offers a walk-up interface, one that required little or no training for the users. Here’s a screen shot of the new user interface.
Another unique aspect to the product is that there is a near real-time data warehouse that feeds the analytics for Avalon. For example, when their customers are comparing their renewal rates against the industry or even their peer group, they will be looking at really fresh data. It is common for most aggregated data of this type to be compiled and delivered in a quarterly or in some cases a monthly basis. So this continuous intelligence capability may deliver a competitive edge to ServiceSource customers because the information is representing how the company is operating right now. For most SaaS companies, it is difficult to gather service revenue-related data about their business on a continual basis but with this aspect of the ServiceSource Avalon product, it will make it really straightforward because it will be delivered through easy-to-use metrics and dashboards.
ServiceSource is using a very modern Cloud infrastructure for their Avalon platform. The infrastructure is build on Node.js and Amazon Web Services, which is interesting because I haven’t seen a lot of enterprise software vendors building their next generation platform on the Amazon infrastructure. There are clearly some scalability and elasticity advantages to using the AWS platform for a SaaS offering and ServiceSource is using many of these capabilities. The company also has a strong Avalon development team with some ex-Coghead alumni leading the efforts.
With their new user interface and the flexibility they are building into their SaaS platform, it may be very easy for the company to allow their customers and prospects to ‘try before they buy’ new software modules and capabilities. I believe that this inherent flexibility, for this type of application suite, should really increase user adoption and consumption levels, which should help ServiceSource continue to renew their customers and sell them additional products and managed services.
The Avalon service will be generally available later in 2012.
Company: Eloqua
Started: 1999
Located: Vienna, Virginia
Geography: Global
Market: Revenue Performance Management
Products: Marketing Automation platform and Revenue Performance Management applications that help growing businesses align their sales and marketing teams, identify and nurture revenue opportunities and measure marketing and sales effectiveness
Customers: Adobe, AON, Dow Jones, ADP, Fidelity, Polycom, and National Instruments.
Website: Eloqua
Blog: It’s All About Revenue
Twitter: @Eloqua
Recent News:
Eloqua’s Social Media ProBook Takes Home the Gold
Citrix GoToWebinar Integrates With Eloqua AppCloud
Innovative, Revenue-Focused Marketers Recognized at Eloqua’s Fifth Annual Markie Awards
Eloqua Creates “All-in-One” Marketing Automation Resource Hub with New “Business Center” Portal
I asked Joe Payne, Eloqua’s CEO, a few questions about his business and view of the SaaS market in 2011 and beyond.
Did you start out as a Software-as-a-Service company?
Eloqua has always been a SaaS company from the day it was founded in late 1999. The vision at the time was to help businesses sell products through a combination of web analytics, email, and chat. As prospect data was collected and tracked through Eloqua, it soon became obvious that companies could really benefit from tracking this “digital body language” and then use it for demand generation. We went on to develop marketing automation technology and became the unquestioned leader in the space.
We recognized early on that businesses wanted cutting edge technology but were often burdened by the expensive infrastructure and IT staff. Eloqua was a pioneer in the Software-as-a-Service delivery model long before it became popular.
Why do your customers buy from Eloqua?
We help our customers win their markets. If you can be more effective and faster than your competitor, you can win your market. Eloqua’s technology and best practices helps our clients win.
A major reason companies choose Eloqua is that we invest heavily in our customers and really promote a culture of customer success. Our SmartStart program is an on-boarding process that provides customers with marketing best practices from day one. With a SmartStart our clients are up and running in days. It is such a successful program that we offer a money-back guarantee to all clients who use it. We have numerous resources available to our customers helping to ensure their success. We provide education services through Eloqua University, best practices through our Topliners community, success coaching, and more. Our culture is rooted in customer success and every employee’s bonus is actually tied to customer satisfaction.
Finally, our product is the deepest and most powerful in the industry. As the largest player in the space we can invest in R&D to innovate. For example, we’re currently the only vendor in our space to invest in HTML 5 for our platform delivering an exceptional browser interface and user experience. We also developed the industry’s first online marketplace for B2B marketing applications called the Eloqua AppCloud. The AppCloud eliminates custom integration offering on-demand “connections” from marketing, sales and social media applications to Eloqua.
What do you see as the key trends emerging in the SaaS industry?
Social, Mobile and Apps. SaaS applications are perfectly situated to take advantage of emerging trends in a way that on-premise software cannot.
SOCIAL. Because our applications are already in the cloud we can use components to connect and embrace social media. We allow our clients to quickly tie their marketing and social efforts together and to track the effectiveness of both. It is almost impossible for an on-premise application to have this kind of social extensibility.
MOBILE. Extending the capabilities of a SaaS app to a mobile device is easy. We build that mobile app once and it works for all our customers. We don’t have to worry about different firewall settings or VPNs or configuration issues for each client like an on-premise vendor would. This gives us a tremendous advantage in responding to the speed with which customer browsing is changing.
APPS. Apps allow cloud offerings to talk to each other. Any Eloqua customer – no matter the size — has instant integration with D&B, ON24, Cvent, Klout, Radian6 and 35 other platforms. That integration all occurs in the Cloud. Such an undertaking in a non-SaaS environment would be cost prohibitive for most companies. This is a huge advantage for SaaS companies.
What is your market outlook for 2011?
Our outlook is positive. Our products are market-leading. We are twice as big as our closest competitor and we’re in a fast growing market, which will continue to experience strong growth in the next few years. Compared to other software categories, there is still relatively low adoption of our technology. Companies in the software and technology space were early adopters and now we’re seeing other vertical markets adopt marketing automation. We also introduced an entire new business category, Revenue Performance Management (RPM). While RPM is still new, the category is gaining steam (other vendors and analysts in the industry are adopting it) and we expect to see this continue into 2012.
It is always hard to predict the future, but here are my 10 Predictions for the SaaS market in 2011, and they might just happen:
Blockbuster Subscription Software IPO’s
A number of large consumer subscription software players including Facebook, Groupon, LinkedIn, Zynga and Skype could really open up the public markets with a major blockbuster IPO (or IPO’s) in 2011. SaaS firms that look to get everyone’s attention with potential IPO’s next year include Cornerstone OnDemand, Workday, Marketo, Service-Now and possibly Plateau.
Major Players Merge to Form the Next Big SaaS Brand
So my prediction (which is a pure guess) is that SuccessFactors and Taleo finally get over their respective CEO ego issues and decide to merge. Sounds a little crazy, but when you really consider their product portfolios, there might not be as much of an overlap as you might think. SuccessFactors is basically a performance and analytics company and Taleo is a recruiting and learning (after acquiring Learn.com) company. They both have some additional components that could be plugged into to create a more comprehensive suite of CPM and Talent Management offerings.
This would also create a combined company with a market cap approaching (SFSF + TLEO) $4B and annual revenues in excess of $400M, which would be the second largest SaaS firm in the market, and a clear leader in their space. Another potential marriage might be Concur and Ultimate Software.
Oracle Finally Pulls the Trigger on NetSuite
It seems like most Oracle SaaS rumors involve the acquisition of Salesforce.com, and that may happen some day, but the more likely combination for 2011 is NetSuite. Larry Ellison is a major investor in NetSuite (early investor) and own/controls more that 50% of the company’s shares. He may come to the conclusion that he needs some real SaaS DNA inside of Oracle to help grow their Fusion business in 2011 and beyond.
SAP Throws in The Towel and Buys Leading SaaS Player
Similar to the realization that many other major traditional ISV’s will come to in 2011, that they are too far beyond in SaaS to catch up organically, SAP will buy their way into SaaS. The Business ByDesign project for SAP, by some estimates, has cost more than $1 billion and there isn’t much to show for it. I always thought that the Sybase acquisition was just a smoke screen to cover up how little progress has been made with BBD at their most recent Sapphire user meeting. Like Oracle, I think SAP reaches out into the market and purchases a SaaS firm to jump start BBD. RightNow would be an interesting choice since SAP wants to make a splash in the CRM market.
Master Brands Continue to March Towards SaaS
These big software companies are no longer just paying lip service to SaaS or the Cloud, they continue to catch up with the subscription software market transition that is happening everywhere. All sizes of customers who were battered during the recession are no longer interested in spending a lot of capital and time that has been associated with traditional software projects and are becoming increasing comfortable with SaaS. This shift in the Software market is massive and is going to take at least 10 years, and we are probably only in the second year (post-recession) of this shift. Continue to look to see what SaaS moves firms like Oracle, SAP, HP, CA and Infor make in 2011.
Continued Explosion of PaaS offerings
Look at Salesforce.com’s recent moves to expand their Force.com Platform-as-a-Service portfolio with VMForce and then buying Ruby on Rails provider Heroku for over $200 million. Beyond Force.com there are many other offerings here today and coming in 2011 including App Engine by Google, Apprenda, Azure by Microsoft, Corent, Engine Yard, Facebook, Flex by Adobe, Fusion by Oracle, Intalio, IPP by Intuit, LongJump, Nimbula, SuiteCloud by NetSuite, and Wolf Frameworks.
As long as traditional ISV’s continue to move towards SaaS, there will be a green field opportunity for all types of PaaS solutions. Look for several of these firms to be acquired in 2011 by larger ISV’s.
Salesforce.com Continues to Expand Beyond CRM
After attending Dreamforce this month, it was curious to see a number of Force.com firms offering ERP extensions starting to gain real market momentum. Companies like FinancialForce.com (they purchased Appirio’s PSE business) who are delivering a growing suite of financial and accounting applications, JobScience who continue to build out their Talent Relationship Management suite on Force.com, Less Software who is selling a targeted Supply Chain Management solution and even Remedy’s Service Desk offering, RemedyForce Cloud. If Salesforce offers an attractive exit for any of these firms or their Force.com products, like they did with Heroku, then it might be possible to do a quick roll-up of key partners to create a competitive Cloud-based ERP solution.
Interestingly this type of move might be triggered by Oracle buying Netsuite or Workday going public.
Fake SaaS Firms That Use Private Clouds Will Loose Altitude
Although Private Clouds might be a viable alternative for enterprises who are looking to leverage the economics of the Cloud, for software companies this type of approach will only provide short term ‘Fake SaaS‘ types of solutions. This type of business model of hosting single-tenant software was known as Application Service Providers (ASP’s) and none of these companies that emerged about 10 years ago were able to find a business model that really scaled profitably. Private Clouds will offer a short term technology transition steps for software companies who are moving away from just offering traditional on-premise software but this trend will really start to fade by later next year.
New Revenue Streams for SaaS Firms That OEM
At Dreamforce ‘10 Salesforce.com announced that they are launching their new Database.com offering, a Database in the Cloud. What was interesting about this news is that Salesforce is really just reselling a private-label version of Oracle’s database technology. For Salesforce this is a unique way to take proven Oracle software, designed for on-premise deployment, and create a true subscription-based version of this product. No doubt that Salesforce will need to do some work to create a massive multi-tenant version of an ORACLE database and then deliver it as a service, but they are already doing this today through their Force.com platform. This could be a significant new revenue stream for both companies and look for other SaaS firms to try OEM’ing their software as a way to improve their CAGRs in 2011.
This should be an interesting year as the economy improves and the SaaS market really begins to gain some serious momentum. It should be a fun time to be in the Software business again.
Kevin Dobbs, Montclair Advisors, LLC
Company: Lingotek
Started: 2005
Located: Draper, Utah
Geography: Global
Market: Translation as a Service
Products: Collaboration Translation Platform
Customers: Adobe, Avaya, BYU, eBay, Novell, NuSkin and ZAGG
Website: Lingotek
Blog: Lingotek Blog
Twitter: @Lingotek
Recent News:
Lingotek Wins International Stevie® Award for Best New Product of the Year
Lingotek Appoints Calvin Scharffs as Vice President of Marketing and Product Development
Lingotek to Deliver More Localized Community Translation for Adobe
I asked Rob Vandenberg, President and CEO a few questions about his business and view of the SaaS market in 2010.
Did you start out as a Software-as-a-Service company?
Yes, we started out as an online translation service. Currently our products are hosted on Amazon AWS but some of our customers, like the CIA, prefer their product to work on-premise. (That makes sense since the company was originally funded by In-Q-Tel, the venture arm of the CIA. By the way, the Q in the name is for “Q” from the James Bond movie fame.)
We worked through our business model over the past five years and finally got launched our platform about two years ago and were able to secure our first stage of funding from In-Q-Tel, as a way to put more translation control in the hands of the actual content owner.
Our web-based platform allows content owners to load up their content, which allows outside translators to actively participate in the process. This approach allows organizations to better manage a massive data stream of content that needs to be translated. Administrators can identify content that needs to be machine or human translated and then the translated content can be stored in memory for reuse or even train other services.
We have always thought that machine translation from software firms like Google and Microsoft offer good resources but only provide a very rough-cut type of translation. These services don’t produce translation results that are ready for publishing, that’s when you need more detailed post-editing that can only be done by a person. Machine translations are a good start but there is never a way to review and improve the translation, without involving people and that’s where Lingotek comes in.
Why do your customers buy from Lingotek?
Lingotek enables our customers to capture, grow, and re-use their linguistic assets, while achieving unprecedented control over the translation process.
We have deployments at some of the most innovative organizations in the United States, from Fortune 500 corporations, to government agencies, to small professional service firms. Some of our more recognizable customers are Cisco, Novell and Abobe.
Our software was designed to help content owners at larger organizations do translations more quickly and easily. The Church of Latter Day Saints has more than 14 million members who are doing family search and genealogy every year. These members to translate this content into virtually every available language use our translation software platform. The LDS members publish, tag content and domains, and then the community translates chunks of content.
Crowdsourcing is the answer to dis-intermediate traditional translation processes. Adobe has over 650 product user groups who are all generating and using content. The opportunity is to have all of these groups participate and focus on translation and creation of new content. What they have discovered is that their users are willing to translate and create content, which is what happened with their Russian Flex community. Lingotek really created our translation platform based on this work with Adobe.
The Lingotek software allows translators to act like freelancers who can do their work online inside of the platform, but also helps large organizations to overcome content language barriers. This approach is similar to other freelance work type of platforms such as eLance, Guru.com or oDesk. We also make is easy and affordable for these content owners at large organizations by using a software subscription pricing model.
Our software platform is very popular in China and India. We currently support 26 different languages, local dialects and regions.
What do you see as the key trend emerging in the SaaS industry?
Lingotek has formed a number of newer partnerships with firms like Jive Software and Microsoft (SharePoint), because they are large content containers that store a tremendous amount of user-generated content. This type of user-generated content is doubling every year but only about 2% of it is getting translated every year. This is a big opportunity for these types of firms and Lingotek can make it easier to get this content translated and deployed. Their users can nominate content to be translated and then the Lingotek community can work on translating it using a ‘follow-the-sun’ type of business model.
When our customers capture their linguistic assets, it makes it easier for them to go global with their products and services. By engaging both their internal subject matter experts and the Lingotek community, and getting them to actively participate in translations, this allows them helps break down the traditional language barriers for their offerings.
What is your outlook for 2010?
The translation market is a $15 billion a year market and there are many opportunities to expand our services to help our customers overcome language barriers for their products and services. Our next phase of growth is to work with these content container partners to create new tools to expand our services to these firms.
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