Happy New Year!

In February Montclair Advisors launched our SaaS Business Profile Series and have been focused on covering as many SaaS companies as possible during 2009. As it turns out we were able to profile more than 30 SaaS companies of all types including pure SaaS firms, Cross-Overs and Hybrids!

We would like to thank all of the executives and companies that participated during 2009 and we look forward to continuing to follow their progress during 2010.

What we learned from these thirty-four profiles:

• SaaS is an evolving business model - It is still a new concept and few firms are running a pure subscription software models. Beware that there is still a lot of “Fake SaaS” out in the market overall.
• There are many variations of SaaS - these variations are based on the company’s starting point, the market they serve and the types of products they sell. Interestingly, Salesforce.com is actually not a very representative SaaS business model for the broader market.
• It takes time to build a real SaaS company - For many SaaS firms it takes up to 7 years to reach breakeven and nearly 10 years to ultimately gain scale with their business model.
• Cross-over providers will still need to hold onto their on-premise legacy for the foreseeable future, because it is hard to switch customers to SaaS all at once.  It is also difficult to upset your maintenance revenue streams, especially during tough economic times.
• The Great Recession has permanently changed the Software buyer’s behavior towards SaaS due to the lack of available capital. When you see SAP and Oracle and many of these profiled ISV’s moving their businesses to SaaS, you know it isn’t a fad.
• Penetrate and Radiate. The successful SaaS firms have started small, with easy to sell, easy to consume solutions.  They then develop additional software, services and content solutions to sell back into their installed base.

Here is an overview of the thirty-four companies Montclair Advisors covered in 2009:

Profiles by SaaS Category

Pure SaaS:        15     Started out and only offer SaaS subscription services

Cross-Overs:    11      Started out as on-premise, but have fully transitioned to SaaS

Hybrids:             8      Continue to offer SaaS services AND on-premise software

Public vs. Private

Public:               6

Private:             28

Profiles by Age of Company

0-5 Years:         9

5-8 Years:        10

8+ Years:         15

M&A by Companies

Sell-side:            2    Mint.com by Intuit for $170M and QuickArrow by NetSuite for $20M

Buy-side:           4    Lithium Technologies (Keibi Technologies), RightNow (HiveLive), Taleo

(Worldwide Comp), Xactly (Centive)

Fundraising Public & Private

What was also interesting to see is that even in the toughest economic climate since the Dot Com meltdown, that many firms that were profiled were able to raise capital in both the private and public market places.   The big winners were SuccessFactors who raised more than $200M in a public offering and Workday, raised an impressive $75M private round that was led by New Enterprise Associates.  As the economy begins to turn in 2010, expect to see more SaaS firms going back out to raise growth capital.

We hope these profiles have been helpful to our readers and we will continue to profile interesting SaaS firms in 2010, because we learn a lot about our emerging industry and we will continue to build back into the Montclair Advisors advisory services that help our clients become successful SaaS companies.

Please let us know what you think, because we would welcome any ideas on how to improve the Saas Business Profile Series for 2010.  Just drop me an email at kevin@montclairadvisors.com.

Company:        Boomi

Started:            2000

Located:           Berwyn, Pennsylvania

Geography:      Global

Market:             Integration Platform-as-a-Service

Products:          Boomi Widgets and Boomi AtomSphere

Key Customers:   Puma, Kodak, Ingres, OpenTable, Global Forex Trading, Siemens, Electronic Arts

Website:            Boomi

Blog:                 Boomi Blog

Twitter:             @Boomi

Video:                Bob Moul, CEO Boomi at SIIA \’09

Recent News:

Taleo Business Edition to Embed Boomi’s Cloud Integration Technology

Salesforce.com Community Chooses WebEx Integration as Next Boomi Widget

Boomi AtomSphere to Power Integration Services for OpSource Cloud

Boomi Announces Integration Widget Challenge for Dreamforce ‘09, Salesforce.com’s User and Developer Conference

I asked Bob Moul, Boomi’s CEO a few questions at Dreamforce ’09, about his business and his view of the SaaS market as we move into 2010.

Did you start out as a Software-as-a-Service company?

We originally started out as an on-premise software company but completely rebuilt the company and our products as a Software-as-a-Service offering beginning in 2006.

Why do your customers buy from Boomi?

For direct customers, it’s the ease of use, no maintenance costs, affordable pay-per-connection pricing and rapid time-to-value. For our ISV partners, we remove a huge sales barrier, increase their win rate and sales velocity as well as speeding up their implementations. For our Systems Integration partners, they get one centralized platform to implement and manage all of their customers and the ability to generate a recurring revenue stream.

What do you see as the key trend emerging in the SaaS industry?

Adoption of SaaS and Cloud software solutions by the enterprise - and for more than just storage and spare processing capacity. Enterprises are begging to move business applications to the Cloud, which of course requires orchestration of processes and integration of data among disparate applications and networks. Major enterprise software companies are moving to the Cloud in a big way including Microsoft, IBM, and SAP. The industry is picking up steam post economic melt-down.

What is your outlook for 2010?

With the economic recovery, the rate of SaaS and Cloud adoption will accelerate rapidly. This is the year the enterprise steps into the cloud in a major way. We are excited to be leading the way in cloud integration which we see as a key enabling technology for the rapid adoption and expansion of the cloud computing industry. At Boomi, we are very bullish on 2010.