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:            iCIMS

Started:               1999

Located:              Hazlet, NJ

Geography:        Global

Market:               Software-as-a-Service Talent Acquisition Solutions

Products:            iCIMS Pre-Hire Solutions and iCIMS Post-Hire Solutions

Key Customers:  Continental Airlines, Canon, esurance, Hershey’s and Whole Foods

Website:              www.icims.com

Recent News:

iCIMS Honored for Outstanding Client Satisfaction in Both US & UK Awards

Growing Number of Healthcare Organizations Select iCIMS for Talent Management Needs

iCIMS Powers into 3rd Quarter with Unwavering Momentum

iCIMS Continues on Record Breaking Path Surpassing the 750 Customer Mark and Signing its 100th Client of 2009

I asked Susan Vitale, iCIMS Director of Marketing a few questions about their business and her view of the SaaS market in 2009.

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

The company started out in 1999 with as a broad ERP solution but was repositioned to just be a simplified ASP recruiting solution. Since we were late the Internet party, we never took any venture capital money and have been profitable since 2003. Initially we were focused on selling to small agencies and then over time switched to selling to corporate customers. Our target was companies that had less than 500 employees but over time we have scaled to support large, global organizations as well. iCIMS’ Talent Platform has always differentiated itself from competing vendors and recently has emerged as an industry leader, securing the position as the third largest talent acquisition software provider in the space - this ascension largely attributed to iCIMS’ focus on the customer experience.

Why do your customers buy from iCIMS?

iCIMS offers an alternative to disparate HR components and complex data integrations through the use of one, single-source coded platform, these clients are able to take advantage of the singular system for their entire employee lifecycle. We offer a very configurable talent platform that can be set up very quickly; in fact Hershey’s was set up in only two weeks. iCIMS offers a wide array of talent acquisition products that our customers can grow into over time, including workforce planning, onboarding, performance management, succession planning and even offboarding.

Our products are also easy to use and can interfaced with many popular payroll and HR systems.

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

In addition to being a leading provider in the North American market space, iCIMS is proving to be the solution of choice for mid-market organizations around the world. Since the grand opening of the company’s newest office in London, UK, iCIMS is taking the international market by storm, with Mid-Market organizations across the globe growing eager to take advantage of iCIMS’ end-to-end Talent Management tools. Just last month, iCIMS signed several international organizations including ALEC, which is based in Dubai and serves the middle east, and Optical Express, based in the UK and operating throughout most of Europe.

For iCIMS the ability to support a global organization’s talent requirements is increasingly important. We have recently expanded in Asia Pacific with the opening of a customer support center in Beijing, China. This was in response to our client’s use of talent around the globe, including Tyco Electronics who hires more than 75% of their workforce in Asia.

Another interesting trend is the use of Cloud Computing. A majority of our global clients are supported in data centers in the US, hosted by AT&T utilizing technology from Akamai. In fact we have more than 15,000 servers hosting all of our clients but we are starting to experiment with Amazon’s Cloud Computing capabilities, which could offer tremendous flexibility and cost savings for iCIMS.

What is your outlook for 2009?

2009 has been a tough year for most companies but iCIMS has been diversified across our business and growth this is year is faster than in 2008. We offer a very nice mid-priced replacement recruiting solution that is attractive to customers looking for a more modern, Internet-based solution.

Since day one, iCIMS has been dedicated to ensuring a positive overall customer experience and has molded the company’s offerings with this priority in mind. The Talent Platform’s cost-effectiveness, inherent configurability, ease-of-use, and industry acclaimed customer service all largely contribute to this commitment to an unparalleled customer experience, in fact our customer retention rates are at 97%. We are excited about the expansion possibilities within our customer-base of over 700 customers, because we can start with recruiting and offer them on-boarding, performance and other products.

Thank you to Colin Day, Susan Vitale and Caitrin O’Sullivan for contributing to this profile.