Key Customers:  Boehringer Ingelheim, Irish Life & Permanent, Zions Bancorporation, Yahoo!, Department of Labor, General Electric, Schering Plough and Bristol Meyers.

330 customers and about 10 million users. customers are about 35% Public sector, 45% commercial but regulated (Pharma, financial services, healthcare) and 20% commercial but not regulated. Target customer is a large, complex, global organization.

Website:     Plateau Systems

Twitter:     @PlateauSystems

Facebook:  Plateau on Facebook

Moving to SaaS

Plateau has some unique market constraints that make it difficult to completely move to a pure SaaS model, due to some of the government and regulated industry segments and their inability to accept a third party hosting of their internal systems. Examples of this would include Department of Homeland Security and Department of Defense to name a few clients who will require a traditional on-premise solution for the foreseeable future.

Other than this market reality, my question was, ‘How is Plateau managing the SaaS transition that they started in 2006?’ To my pleasant surprise, they are doing quite well.

Here are some basic statistics on their overall business:

• Plateau’s 5 year Compound Annual Growth Rate is 24%, which is respectable given what has happened to the economy over the last 18 months. The industry average for traditional software firms under $100M in revenues is 9.8% and an average CAGR for all sizes of SaaS firms is 20.3%, so this is a respectable number for a Hybrid SaaS firm.
• Plateau is profitable.
• Revenues were up in 2008.
• More than 40% of their business comes from customers based outside of the US during the first half of 2009.  This is a growth area for Plateau.
• 55% of their deals are for their Learning Management products only and 45% of their deals are Talent Management suite deals, and the trend towards suite purchases continues to grow. Suite purchases in 2008 made up only 17% of all deals and in Q2 2009 that number has increased to 40%.

Business SaaS statistics

• Plateau’s SaaS revenues are up 31% year/year.
• The SaaS customer base is up by 100% to 90 customers, out of 330 total, which is almost 30%.
• More than 50% of new software bookings are SaaS.
• A large majority of the total revenues are now recurring.
• Some large enterprise customers are now beginning to move from on-premise to SaaS including General Electric.
• Customer retention is 99%, or 1% churn which would be considered best in class for either an on-premise or SaaS company.  Based on the materials shown at the briefing, Plateau focuses a lot attention on customer satisfaction.

Plateau will continue to support their more than 200 on-premise customers as well as sell new on-premise deals, this is a requirement of the regulated markets that they sell into. Over time, the company will move away from on-premise and try to optimize operating efficiencies and will look to standardize and leverage the SaaS product as an on-premise option. Plateau would be considered a Hybrid SaaS company and over the next 2-3 years should have a wide majority of their business operations and revenues focused on SaaS.

New Product Announcements

A couple other interesting developments is that Plateau has rewritten their product interface, for their Talent Management Suite, using Adobe Flex, which looks really good. More and more SaaS firms are writing their applications using Flex including Workday, Taleo and Intuit’s latest SaaS offerings. This is a good move from a user experience perspective and it will be interesting to see how this works for Plateau’s larger clients, since Flex uses more code on the client than a pure thin client implementation.

The other announcement was the Plateau Talent Gateway which is a portal and social collaboration hub that facilitates knowledge sharing, collaboration, and learning activities. This platform extension helps to reign in informal learning and acts as a social collaboration API for companies, so that they can package or ‘portletize’ social connectivity with tools like Twitter and LinkedIn, collaboration capabilities and repositories of content that reside all around the enterprise. This Plateau platform extension is based on Liferay, which is a leading open source portal and collaboration platform. I think this is a very smart move for Plateau because it offers an often-requested set of capabilities and since it is open source, it can be delivered at a low cost to the customer, with a very high perceived value.

Conclusion

My overall impression of Plateau’s transition to SaaS was very positive. A reasonable transition to a subscription business model for most software companies takes three to five years. Since Plateau announced their first on-demand offering in June 2006, three years into their transition, they have made a significant movement towards SaaS and I think they could be one of the surprise stories in the SaaS Talent Management market over the next few years.

Thank you to Paul Sparta, Brian Murphy and Jeff Kristick for contributing to this profile.