Skip to content

Posts tagged ‘SaaS’

Lessons Learned From The 2013 Pacific Crest SaaS Survey

Pacific Crest SurveyDeveloping the ability to upsell existing customers into longer-term, higher value contracts that are multi-year in duration is one of the most critically important skill sets any SaaS business needs to attain.

These and other insights were gained from analyzing the 2013 Pacific Crest SaaS Survey, published earlier this month by David Skok.   The survey is based on responses from 155 SaaS companies, compiled by Pacific Crest Securities.   David’s blog For Entrepreneurs provides excellent content on SaaS metrics, start-up advice and a wealth on insight in the areas of sales and marketing, business models and the specifics of how to manage a SaaS business model profitability.

Key take-aways from the 2013 Pacific Crest SaaS Survey include the following:

  • Median GAAP revenue growth increased by 41% in 2012, projected to reach 47% in 2013 across all 155 SaaS companies included in the analysis.  When smaller companies whose revenue growth projections are excluded, median revenue growth for 2012 was 32%, projected to increase to 36% this year.  The following two figures illustrate distribution of revenue growth by number of companies.

  • The fastest growing SaaS companies have median contract sizes that are between $1K to $25K.  Companies’ with less than $2M in revenue were excluded from this analysis given the smaller deal sizes they generate.

  • The larger the median ACV (Annual Contract Value) the greater the reliance on field sales.  In results from previous surveys Pacific Crest found that mid-tier companies were more reliant on inside sales.  54% of respondents in the $5K to $25K ACV segment of companies this year are reliant on insider sales, up from 33% in 2012.
  • 13% of new ACV is generated from upsells across all SaaS companies, with the largest capable of expanding into other departments and divisions of existing customers.  SaaS companies with sales over $60M are generating 32% of new ACV from upsell strategies. It’s interesting to note that upsell is a more effective strategy at gaining market share versus marketing spending, and this hold true across sizes of SaaS companies.  The following graphic illustrates percentage of new ACV by size of SaaS company and an analysis showing the fastest-growth SaaS companies generate a higher proportion of new ACV from upsells compared to their peers.
  • 76% gross margins are being achieved across all respondents.  This does not change significantly when smaller companies are removed from the analysis.
  • Try-Before-You-Buy is used far more often than Freemium because it generates additional sales.  The following graphic shows the expected contribution of each to ACV in 2013:

  • Professional Services are 12% of 1rst year ACV across all customer segments.  Selling professional services into the enterprise generates 23% of first year ACV according to the study.  A graphic showing the distribution of first year ACV as a percentage of professional services by customer segment is shown below:

  • SaaS companies who primarily rely on Internet-based distribution methods are attaining the highest growth rates.  When companies with less than $2M in revenue were taken out of the analysis, those companies primarily based on inside sales grew 10% more than field sales.  The following graphic presents this analysis, excluding companies with less than $2M in revenue.

  • 37% of respondent companies rely on field sales as their primary means of distribution followed by inside sales (29%) and Internet sales (17%).  When smaller companies with sales less than $2M are excluded, field sales jumps to 50% of all respondents using this method as a primary means of distribution.  Inside sales (29%) and Internet sales (8%) are second and third.  While Internet sales is the cheapest form of distribution, it also leads to the highest churn rates (9%) recorded in the survey.

Predicting Enterprise Cloud Computing Growth

69% of enterprises who have separate budgets for cloud computing are predicting spending increases this year and into 2014.

This is one of several key take-aways from a research study published today by TheInfoPro, a service of 451 Research.  TheInfoPro Wave 5 Cloud Computing Study is based on research completed in the first six months of 2013, and relies on live interviews with IT management and primary decision-makers in midsize and large enterprises in Europe and North America. You can view details of TheInfoPro Cloud Computing Overview Program and methodology here.

Additional key take-aways from the study include the following:

  • The worldwide cloud computing market will grow at a 36% compound annual growth rate (CAGR) through 2016, reaching a market size of $19.5B by 2016.
  • 38% of enterprises surveyed break out cloud computing budgets, while 60% include cloud-related spending as part of their enterprise-wide IT budgets.  TheInfoPro asserts that cloud computing’s benefits of greater business orchestration and reduced time-to-market have led to a change in budgeting approaches.
  • The median enterprise cloud computing budget is $675,000 and the mean enterprise cloud computing budget is $8,234,438.  The study found the largest enterprise cloud computing budget at $125M.  The following graphic provides a distribution of cloud computing budgets by range.


  • Internal Private Cloud (35%), Cloud Provider Assessments/Strategy Planning (33%), Infrastructure-as-a-Service (IaaS) (31%) and Software-as-a-Service (30%) are the top four cloud computing-related projects enterprises are working on right now.  Cloud Provider Assessments/Strategy Planning have seen the largest increase, attributable to more enterprises looking to better support strategic plans with more agile, efficient IT organizations.


  • 83% of enterprises face significant roadblocks that hold them back from moving beyond cost reduction to faster time-to-market and better orchestration of their businesses. Respondents mentioned that politics, budget, time and staff are the main sources of roadblocks to getting more value out of their cloud computing investments. The majority of these roadblocks are not related to IT.  They include lack of clarity regarding organization and budget (37%), resistance to change (16%) and lack of trust (visibility and reliability) (15%).  The following graphic illustrates the enterprise cloud journey as defined in TheInfoPro Wave 5 Cloud Computing Study.


  • Consistent with many other enterprise cloud computing surveys, security is the biggest pain point and roadblock to cloud computing adoption (30%).  Migration and integration of legacy and on-premise systems with cloud applications (18%) is second, and lack of internal process (18%) is third.  The following graphic shows a rank ordering of cloud computing-related pain points.


451 Research: Platform-as-a-Service (PaaS) Fastest Growing Area Of Cloud Computing

public-cloud-computing-forecast-2011-2016The majority of cloud computing revenue in 2012 was generated from vendors with sales over $75M (66%) and who are privately held (77%), with Platform-as-a-Service (PaaS) projected to attain a 41% compound annual growth rate (CAGR) through 2016.

Market Monitor, a service of 451 Research, is also predicting 36% CAGR in cloud computing, growing from $5.7B in 2012 to $20B by the end of 2016 in their Cloud-as-a-Service overview report. Other research firms including Gartner have much higher forecasts for cloud computing in general and IaaS, PaaS and SaaS specifically.

Market Monitor relies on a bottoms-up forecasting methodology that includes revenue analysis and forecasts from 309 cloud-services providers and technology vendors across 14 sectors. Their taxonomy defining Cloud as a Service is shown in the following graphic:

taxonomy cloud as a service

Here are the key take-aways from the report:

  • The cloud computing market will grow from $5.7B in 2012 to $20B in 2016, attaining a 36% CAGR over the forecast period.  The following graphic from the report shows the breakout of revenue on a yearly basis throughout the forecast period.

forecast breakout

  • Platform-as-a-Service (PaaS) will attain a 41% CAGR through 2016, generating 24% of total cloud revenues.  71% of PaaS revenues will be generated by vendors over $75M in sales according to the study.
  • Infrastructure-as-a-Service (IaaS) will attain a 37% CAGR through 2016, generating 51% of cloud revenue.  69% of IaaS revenues will be generated by vendors over $75M in sales according to the study.
  • SaaS will attain a 29% CAGR through 2016 and the distribution of revenue by vendor size shows how fragmented this area of the market is.  The following is a summary table from the report showing distribution of sales by vendor and category.

distribution table

PRISM Projected To Cost U.S. Cloud Computing Industry $35B

prismU.S.-based cloud computing providers are projected to lose up to 20% of foreign market revenues or $35B over the next three years as a result of disclosures involving PRISM.

The Information Technology and Innovation Foundation (ITIF), a Washington, D.C.-based think tank published How Much Will PRISM Cost the U.S. Cloud Computing Industry? (free to download, no opt-in) on August 5th.  The report highlights how the disclosures involving PRISM quickly are turning into a catalyst that rival countries’ cloud providers are using for their competitive advantage.  PRISM has also fueled protectionism throughout European countries, with the report citing Germany’s response in detail.  Jörg-Uwe Hahn, a German Justice Minister called for a boycott of U.S. companies in response to PRISM.

Key take-aways from the report are summarized here:

  • Of the $13.5B in investments that cloud computing service providers made in 2011, $5.6B or 41.5%, came from companies outside North America.
  • Global spending on cloud computing is expected to grow by as much as 100% between 2012 and 2016, while the global IT market will grow only 3% in the same period according to the report.
  • The global enterprise public cloud computing market will be a $207B industry by 2016 according to sources cited in the report.  The following graphic illustrates how non-U.S. markets are projected to grow through 2016.


  • The ITIF completed two forecast scenarios as part of their methodology, the first assuming 10% reduction in foreign market share to European and Asian competitors, and no loss of current projected market share domestically.  The second forecast scenario assumes 20% reduction in foreign market share, and constant market share growth domestically.  The table below summarizes their findings.


Thank you Jeff Nolan and Manuel Pumarada for distributing the link to the report and for sharing your insights, much appreciated.

Best- And Worst-Performing Cloud Computing Stocks In The First Half Of 2013

Cloud computing stocks continue to show wide variation in performance throughout the first half of this year.

Ten of the twenty companies in the Cloud Computing Stock Index delivered returns to shareholders with NetSuite leading with a 37.30% share gain, delivering $13,730 on $10,000 invested on January 2, 2013.

To more fully define the stock performance of these companies, I’ve added Earnings Per Share (EPS), Price/Earnings Ratio, Year-To-Date (YTD) Total Gains or Loss, Annualized Gain or Loss, and Total Dollar Value of $10,000 invested on January 2, 2013.  You can download the latest version of the Cloud Computing Stock Index here.  The filter applied to these companies is that 50% or more of their revenues are generated from cloud-based applications, infrastructure and services.  Additional details of the index are provided at the end of this post.


Best Performing



(1/2/13 – 7/5/13)Total Gain or Loss

Annualized Gain or Loss

Total Dollar Value of $10K invested in this stock on Jan. 2, 2013 as of July 5th:

NetSuite Inc





Keynote Systems, Inc.





CA, Inc.





Workday Inc





Cisco Systems, Inc.





Symantec Corporation




$11,884.00, Inc.






Worst Performing



(1/2/13 – 7/5/13)Total Gain or Loss

Annualized Gain or Loss

Total Dollar Value of $10K invested in this stock on Jan. 2, 2013 as of July 5th:

Rackspace Hosting, Inc.





Fusion-IO, Inc.





F5 Networks, Inc.





VMware, Inc.





Riverbed Technology…





Red Hat, Inc.





Key Take-Aways:

  • NetSuite leads the index with a 37.3% gain in their stock price, and $10K invested in their stock on January 2nd of this year would be worth $13,730 as of July 5th.  Cloud-based Enterprise Resource Planning (ERP) systems acceptance is accelerating, evidenced by the success NetSuite is having with their two-tier ERP strategy and recent announcement they are moving into manufacturing.  Their recent alliance with Oracle also shows upside potential.   A cloud-based ERP provider leading the index is good news for Acumatica and Plex Systems especially, the leader in cloud-based ERP systems for manufacturing and one of the most enthusiastic customer bases in enterprise software.  Both of these companies are privately held or they would have been included in the index.
  • The 20 companies that comprise the Cloud Computing Stock Index attained a 29.6% return from July 10, 2012 to July 5, 2013.  The Dow Jones Industrial Average (DJIA) gained 18.83%;  Microsoft, 14.02%; Oracle, 7.17%; and SAP, 27.51%.  The following chart compares the performance of each. Please click on the index to expand it for easier viewing.

  • Widespread adoption of Amazon Web Services, success using the Kindle series of tablets as customer acquisition tools for digital content, market leadership of the online retail landscape, and successful pilots of the AmazonFresh online grocery business in Los Angeles and Seattle are all fueling Amazon’s stock performance this year.

Specifics on the Cloud Computing Stock Index

I used The Cloud Times 100 as the basis of the index, and included the 20 following companies, all of which are publically traded.  The latest edition of the Cloud Computing Stock Index is shown here.  Please click on the index to expand it for easier viewing.

 Note: I do not hold equity positions or work for any of the companies mentioned in this blog post or included in the Cloud Computing Stock Index.  

How Cloud Integration Is Defining The Future Of CRM

Scribe SoftwareThe future of customer relationships depends more on context than transactions.   And this trend is accelerating, driven by the integration of social media into customer relationship management (CRM), rapid gains in usability of CRM and integration applications, and the global growth of the API economy.

Gaining a clear, contextually-based view of customers isn’t easy. Fine-tuning system integration to understand the nuances of customers, gain greater insights and infusing customer intelligence through a company requires more than APIs and cloud platform integration.  It requires a precise strategy of integration to align customer data to ongoing strategies.

The bottom line is that customer-driven integration is reshaping CRM and will accelerate as cloud platforms, combined with APIs, reorder the customer relationship landscape.

To gain greater insights into what’s going on in the area of cloud-based CRM integration and the impact of the API economy, I recently spoke with Lou Guercia, President and CEO, and Betsy Bilhorn, VP Marketing and Product Management of Scribe Software

Key take-aways from my interview with them include the following:

Cloud integration is one of the fastest growing areas of enterprise software today, made more complex by cloud platform providers creating their own unique approaches to APIs.  What are the top three lessons you’ve learned navigating Scribe through the many potential product and services strategies cloud platforms are providing today?

The top that come to mind are understanding that your cloud platform vendor absolutely affects your product offering and making sure your offering is portable, that you’re not too deep in one vendor’s technology or platform.

There are a many new cloud services and platforms – you have to make a choice between an established, proven vendor or taking a chance as an early adopter of something new. We decided to be an early adopter and we’ve had mixed results, which at times caused problems for our customers. Customers don’t care who caused your slowdown or outage – they expect that you have service available no matter what. As a result, we had to build out sophisticated and sensitive monitors, fail-over and availability capacity.

One of the things we did, and it was fairly controversial at Scribe, was make sure our offering was highly portable. Given the vendor’s brand name, there were people who felt that there was no way something could go wrong and we were showing a vote of no confidence by not completely embracing the service. Others at Scribe were skeptical and insisted we not get too deep into this particular technology so we could pull the plug quickly if it didn’t work out. Even though it was not a popular decision, we made sure this portability was part of our architecture from day one and we’ve resisted getting too dependent on unique capabilities even though it could be easier from a development standpoint.

Keeping that discipline turned out to be a very smart move – we’ve since had to move parts of our offering to other platforms and services that could better accommodate our growth and capacity needs. As we compare notes with other integration companies with cloud offerings, we’re hearing similar stories. We want to focus on our features and services and we want to be able to make sure our platform is stable and performing for our customers. Having the ability to move parts and pieces of our architecture when we need to is critical as we grow. Our planning and roadmap now include a capacity review and all options are on the table, including changing technology platforms or vendors.

Many say enterprise software is quickly moving in the direction of an API economy.  What are your thoughts on the API economy beginning with how you define it, and how will it change CRM in the next three years?

When we look at the enterprise software space and how it is still very challenging to integrate the data across these applications, it absolutely makes sense directionally. There are so many new technology stacks and platforms out there and the old ones aren’t going away either. APIs are a logical framework for people to access, share, and integrate data regardless of where it lives or how it’s stored.

This is really exciting for CRM. There is a lot of talk about the 360 degree view of the customer but the reality for most businesses is that actually getting all that data is still difficult and not standardized. If you’ve got a lightweight API to access any number of customer data points in and outside the business, CRM would be more a framework and platform to select and mash up those data feeds in a tailored presentation for particular roles in your business – sales, support, marketing, etc. You could put a very powerful, functionally relevant view of the customer at your employee’s fingertips. We’re already seeing that today with the ability to embed Google Maps, social feeds, and the like in CRM. But think about how incredible it could be for CRM if you were able to do that type of embed with virtually any data source.

In such a highly competitive, rapidly changing and technically complex market area, how do you continually innovate and generate new ideas?

The best way to describe how we innovate is that we take a clean sheet of paper approach when thinking about product. Our product team typically looks at the business problem first and gets very creative about how to achieve the desired outcome. We also take a hard look at the status quo and challenge “how can we do this completely different and better”? Our goal is to delight our partners and customers with product that they find easy to use and that gets the job done without a lot of hassle or drama. Sometimes it takes an unusual path and it typically isn’t your big, trendy items. For instance, most integration projects require a team of people to accomplish – experts in data, experts in business process, usually an outside consultant or professional services vendor. One of the things we heard in passing was what a pain in the neck it was to manage multiple clients and getting permission from the client’s IT organization to access the integration environment – one of those things you just talk about as an accepted pain of doing business. In response, our product team brought in social features like the ability to invite or de-invite members to a specific customer organization and allowing the owner of that customer organization to set permissions of what that member could do in their organization. In the grand scheme of things, this doesn’t seem like a big deal but today, that social user experience really excites our customers and partners and it’s become a key differentiator for Scribe.

For many enterprise software companies, selling through resellers is challenging.  What key lessons has Scribe learned about making a reseller strategy for cloud integration services successful? 

We’ve been selling through the channel for a long time now – understanding their business model and supporting their success is paramount to us as a business. Partners are all about standardization, efficiency, quality, and repeatability at scale – you need to be oriented to that outcome whether it’s product, programs, pricing, communications, or support. Who you are and what you provide needs to be consistent and fair to the entire community.

Our motto is “own the customer, respect the partner”. When we’re servicing a customer directly, we are very cognizant of the partner and we know that customer’s experience with Scribe can directly impact their relationship with that partner. You have to weigh your interactions with a customer against the whole of your partner relationship and calibrate accordingly. So we make sure that we give our customers the same touch and quality service as our partners. Your reputation with your partners and that partner community will dictate your success in the channel. You have a great reputation with your partners and you’ve got their back – they are going to reward you by being incredibly loyal. The top reason we hear from prospective partners looking to make a switch is “this vendor was really difficult to work with” or “this vendor failed in delivering to my customer and I need something now to get this customer back on track”.

The growth of the API economy has many parallels to growing a reseller-based business.  How do you view these parallels and how do they open up greater avenues of innovation to benefit those companies using CRM today and in the future through resellers?

Where we see a distinct parallel is taking hold of a something like data or an application, and evolving it into a completely new and innovative offering, which completely transforms the experience of using it – for the better. With APIs it’s about evolving connectivity and access. In CRM, the most successful resellers reinvent the CRM application as a platform. They craft entirely new solutions on CRM that are imbued with their particular expertise in a vertical or a set of business processes that make CRM much more straightforward and easier to use. Often these offerings are unrecognizable from the original CRM. This innovation benefits business customers as the reseller is productizing their expertise and making CRM much more turnkey for them. At the end of the day, it isn’t about the particular CRM vendor or platform but more about the particular capabilities that a reseller has in their turnkey CRM offering. That’s a huge benefit to customers as they’re now able to focus on picking the right reseller and their expertise to help their business versus being distracted and consumed with the nuts and bolts of hand-tailoring the CRM application to fit their needs.

What are you seeing in terms of on-premise to cloud migration on the part of resellers?  Are they bringing you more deals that are cloud-based versus on-premise?  Does this vary between North America and EMEA (Europe, the Middle East & Africa)? 

The reseller channel is going through an interesting evolution with cloud. What we’re seeing are resellers typically making two choices, going cloud or sticking with on-premise but focusing on larger, enterprise deals. We’re seeing some of our existing resellers re-aligning their offerings and services around cloud; they may continue to do premise deals but they aren’t leading with premise. We’re increasingly working with a third category of new partners who have entered the CRM business recently as exclusively cloud; typically these resellers represent multiple CRM vendors (Salesforce, Sugar, Dynamics CRM Online, etc.) in their practice.

Regardless of the partner orientation towards cloud, we are definitely seeing a shift towards cloud deals. EMEA is behind North America but is quickly closing the gap – we see growing adoption of cloud applications and there is an excitement and interest in EMEA for more cloud.

Can you walk me through the new product development cycles you use?  How are you seeing the market cadence right now from a cloud integration perspective?  Is it 6 months, or shorter than that for each new release?

The cloud is driving faster release & upgrade cycles overall. Customers use cloud applications in their everyday lives and those consumer applications typically have rapid response to feedback; it’s not unusual to get an update on your iPhone apps once a month. We’re seeing those same expectations in the business applications space – you shouldn’t be waiting 6-12 months or more for updates to the product. The nature of cloud allows us to be much more responsive giving us the flexibility to push out updates when we need to.

Our release cadence is 8 weeks. We might go longer to a 16- or 24-week cycle for a major release. Our connectivity release cycle is much faster. Each quarter we’re typically releasing 2-3 new connectors and 2-3 upgrades to existing connectors. This release cadence has been a real advantage for us in closing deals and building customer loyalty. Every two months we’re putting in enhancements and new features – many of those driven from direct customer feedback. We’ve won more than a few competitive and strategic wins because we were able to incorporate feedback from the prospect during the proof of concept or trial phase of those deals within a short period of time.

Earlier we spoke about how your company is successfully using personas to guide new product development.  Can you comment on how personas guide the development and launch of new products?

Personas provide that guiding star for the development team to build towards. It’s not just the “what” and the “how”, it’s the “who” and the “why”. When we start with personas we’re talking about the business problem or goal that our customer is grappling with. That’s where the innovation we talked about earlier comes in – we try to solve for the real world business problem and an authentic user experience for our target customer. After we have the persona solidified, then we apply a particular technology approach and design. Starting with what success looks like to the customer keeps things very clear and real in terms of design, scope, what the product will and will not do.

The development team has a much clearer understanding who they are building product for and why it needs to be a certain way. If there is a question or difference of opinion about the user experience or the way a certain feature should work, we always go back to the persona. It’s a very efficient sanity check throughout the development process – would our persona really use this feature in this way, would they be comfortable working that way in real life, do they really need this feature or capability to do these extra 5 things we think they do?

Personas are very helpful in discouraging developing products that might be perceived as cutting edge to the tech community but ultimately don’t give the customer what they need and want. We like cool technologies and features, and we’ll put it in there but only if it fits the persona.

Has any customer measured the impact of Scribe integration solutions in the context of improved user experience and customer satisfaction?  If so, can you share those figures? 

An interesting question and one we asked in our recent State of Data Integration 2013 survey. What we found was that over 70% of our survey respondents had no formal process for evaluating the success of their integration and articulating the return on investment either in operational improvements or customer satisfaction. With a partner involved there is some improvement as the partner has to typically prove the success of their engagement but it’s not what we’d like it to be. It’s virtually impossible to get a customer to capture any meaningful metrics after the project has been completed.

What we’re finding is that partners and customers don’t know where to begin to measure the impact of their integration and there are no standard templates or resources to use as part of the project planning & tracking. This is a problem we’re tackling in the coming months, providing standard metrics that any partner or customer can use to track the success of their integrations.

What are the most important metrics to keep in mind when evaluating the performance of a cloud integration platform?  How did these metrics influence the design, coding and launch of Scribe Online?

The most important metrics are usability and performance. The obvious one, performance comes in many flavors but the big ones we look at are the responsiveness of the platform user interface, the throughput and speed of the integrations, and the reliability/availability of the platform overall. These are table stakes. When we say usability, we mean how many customers are actually creating and running integration jobs? How often are they logged into the system and what are they doing? Are they adding new integration jobs? Using new connectors? How many customers are renewing and/or increasing their subscription levels? These are metrics we measure. If a customer were evaluating a platform, questions I’d be asking would be “how long does it take to get a typical integration project live and running?”, “do you require professional services and how much/how long does that engagement typically run?”, and when talking to references “did you get your integration project done in the time frame you expected?”

Usability is very, very important to us. You can have a platform that processes billions of rows a day but if it is difficult to configure, use, and maintain, customers are going to gravitate to vendors that have both performance and better usability.

Have you seen a shift in the types of CRM applications being integrated within the last twelve months, and do you see trending of these systems changing in the next three years?  Why or why not?

In the past twelve months, we’ve seen a shift where customers appear to be doing less of the rip and replace with new CRM systems and more where they are adding on other, customer-facing applications with discrete functions like marketing automation, e-commerce, sales productivity, or support. We’re also seeing an uptick in two-tier CRM integrations where a division or line of business will use one vendor’s CRM for specific range of capabilities but want to integrate with the legacy or corporate CRM.

Certainly the CRM vendors are adding more capabilities and providing more complete platforms that include marketing automation, support, e-commerce, finance, and social. What will be very interesting in the next three years is if businesses will embrace these platforms completely or if they will use parts and pieces of these platforms and integrate them with existing application investments or other CRM platforms. For instance, would a business decide to purchase Salesforce Support Cloud and integrate that with NetSuite? We think given what we’re seeing in with legacy applications – that businesses have made major investments in and are still realizing value from these applications – that a rip and replace to a complete CRM platform from one major vendor might be a bit of stretch. Given that cloud integration is evolving quickly, it would seem that a business could put together best of breed cloud CRM apps just as they did with premise applications in the past.

Often integration in small and medium businesses, which is a market Scribe excels in, are complacent about the need to change and adopt a more unified CRM system.  Is complacency is your biggest competitor?  How do you overcome that in your channel development, marketing and selling strategies?

We’re seeing SMBs are as savvy as our largest enterprise customers about integration. They get the need for an integrated CRM system to keep competitive. SMBs are requiring integration in the first phases of their CRM implementation and are asking partners about it. That’s a big shift from 4-5 years ago where partners had to educate the customer about the benefits of integration and why spending money/time/resources on integration are valuable. It’s less complacency that is our biggest obstacle with SMBs – its education and outreach that there are affordable, easy-to-use integration options out there for the SMB that allow them to realize the same business benefits as the big companies. If you define complacency as the common belief that there is just nothing out there right now for the SMB, then yes, it’s a competitor. We have been aggressive in recruiting partners who specialize in SMB and making sure our cloud integration platform have the features and capabilities so these partners can service a large volume of smaller customers quickly and cost-effectively. We also work with our partners with other marketing outreach to educate the SMB that integration is possible and how to best approach that first integration project. And it goes back to that usability metric – we want the SMB to have an easy time with integration – so that means proving it with our selling, our marketing, and our partner channel. All of it needs to be approachable and reinforce that integration is accessible and can be realized by the SMB.

What are Scribe’s top three goals for 2013, and how are you tracking to them?

Our top three goals in 2013 are to continue build out the features and services in our cloud platform, continue to offer more customer data connectivity, and continue to build out our ecosystem of ISVs and partners using our online platform. We’ve had excellent success in all three areas – we’ve announced partnerships and connectivity to Marketo, Silverpop, and ExactTarget and we continue to build and enhance the platform. The interest in the channel and the ISV community is very strong – we have as much incoming as we do active outreach – and we expect more ISV partnership announcements later this year.

When you and your company look three years into the future, what will cloud integration look like? 

In three years, integration should be ubiquitous in most business applications. It’s not just about APIs – it’s about customers being able to connect quickly, easily, and seamlessly to other applications without having to stitch code together or understand what entities and methods to use. When we use consumer applications today, we don’t care or think about things like how to send a Tweet to my Facebook feed – we just press a button and it happens. I think you’ll see more turnkey integrations based on common business processes that business users can provision and manage within the  user interface of their business application instead of using a separate application. There will always be a market for more sophisticated, unique integration needs but common business practices such as sales order processing should be something a business analyst or system administrator could invoke within a CRM or ERP user interface, perform some light customizations as needed, and provision.

2013 ERP Market Share Update: SAP Solidifies Market Leadership

SAP Headquarters, Building 1

SAP Headquarters, Building 1 Source: Wikipedia

During 2012 the Enterprise Resource Planning (ERP) market experienced sluggish growth of just 2.2%, yet Software-as-a-Service (SaaS), financial management and Human Capital Management (HCM) applications showed potential for breakout growth.

Through the challenging times of the previous year however, SAP still retained worldwide market share leadership.  These and other insights were recently published in the recent report, Market Share Analysis: ERP Software Worldwide, 2012 authored by Chris Pang, Yanna Dharmasthira, Chad Eschinger, Koji Motoyoshi and Kenneth F. Brant.

Key Take-Aways

  • Overall market growth of just 2.2% and the top ten vendors owning 64% of the worldwide ERP market is leading Gartner to predict further consolidation of the industry.
  • SAP had just over $6B in total ERP software revenue in 2012, leading the worldwide market with 24.6% market share.  Oracle had $3.12B and Sage, $1.5B in software revenues for 2012.  Oracle’s market share was 12.8%, and Sage, 6.3%. The following graphic shows worldwide ERP market share for 2012.

ERP Market Share 2012 Stats

  • Infor achieved 49.5% revenue growth in 2012, increasing their 2011 sales from $1B in 2011 to $1.5B in 2012.  Their market share increased from 4.2% in 2011 to 6.2% in 2012.
  • Microsoft achieved 4.2% revenue growth  in 2012, increasing revenue from $1B in 2011 to $1.1B in 2012.  The majority of these sales are for the Microsoft Dynamics AX ERP system.
  • The fastest growing ERP vendors  in 2012 include Workday, Cornerstone OnDemand, WorkForce Software, Ventyx and NetSuite.
  • Workday grew 114.7% in 2012, increasing revenue from $88.6M in 2011 to $190.3M in 2012.
  • Cornerstone OnDemand grew 61.5% in 2012, increasing revenue from $58.4M in 2011 to $94.3 in 2012.
  • WorkForce Software grew 39.8% in 2012, increasing revenue from $11.8M in 2011 to $16.5M in 2012.
  • NetSuite grew 34% in 2012, increasing revenue from $139.7M in 2011 to $187.1M in 2012.
  • SaaS-based ERP revenues are projected to grow from 12% worldwide in 2013 to 17% in 2017.  The following graphic from the report Gartner’s Market Trends: SaaS’s Varied Levels of Cannibalization to On-Premises Applications published: 29 October 2012 shows this progression.  You can find a research roundup at the previous post SaaS Adoption Accelerates, Goes Global in the Enterprise, which provides additional insights into which factors are driving SaaS adoption.

SaaS Revenue Market Sizing

Bottom line:  SAP’s continued market dominance depends on how well the company orchestrates it core ERP strategy with the following areas: BusinessObjects 4.0, its highly regarded analytics suite; social application adoption (StreamWorks and SuccessFactors Jam); the many Cloud-based initiatives they have including SuccessFactors and BusinessbyDesign; mobility platform wins;  and major wins with their SAP Sybase DBMS and HANA architectures.

Amazon Web Services Leading Cloud Infrastructure as a Service App Development

IaaS Magic QuadrantEvangelizing development on any cloud computing or enterprise platform is challenging, costly and takes a unique skill set that can educate, persuade, sell and serve developers at the same time.

The companies who excel at this exude technical prowess and as a result earn and keep trust.  For Cloud Infrastructure as a Service (IaaS) platform providers, getting developers, both at partner companies and at enterprise customers to build applications, is a critical catalyst for future growth.

Assessing Cloud Infrastructure as a Service Providers with Inquiry Analytics  

Using the Magic Quadrant for Cloud Infrastructure as a Service, 2012 published October 18, 2012 as the baseline and shown above from Rueven Cohen’s excellent post last year, the five leaders were compared using the Inquiry Analytics Statistics: Topic and Vendor Mind Share for Software, 4Q12 published March 13th of this year.  Analyzing the five leaders in the Magic Quadrant using Inquiry Analytics shows that Amazon Web Services (AWS) was 57.1% of inquiry share worldwide for application development  during the 4th quarter of 2012.

From 4th quarter 2011 to 4th quarter 2012, Amazon Web Services showed just over 10% inquiry gain against the other vendors listed as leaders in the quadrant.  Only five vendors can be compared at once using the Gartner Inquiry Analytics tool so the leaders were included in the comparison first.

cloud IaaS

A second pass through the Inquiry Analytics was done comparing Amazon Web Services to the other vendors in the quadrant.  AWS had 63.6% of inquiries in the application development category during the 4th quarter of 2012 compared to non-leader vendors in the quadrant who were listed in the Inquiry Analytics database.  It was surprising to find that a few of the vendors listed in the Cloud IaaS Magic Quadrant don’t have data available in the Inquiry Analytics Statistics: Topic and Vendor Mind Share for Software, 4Q12 indicating inquiries.  During this pass, Rackspace share of inquiries between the 4th quarter of 2011 to the 4th quarter of 2012 declined just over 5% and Dell declines approximately 2%.

Bottom line: The land grab for developers is accelerating on IaaS and will be a major factor in who establishes a long-term cloud platform for years to come.

10 Ways Cloud Computing Is Revolutionizing Manufacturing

manufacturing floorThe best manufacturers I’ve visited this year all share a common attribute: they are obsessed with making themselves as easy as possible to work with from a supply chain, distribution and services standpoint.  Many are evaluating cloud-based manufacturing applications including Enterprise Resource Planning (ERP) and several have adopted cloud-based applications across their companies.

With so much interest, there is much confusion as well.  I recently spoke with Cindy Jutras, founder and CEO of MintJutras.  Her firm has recently completed a survey of SaaS adoption in manufacturing, distribution and other industries.  She found the following:

  • 49% of respondents in the manufacturing & distribution industries do not understand the difference between single- and multi-tenant SaaS architectures.  Overall 66% of respondents to the survey did not know.
  • SaaS-based applications are 22% of all manufacturing and distribution software installed today, and will grow to 45% within ten years according to MintJutras.
  • The three most important characteristics of a SaaS solution in manufacturing and distribution include giving customers a measure of control over upgrades, consistent support for global operations and allowing for rapid and frequent upgrades.

Cindy Jutras Research May 8 2013

Why Manufacturers Are Looking To Cloud Computing  

Manufacturers are under constant pressure to increase accuracy, make process speed a competitive force, and capitalize on their internal intelligence and knowledge to make every supplier, distributor and service interaction count.  The manufacturers spoken and visited with to gain the following insights are in the high tech, industrial and aerospace and defense industries, where rapid product lifecycles and short time-to-market schedules are commonplace.

Cloud-based strategies give these companies the chance to bring their own innate intelligence and knowledge into every sales situation.  While on-premise systems could also do this, cloud-based systems were quicker to roll out, easier to customize and showed potential to increase adoption rates across resellers.

One manufacturing manager explained how during a new product launch the speed and volume of collaboration was so rapid on between suppliers and distributors that an allocation situation was averted.  That he said, made senior management believers.  These epiphanies are happening daily in manufacturing.

Based on my visits with manufacturers, here are the ten ways they are using cloud computing to revolutionize manufacturing:

  • Capturing and applying company-wide intelligence and knowledge through the use of analytics, business intelligence (BI), and rules engines.  For the many manufacturers who rely on build-to-order, configure-to-order and engineer-to-order strategies as a core part of their business models, using cloud-based platforms to capture knowledge and manage rules is accelerating. A key part of this area is mobility support for analytics, BI and rules engine reporting and analysis.
  • Piloting and then moving quickly to full launch of supplier portals and collaboration platforms, complete with quality management dashboards and workflows.  Among the manufacturers visited, those in high tech are the most advanced in this area, often implementing Vendor Managed Inventory (VMI) and demand management applications that deliver real-time order status and forecasts.
  • Designing in services is now becoming commonplace, making cloud integration expertise critical for manufacturers.  From simplistic services integration on iPhones to the full implementation of voice-activated controls including emergency assistance in the latest luxury cars, adding in services integrated to the cloud is redefining the competitive landscape of industries today.  Revising a product or launching an new product generation with embedded services can mitigate price wars, which is why many manufacturers are pursing this strategy today.
  •  Accelerating new product development and introduction (NPDI) strategies to attain time-to-market objectives. Using cloud-based platforms in high tech manufacturing is growing today as time-to-market constraints are requiring greater collaboration earlier in design cycles.
  • Managing indirect and direct channel sales from a single cloud platform tracking sales results against quota at the individual, group and divisional level is now commonplace across all manufacturers visited.  Dashboards report back the status by each rep and for sales managers, the profitability of each deal.
  • Using cloud-based marketing automation applications to plan, execute and most important, track results of every campaign.  Marketing is under a microscope in many manufacturers today, as marketing automation applications have promised to deliver exceptional results and many manufacturers are still struggling to align their internal content, strategies and ability to execute with the potential these systems promise.
  • Automating customer service, support and common order status inquiries online, integrating these systems to distributed order management, pricing, and content management platforms.  Manufacturing industries are at varying levels of adoption when it comes to automating self-service.  The cost and time advantages in high tech are the highest levels of adoption I’ve seen in visiting manufacturers however.
  • Increasing reliance on two-tier ERP strategies to gain greater efficiencies in material planning, supplier management and reduce logistics costs.  Manufacturers are also using this strategy to gain greater independence from a single ERP vendor dominating their entire operations.  Several manufacturers remarked that their large, monolithic ERP systems could not, without intensive programming and customization, scale down to the smaller operational needs in distributed geographic regions.  Cloud-based ERP systems are getting the attention of manufacturers pursuing two-tier ERP strategies.  AcumaticaCincomMicrosoftNetSuite and Plex Systems are leaders in this area of ERP systems.
  • Reliance on cloud-based Human Resource Management (HRM) systems to unify all manufacturing locations globally.  This often includes combining  multisite talent management, recruiting, payroll and time tracking.  Contract manufacturer Flextronics uses Workday to optimize workforce allocations across their global manufacturing centers for example.

Bottom Line:  Using cloud-based systems to streamline key areas of their business, manufacturers are freeing up more time to invest in new products and selling more.

2013 CRM Market Share Update: 40% Of CRM Systems Sold Are SaaS-Based

CRM-Market-Share-Analysis-Image-2012Last year, four out of every ten CRM systems sold were SaaS-based, and the trend is accelerating.

In the recent Gartner report  Market Share Analysis: Customer Relationship Management Software, Worldwide, 2012 published April 18, 2013 the authors provide insights into why the worldwide CRM market experienced 12% growth in 2012, three times the average of all enterprise software categories.  Gartner cites demand they are seeing from their enterprise clients for CRM systems that can help acquire customers, analyze and act on customer behaviors, and increase all-channel management performance.  Big data inquiries are also increasing in CRM, driven by the interest enterprise clients have in getting more value from social network data and interactions.

Key take-aways from the report include the following:

  • The CRM worldwide market grew from $16B to $18B attaining a 12.5% growth rate from 2011 to 2012.
  • 80% of all CRM software in 2012 was sold in North America and Western Europe.    North America CRM sales grew 16.6% from 2011 to 2012.  The highest growth regions of CRM sales between 2011 to 2012 included Greater China (26.9%) and Latin America (24.3%).
  • is the world’s leading CRM software vendor with 14% market share in 2012 ($2.5B in sales), surpassing SAP (12.9%, $2.3B in sales), Oracle (11.1%, 2.01B in sales), Microsoft (6.3%, $1.1B in sales), IBM (3.6%, $649M in sales) and all others.  The top ten vendors worldwide generated $10.9B in sales alone in 2012.


  • Worldwide CRM software spending by subsegment shows Customer Service and Support leading all categories with 36.8% of all spending in 2012 ($6.6B), followed by CRM Sales (26.3%, $4.7B), Marketing (includes marketing automation) (20%, $3.6B) and e-commerce (16.9%, $3B).   The following chart shows the distribution of revenue by category:


  • 40% of all CRM software sold in 2012 worldwide was SaaS-based.  Gartner states that they are seeing their enterprise clients seek out easier-to-deploy CRM systems compared to on-premise alternatives.  The report states that many enterprises are now replacing their legacy systems with SaaS-based CRM systems as well.  Enterprise clients also report that SaaS-based CRM systems are delivering net-new applications that deliver complementary functionality not possible with legacy and previous-generation CRM platforms.
  • Ten fastest growing CRM vendors as measured in revenue Annual Growth Rate (AGR) in 2012 include Zoho (81.2%), Hybris (78.6%), Teradata (70.4%), Bazaarvoice (56.2%), Marketo (54.3%), Kana (44.2%), Demandware (43.9%), IBM (39.4%), Technology One (37.1%) and Neolane (36%).
  • Communications, media and IT services were the biggest spenders on CRM in 2012 due to their call center requirements.  Manufacturing including Consumer Packaged Goods (CPG) was second, and banking & securities were third.

Get every new post delivered to your Inbox.

Join 422 other followers

%d bloggers like this: