SaaS Enterprise Application Market Trends

Chuck Jones

March 29, 2012

2

Every SaaS Segment Has a CAGR Over 20%

Source: IDC

• Worldwide SaaS market could reach $53.6 billion in 2015, a CAGR of 26.4% from 2010

2010-15

$ billions 2010 2011 2012 2013 2014 2015 CAGR

Application development and deployment 1.7 2.7 4.0 6.0 8.9 12.6 48.6%

System Infrastructure 4.5 5.8 7.4 9.3 11.5 14.4 26.1%

Applications 10.4 13.1 15.9 18.7 22.2 26.5 20.7%

Total 16.6 21.6 27.4 34.1 42.6 53.6 26.4%

WW SaaS Revenue by Segment

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2010 2011 2012 2013 2014 2015

$ b

il. Application development and deployment

System Infrastructure

Applications

3

SaaS Solutions Stealing Share from Enterprise Applications

• 38% of Enterprises project that over half of their software applications will be deployed on a cloud platform within three years compared to 11% of Enterprises today

• SaaS application revenue could grow from $10 billion in 2010 to $21.3 billion in 2015, a 16.3% CAGR

• SaaS applications could increase from 9.6% of enterprise application purchases in 2010 to 13.8% in 2015

2010-15

$ billions 2010 2011 2012 2013 2014 2015 CAGR

Cloud Applications (SaaS) $10.0 $12.1 $14.3 $16.7 $18.9 $21.3 16.3%

Enterprise Application Software $103.8 $114.4 $123.7 $133.4 $144.0 $154.8 8.3%

Cloud Percentage 9.6% 10.6% 11.6% 12.5% 13.1% 13.8%

Source: Yankee Group and Gartner

4

XaaS Solutions at Various Stages of Gartner’s Hype Cycle

5

SaaS Adoption Could Top 50% in 2012

• SaaS continues to outpace other XaaS implementations

6

Security Related SaaS Application Spending Projected to Grow at a 31% CAGR Through 2014

7

SMBs Plan to Pay for Cloud Services

8

SMBs Have Higher Adoption of SaaS Solutions Than Enterprises

Source: Gartner 2011

9

SaaS Solutions Apply Across Multiple Domains

Source: Wells Fargo Securities

10

SaaS Categories and Major Players

Sales & ServiceTalent Management

Marketing & Social

Supply Chain /B2B

Back Office (ERP, HRIS, and Accounting)

Vertical Specialists

Collaboration, Integration, Productivity

IT and Security

Salesforce.com

Salesforce.com

Taleo

Cornerstone OnDemand

Workday SuccessFactors

Ariba ConcurRearden Commerce

Bazaarvoice

IntuitNetSuite

ServiceNow RealPage

IntraLinks

Covisint

Covisint

Responsys

ExactTarget

LithiumPowerReviews

Kenexa

ConstantContact

RightNow Technologies

SugarCRM

Oracle

Adobe

Microsoft

IBMVeeva Systems

Vertical Response

Marketo

LivePerson

BigMachines

Vocus

Patersons

Ultimate Software

OpenTable

Athena Health

ConvioManagement Dynamics

DropboxBox.net

InformaticaGoogle

IBM

Microsoft

CiscoCitrix

SPS Commerce

ob10

SciQuest

Emptoris

BravoSolution

Coupa

Hubwoo

DemandTec

Aravo

MFG.com

SabaJobvite

HireVue

Peopleclick/Authoria

SumTotal

OracleSonar6

Plex Online

Rootstock

Freshbooks

Intacct

FinancialForce.com

OrderMotion

ProofPoint

SymantecCisco

Google

AppFirst

Apptix

Logmein DealerTrack

Medidata

Tangoe

CaseCentral

ElemicaGHX

FastSpring

FPX

Telogis

Demandforce

iContact

Axeda

Advanced Planning

Arena Solutions

Xactly

Baynote

Zuora

MarketLiveVenda

Workday

Source: Goldman Sachs

11

The Salesperson Who Makes the Most Money Isn’t the Best Salesperson, They Are the Best Sales Plan Lawyer

• Sales plans are developed internally with – Bias from people who create them

• Finance and Sales– Limited information on other companies

• Outside consultants

• Xactly is able to analyze multiple companies in the same industry– Multi-tenant delivery model– Determines which metrics best motivate sales people

• Can Model and Test-drive sales plans

• Customers include Akamai, ARM, Cablevision, DHL, Intuitive Surgical, John Hancock, LinkedIn, Motorola, NBC Universal, PayPal, Salesforce.com, Stryker, Walgreens and Yamaha

12

Wherever There are People, There are People to be Motivated• 50% of organizations will Gamify Innovation Processes by 2015 (Gartner)

– Gen Y makes up 25% of the workforce and growing• Integrate gaming into business activities

– Points, Badges, Levels and Virtual Goods• Advantages

– Encourages repeat user and visitor behavior– Fast feedback vs. once a year performance review– Helps determine and reward skilled employees

13

When Your Customer Participates, Your Business Wins

• Microsoft “Ribbon Hero” trains users on Office– Understand breadth and depth of the entire Suite– Keep users from defecting to “good enough” alternatives such as

Google Docs– Real-time feedback and scores, badges and levels

• SAP Community Network (SCN) Recognition Program– Earn points for every contribution– Four levels to show depth of expertise– Leaderboards for individuals and companies– Hiring managers are using as an initial screen for candidates– Companies are adding SCN points to performance evaluations

Source: Bunchball

14

Verify the Supply Chain

• Connects Buyers, Suppliers, Testing Labs, Audit Firms and Government Agencies

• icix enables a more secure and reliable Supply Chain

• Verification for – Sourcing products

• Multi-level down to original source– Employee Health and Safety– Product Tests– Tracking Chemicals– Insurance

• Increased regulations driving demand– California Prop. 65, Consumer Product Safety Act

• Protects brands, lowers costs & risks and minimizes supply change disruptions

• Customers: ConAgra, Costco, Safeway, Sysco, Target, Tyson, WalMart and Whole Foods

15

Additional Enterprise SaaS Areas to Explore

• Mobile access to Enterprise Applications– Secure containers for mobile devices

• Development tools for Enterprise SaaS applications– Integrate social media platforms

• Unified Communications as a Service (UCaaS)– Voice, Web and Video conferencing

• Testing as a Service (TaaS)– Automated Software Quality (ASQ) and TaaS to generate almost $1

billion in revenue in 2014 with a 36% CAGR (IDC)

• Vertical specific application and industry solutions– Retail, Retail POS, Finance, Consumer Products and others

16

Conclusions

• SaaS/Cloud solutions bring scale and lower costs

• SaaS solutions will be very disruptive and competitive with Enterprise on-premise applications

• SaaS offerings will cover a range of solutions– Application and Industry specific

• Retail, Finance, HR, Supply Chain, … – Platforms, Infrastructure and Business Process– Span SMBs to Enterprises

• Multi-tenant provides for data consolidation and analysis

• Marketing: Everything is Social

• Mobile: Bring your own Device