software as a service - the importance of marketplaces and ecosystems for business
DESCRIPTION
The SaaS industry is about to go under a massive shift driven by cloud and mobility with a strong focus on mobile. With budgets moving across departments and responsibility shifting - See which companies are embracing and reaping the benefits. http://www.exiconglobal.com/report-download/saasTRANSCRIPT
Proprietary & Confiden0al 1
August 2012 So4ware As A Service (“SaaS”) And the importance of Marketplaces & Ecosystems for business API’s, Applica-ons, So1ware Developers are crucial ingredients to commercial success
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An Industry undergoing shifting
Global Purchases of IT Product & Services 2011 by Forrester Research
$212
$43
$30
$95
$0
$50
$100
$150
$200
$250
$300
$350
$400
IT Services Strategy & other Services
IT Applica0on Outsourcing
So4ware Custom build
So4ware Applica0on Development
Total $380 billion
$19 billion
5% dedicated to Mobile Exicon Es-mates
OS $28 Servers $62
PCs $177
Storage $48
Peripherals $57
Other $18
Strategy & other consulGng services $95
Systems integraGon project work
$214
Enterprise &SMBs $152 Telcos $183
ApplicaGons outsourcing $30
Mainframe outsourcing $34
Network outsourcing $32
Desktop outsourcing $30
Distributed environment outsourcing $65
Computer hardware support services $63
Middleware $148
Custom-‐built soSware by contractor and consultants
$43
ApplicaGons $212
$1,690 IT services $309
Communica0ons equipment
$335
US$ 1.7T Global Technology Industry With US$ 20B going to mobile from the US$ 380B dedicated to applications
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It’s about the shift to Marketplace & Ecosystems
-‐75%
-‐69%
-‐52%
-‐45%
Resisting the Shift is futile
And those who embraced it have benefited
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Driven by Cloud and Mobility
Cloud spending to hit US$ 40B as the Enterprise moves IT spending
While more people access the internet using their Mobile devices
The Rise in the Cloud 2012 by DeloiKe
• 500M tablets sold in 2015
• 1.5B Smartphone units sold in 2015
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Moving IT spend to Opex and mobilizing the Enterprise
30% of Enterprise Software budgets for Subscriptions
2011 So1ware budget Alloca-on to Annual Subscrip-on by Gartner
Highlighting the rise in Enterprise applications
And the investment in building applications
“By 2017 CMOs will be purchasing more technology than their CIOs”
hKp://www.forbes.com/sites/onmarke-ng/2012/08/21/five-‐challenges-‐for-‐tomorrows-‐global-‐marke-ng-‐leaders-‐study/
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And how that translate into tremendous pressure for all Technology to win the cloud; and this time they are rich in cash!
Client
Mob
ile
PC Clou
d
Stack
Type of Developers
End goal Partnerships Migration
Developer: End User:
Infrastructure
Software Systems Integrators
Cloud
PaaS
IaaS SaaS
SaaS Application Categories
Finance & Accounting
Content & Document
Mgmt. Vertical
Enterprise Social Media
Marketing Analytics
Retail & Ecommerce
Collabora-tion Business Intelligence
Human Resources
Marketing Demand
Generation CRM
• Cloud compu0ng is the migra0on of PC onto the web. To provide the same set of services, the cloud has 3 dis0nct areas • IaaS – Infrastructure as a Service, providing compute component requirements on a rental basis, ranging from Processors, Storage, Networking.
Subscribers to this service are Systems Developers and Engineers in the So4ware companies and System Integra0ons. Target for this service is developers, par0cularly those focused on the So4ware stack.
• PaaS – Pla[orm as a Service, providing tools and access to write so4ware including API’s and So4ware Developer kits. Subscribers to this service are So4ware Developers and Engineers.
• SaaS – So4ware as a Service in contrast targets the end user with Enterprise applica0ons. Subscribers range from SMB to enterprise customers usually in the business lines and not IT.
• Technology Infrastructure, So4ware Vendors and Systems Integrators are vying for a role in the cloud due to commodi0za0on
• To succeed in PaaS and IaaS it’s cri0cal winning the developer to your pla[orm. SaaS is enduser focused and will need all the services on the cloud.
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And there are a lot of companies across Cloud
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Past and Future outlook of SaaS
• Salesforce.com • Rightnow (now Oracle)
CRM • Netsuite • Saasu • Freshbooks
Accoun0ng
• Successfactor (now SAP) • Kenexa (now IBM) • Taleo (now Oracle) • BambooHR
HR (aka ERP)
• Buddy Media (now Salesforce.com) • Wildfire (now Google) • Hubspot
Social Media
• Exicon • Apperian • Appdirect
Ecosystem and
MarketplaceManagemen
t
• The first Industry to go SaaS was “CRM” or customer rela0onship management to manage and control remote sales leads and business opportuni0es
• Therea4er Accoun0ng, HR have become key element of SaaS applying significant pressure on the tradi0onal So4ware Middleware companies and Enterprise Applica0on Vendors.
• Google and Salesforce.com have just begun to move on Social Media SaaS companies, again providing a centralized management and control across the Social Media landscapes leading to reduc0on in the Customer Acquisi0on Costs
• With the rise of Big Data and the increasing influence of websites driving commerce transac0ons, Developer and Applica0on Rela0onship Management is a natural evolu0on in Marketplace and Ecosystem dominated environment
• Mobility is going to be a cri0cal element
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An example of the SaaS business model - S-1 filings for IPO • Founded in 2005, no0ce that the first record of revenue is in 2007 and then the subsequent revenue growth once the pla[orm is
established and opera0ng.
• The investment in Sales & Marke0ng as a percentage of Revenue is also extremely high, largely a result of Headcount and targeted online marke0ng ac0vi0es to SEO, Key Knowledge Leaders and Social Media.
• They are issuing 10% of their shares looking to raise US$ 400M off trailing Revenues of US$ 134M implying a valua0on of US$ 4B resul0ng in a nearly 30x revenue mul0ple. They are running an opera0ng loss of US$ 80M in the year ending Jan 2012.
• With approximately 1,400 employees managing 325 enterprise customers on a subscrip0on model servicing a total of 200,000 employees
• This sector of SaaS, HR related Enterprise Applica0on, aka ERP, has a number of compe0tor including Successfactor (now SAP), Taleo (now Oracle), Kenexa (now IBM). All have reached revenues in excess of US$ 100M
• This model is similar to the Exicon model. Exicon is specialized in Developer Rela0onship Management.
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There is a lot of room for multiple SaaS vendors and the exit opportunities remain strong
Acquirer Target Category Amount in US$ Revenue Mul-ple
Salesforce.com Buddy Media Social Media 689M 15-‐18x
SAP Successfactors ERP 3.5B 12.1x
Intuit Demandforce CRM 423M 11.3x
HP Autonomy Big Data 870M 11.8X
Oracle Rightnow CRM 1.5B 7x
Neustar Targus 650M 4.4x
IBM DemandTec 427M 4.8x
Oracle Taleo ERP 1.9B 6.5x
IBM Kenexa ERP 1.3B 4x
• Exit mul0ples are in the range of 5x revenue up to 30x revenue
• Poten0al acquirers will be either the big so4ware companies, systems integrators or Cloud Vendors.
• All of them are looking to extend their applica0on and services offering into their exis0ng enterprise customers and have large cash posi0ons on their balance sheets
• Key drivers for valua0ons are • Revenue • Number of customers subscribing to your pla[orm • Customer Assets under management • Features available on the pla[orm • Workflow and technologies • Management Talent • Physical presence
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And the mobile sector focusing on Enterprise is just picking up The mobile sector raised $3.9 billion in venture financing in H1 2012, 610M of which went into mobilizing the Enterprise
Source: Rutberg Announced Category Acquirer/Investment Acquired / Investee EV/SalesConsideration
(US$M)Jul-‐12 Mobile app development platform Funding round Meteor -‐ $11Jul-‐12 Social media marketing Google Wildfire Interactive 7.0x $250Jul-‐12 Cloud analytics for software logs Funding round Loggly -‐ $6Jul-‐12 Enterprise collaboration Funding round Asana -‐ $28Jul-‐12 Cloud storage & sharing applications Funding round Box -‐ $125
Jul-‐12 Mobile App distribution InMobi MetaFlow Solutions -‐ -‐
Jul-‐12 Mobile payment solutions Apple AuthenTec 5.2x $365Jul-‐12 Enterprise Appstores Funding round AppDirect -‐ $8.50Jun-‐12 Enterprise Social Media solutions Microsoft Yammer 60x $1,200Jun-‐12 Enterprise Social Media solutions Salesforce BuddyMedia 15x-‐18x $689
And alone during June and July some of the Enterprise related investment and acquisi0ons
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CEO / EXICON Stefan Rust
EMAIL [email protected]
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