Monday, February 9, 2009

SaaS Growth Halted Immediately as Executives Flee – or Not...

SaaS Growth Thrown Into Question,” wrote my former colleague (and, despite my past influence, one of the most insightful people I know) John Foley for Information Week's cloud computing blog last Friday.

Shakeup at,” wrote Ben Worthen for the Wall Street Journal's “Digits” blog on the same day.

Tough Times at,” wrote Jeffrey M. Kaplan for “Seeking Alpha,” a fairly cool Web site devoted to stock market opinion and analysis, just today.

Do these folks know something you and I don't? Maybe – but I don't think so.

What got them all cautious was the departure from of Steve Cakebread, now-former president and chief strategy officer, and two senior sales executives, Gary Hanna and Dave Orrico. Oh, and the fact that canceled its European edition of its annual multi-day tent revival/prayer meeting, Dreamforce, in favor of a free, one-day event. And the fact that stock fell about 5% on a day when a lot of other stocks went up.

But seriously, if you were Steve Cakebread, which would you really rather help to run right now?, from which he'd already tried to retire once, or your family-owned, high-profile, high-quality Napa Valley winery? I live in Sonoma County, which is often seen as a friendly competitor to Napa, and I know which one I'd pick – and I'm a big fan of and SaaS in general.

As for Messrs. Hanna and Orrico, with all due respect, it could be and has been argued by others that there might have been too many sales executives at the company anyway, especially given the current economic turbulence.

And regarding replacing Dreamforce Europe with Cloudforce London – well, I've been saying for some time now, most recently in a December 2008 blog posting, that the big trade show is probably going the way of...well, bits on disks versus SaaS, just to pick an analogy at random.

Is in trouble? I seriously doubt it. Is it facing uncertainties, and the prospects of fewer, smaller deals and even some customer churn during the next few months? Almost certainly. But when I look at the range of resources the company has, particularly its ecosystem of partners, the Foundation, and the team still in place, I can't help but believe the company remains a good bet for users, partners, and even investors. Yes, there will be more competition for customer dollars, from companies such as SaaS solution provider Zoho and platform-as-a-service (PaaS) purveyor LongJump. But has enough irons in enough fires, and enough bright, clever people committed to its success and that of its customers, that it will weather this storm just fine.

What does it all mean, then? If you're a user considering SaaS with little to no investment in solutions, it “couldn't hoit” to look at some alternatives, including those from the two other vendors I just mentioned. If your company is already invested in solutions and relationships, don't panic – just ensure your contractual terms are known, well-documented, and sufficiently favorable to and protective of your company.

And if you're wondering if overall growth of the SaaS/PaaS/on-demand software market is in jeopardy? Well, I'm still predicting growth in 2009 and beyond. It may be slower than the past few months, and it may be distributed across more companies than I and others may have originally thought. But the basic dynamics remain the same – companies want to do more with less, and SaaS and its related technologies enable that more easily and economically than almost any alternative. And Jeffrey Kaplan apparently agrees with me. In his above-referenced blog entry, he states:

“I’m convinced will withstand the current crisis, just as I’m confident that the SaaS and broader cloud computing market will prosper long-term despite of today’s economic challenges. is still the biggest and among the most influential players in the SaaS and cloud computing market, and I’d much rather be in the on-demand services sector than in either the housing or automotive industries.”

Mr. Kaplan adds that critical to the survival and success of SaaS companies will be their abilities to focus on tangible benefits, such as cost savings or higher sales productivity, operating efficiency, and/or customer satisfaction. These are the kinds of things you should focus on, too, if you're trying to consider or promote SaaS solutions at your company, whatever its core business or size. Meanwhile, let's stop wasting time speculating, and build better business infrastructures and service level agreements (SLAs) for managing vendor relationships effectively, while we wait for credible public statements, from and elsewhere.

At least, that's what I think. What about you?

Tuesday, February 3, 2009's Latest Release: New Features AND New Transparency!, provider of SaaS-based IT service and infrastructure management solutions, will officially announce on Feb. 5 the Winter 2009 release of its software platform. It's the company's 15 software release in more than three years, and most users never even noticed, since they were at home for the weekend. Once they got back to their computers, though, they saw some pretty nifty new and enhanced features, such as:

  • The ability to open, update, and close service requests, incidents, problems, and changes from Apple iPhone, Google Android, and RIM Blackberry mobile devices, to replace those sticky notes that tend to follow IT infrastructure and service managers around;
  • Powerful, role-based global search of people, policies, processes, tools, and other resources;
  • Home page and dashboard layout and content management features that enable companies to leverage familiar “look and feel” features and to decide based on their unique requirements who sees what information in what forms;
  • Graphical workflow features that ease and speed application creation and modification without extensive “plumbing” requirements; and
  • Project management features that integrate with the software's change, release, and service level management features.
I'll have more to say about these features and why they're both important and valuable in upcoming outings. For now, suffice to say that I'm impressed with the alignment of these features with the features a lot of users I've spoken with want from their IT service and infrastructure solutions.

Equally compelling, the privately held company is also planning to disclose at least some high-level financial results, including recurring annual revenues approaching $20 million, 235 enterprise customers and 2.1 million users in 30 countries, and 18 consecutive months of positive cash flow. If the company continues moving forward through the current economic unpleasantness, as many of us expect the larger SaaS market to do, it could position itself well for sustained growth. It could also become perceived as an increasingly safe bet for those companies considering or pursuing SaaS and interested in the financial health of current or candidate vendors. Which should be all of the companies considering or pursuing SaaS. As I may have mentioned once or twice previously. understands that success with SaaS is about much more than SaaS technologies. It's easier to be open when the news is good, but I've got to believe earlier, consistent openness helped to lead to's good news. Along with effective, useful technologies, of course.

More soon. Stay tuned.

Savvis' Savvy SaaS Moves

[UPDATED with financial information and recommendations below.]
In December 2008, Savvis announced that it had successfully completed its fifth consecutive SAS 70 Type II examination. As I've written here previously, SAS 70 compliance is a strong indicator that an infrastructure provider's own infrastructure is reliable and robust.

In January 2009, Savvis made what I think is one of the most interesting staff-related announcements by a SaaS-related vendor so far this year. The company hired Thomas Riley, former U.S. Ambassador to Morocco, as Senior Vice President and Managing Director of Savvis International. Riley's charter is primarily to grow the company's international business, especially in Europe, the Middle East, Africa, and the Asia/Pacific regions, Savvis said.

On Feb. 2, Larry Steele, Savvis' Vice President of SaaS, published a piece at (where I blog about business intelligence, by the way), entitled “Do You Need a SaaS Hosting Provider?” “While many vendors understand what it means to host an application and provide it to customers via the Web, few fully recognize the transformational elements that are necessary to successfully implement their SaaS offering,” Steele writes.

I agree. This is why I'm advising every current or potential SaaS vendor to read Steele's piece, as well as the Andre Yee ebizQ piece I referred to in an earlier blog entry. I also strongly recommend that every current and potential SaaS user read these same pieces, and use them to craft questions and standards for current and prospective vendors. And those users and vendors should add Savvis to their short lists of SaaS infrastructure support providers with which it's worth having detailed conversations.

Meanwhile, Savvis, which is traded on the New York Stock Exchange, announced earlier today year-over-year revenue growth for the latest financial quarter and for the year as a whole. The company added that it achieved positive free cash flow for the first time during the fourth quarter of 2008. Savvis expects 2009 to be economically turbulent -- among other things, a major client, the American Stock Exchange, is being acquired, which could result in up to $27 million in lost annualized revenues for Savvis. But while the company is offering no guidance regarding anticipated 2009 financial results, the company is committed to continued growth and positive free cash flow, according to a spokesperson.

Well, let's hope so. Meanwhile, though, these results jibe with what I'm increasingly seeing as a general condition for SaaS vendors and users. The industry is experiencing the same downturn as the rest of the economy, but seems poised to weather the storm more robustly than perhaps many other market segments. This bodes well for SaaS users, especially those who do their homework and focus on vendors with strong commitments to both technological and financial robustness. As you may have read here previously. At the risk of repeating myself. Again.