Tuesday, February 3, 2009

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 ebizQ.net (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.

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