Software Insider Index™ (SII): 2009 SII Top 35 Enterprise Business Apps Vendors™

2009 Results In Major Revenue Declines For On Premise And Officially The Year Of SaaS
A review of last year's financial performance should erase any doubts about the viability of SaaS as a deployment option and a business model.   Traditional on-premise business apps vendors took the brunt of the beating earlier in the year but have slowly recovered.   This year's Software Insider Index™ (SII) highlights two major themes:

  • Legacy On-Premise Vendors Retain Operating Margins But Lose Revenue Share. Almost every on-premise software vendor lost revenue on a year-over-year (YoY) basis in 2009 (see Figure 1).  IFS (3.87%) and SAS Institute (2.21%) grew in the midst of the financial onslaught.  SAP is still double the size of Oracle in apps revenue!  Vendors such as QAD (-31.42%) and Manhattan Associates (-26.84%)saw the worst YoY declines (see Figure 2).  Most vendors relied on their maintenance and support to bolster their revenues. For example, CDC, Epicor, Exact, Lawson, Manhattan, Oracle, QAD, and SAP exceeded a 1:2 ratio in new license to maintenance revenue.  Why?  Customers chose not to upgrade, purchase new licenses, and expand their footprint.   Despite the downturn, most vendors survived with operating margins between 10% an 50%, well above those achieved by SaaS vendors.   Traditional vendors clearly felt pressure from SaaS/Cloud.
  • SaaS Models Prove Themselves In 2009. Meanwhile, every SaaS vendor grew, from Ariba with the lowest YoY revenue growth (0.44%) to SuccessFactors with the highest (38.73%). Overall the SaaS vendors tracked in the 2009 SII grew 7.98% in YoY revenue. SaaS deployments expanded in all areas from CRM to HCM to spend management. Of note, exceeded the $1.3B mark, a milestone for the SaaS industry.

Figure 1. Software Insider IndexTM (SII) Top 35 Enterprise Business Apps VendorsTM (Calendar Year Revenue)
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Figure 2. Software Insider IndexTM (SII) Top 35 Enterprise Business Apps VendorsTM (YOY Revenue Growth)

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Your POV.
What's your read on the market?  Do you feel the SaaS model has added pressure to your traditional vendors?  Will everyone have a  SaaS option in 2010?
Am I missing a vendor?  Got the numbers wrong? Feel free to post your comments here or send me an email at rwang0 at gmail dot com .
* Not responsible for any math errors or erroneous revenue information.
1. Calendar year estimates based on the quarter nearest the calendar year.
2. Why these vendors than others?  Easy - because I cover them.
3. Exchange rates as of February 25th, 2010 for vendors who have not published quarterly conversions.  Not responsible for currency flux.
4. Estimates created for privately held vendors.
Not sure? Please read the quarterly filings yourself =)
Related resources and links

Take the new and improved survey on 3rd party maintenance
2009 Calendar Year Q4
2009 Calendar Year Q3
2009 Calendar Year Q2
2009 Calendar Year Q1
Software Insider Index™ (SII): 2008Software Insider IndexTM (SII): SII Top 30 Enterprise Business Apps VendorsTM & SII Top SaaS Business Apps VendorsTM SII Top 30 Enterprise Business Apps Vendors™
2008 Calendar Year Q4
2008 Calendar Year Q3
2008 Calendar Year Q2
2008 Calendar Year Q1

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.