While Microsoft’s (MSFT) recent announcement that it had experienced its first down quarter in terms of revenues and profits generated plenty of headlines in the business press, a surge in the sales of Software-as-a-Service (SaaS) solutions aimed at chief financial officers (CFOs) deserves even greater attention.
Two SaaS announcements from NetSuite (N) and Plex Systems clearly illustrate this trend.
NetSuite announced Monday that its total revenue for the first quarter of 2009 was $41.6 million, a 22% increase over the first quarter of 2008. In my view, NetSuite’s success is due to a combination of factors. The company has done a better job of packaging, pricing, positioning and promoting its solution to CFOs. It has made its offering more modular, which in turn has made the pricing more attractive. It has also more effectively targeted CFOs who are at a crossroads between starter kits like QuickBooks and complex systems like SAP (SAP). It is also working more closely with channel partners to meet the needs of its customers. But, most importantly it is finding a more receptive ear among CFOs who are growing increasingly impatient with the inflexibilities and hassles associated with traditional financial systems.
Plex Systems is also finding greater interest in its SaaS-based enterprise resource planning (ERP) solutions geared toward manufacturing companies. Despite being in one of the toughest industrial sectors and being located in one of the most economically devastated areas (Michigan), Plex Systems reported its revenues grew 33% in 2008, and it experienced a 25% jump in revenues during the first quarter of this year over the same period in 2008.
Mark Symonds, the company’s President/CEO, told me that Plex Systems’ growth can be attributed, in part, to a rising number of CFOs within manufacturing companies who are trying to better manage their operations in response to the tough economic climate. These CFOs recognize that SaaS solutions, like Plex Systems, are easier and more economical to deploy, but even more importantly provide greater visibility across the organization and its extended supply chain.
As these CFOs experience the benefits of SaaS in meeting their financial management requirements, they will become important proponents for SaaS adoption across the enterprise, encouraging their business units and IT organizations to leverage SaaS as well.