Everybody loves lists and as a guy that makes lists for a living, that's more true for me.
I don't know how I missed it before but I came across a web site called Software Top 100 recently. Because it got the first four software suppliers right and in the right order and the four account for 40% of the market (I only watch the top 12), I figure Software Top 100's research must be pretty good.
Of course it's time to start redoing the list, guys. I think this is last year's data. Perhaps--even worse--it's last fiscal year's data, which means the list mixes apples and oranges time periods, a real problem in looking at 2008-2009 because the recession did not conviently line up with the Gregorian (or is it Julian?) calendar.
But I like the way Software Top 100 neatly shows you how much each listed software supplier depends on software in its business model (percentage of revenue that is software under heading Sofware Percentage Share). I am pretty sure it is including both actual new-new and update/new-user software licenses, on premise and Software as a Service (SaaS), and annual subscription maintenance/SaaS renewals.
That's the right way to measure the software market because the market choice to keep up a maintenance contract is simply a choice not to buy (lease/rent/subscribe to/license/fill in your own business model) some other software. It appears to be showing you the software that IBM (NYSE:IBM) sells direct as well as the software IBM flows through its services group (so-called "internal software revenue" on IBM's SEC filings under non-GAAP or some such view).
On the other hand, I don't think the Software Top 100 is uplifting Oracle (NYSE:ORCL) to account for the amount of software buried in its OnDemand division or knocking SAP down a few dollars to account for the Oracle database and other suppliers' revenues that passes through its books. Neither subtlety changes the ranking or even the scale that much although the former hides the nugget that anti-cloud-guy Larry Ellison possibly already runs the the number-two SaaS operation.
I like the way the Software Top 100 includes the game suppliers because the enterprise-software market is heading into a conflation where the ability to support business and personal needs together in one user experience at one time will rule the day. For that reason, it might be interesting to see two Microsoft (NASDAQ:MSFT) rows: One for enterprise software and one for consumer software. I think that would give the software company everyone loves to hate, but keeps on buying from year in and year out, the first and second position on the Software Top 100.
That would knock the software company most people have never heard of--#100 Jack Henry (NASDAQ:JKHY)--off the list. That's another thing I like about the Software Top 100, that it counts the industry-specific providers like JKHY, the semiconductor-manufacturing-software suppliers, Reynolds & Reynolds, McKesson (NYSE:MCK), and so forth. But in for a dime, in for a dollar: I don't see Fiserv (NASDAQ:FISV), Cerner (NASDAQ:CERN) or Micros Systems (NASDAQ:MCRS). So Jack Henry would get knocked off my list either way (and to be fair, I read the list very quickly).
(Oh, and since I blog for a living too and these guys have a half dozen other lists, I now know where six of my 150 blog posts in the next year will come from.)Disclosure: No position in companies mentioned