Karen Steele - Senior Vice President of Corporate Marketing
Bobby Yazdani - Founder, Chairman of The Board and Chief Executive Officer
Unknown Executive -
Shawn Farshchi - Chief Operating Officer and Executive Vice President
Elaine Kitagawa - Chief Financial Officer and Executive Vice President
Jeffrey T. Carr - President of Global Field Operations
Roy Lobo -
James Holincheck - Gartner Inc., Research Division
Eric Martinuzzi - Craig-Hallum Capital Group LLC, Research Division
Nathan Schneiderman - Roth Capital Partners, LLC, Research Division
Hyoun Park - Aberdeen Group, Inc.
Scott R. Berg - Feltl and Company, Inc., Research Division
Saba Software, Inc. (OTCPK:SABA) Analyst/Investor Day March 20, 2012 1:15 PM ET
Hopefully, you can all find a seat and make yourself comfortable. My name's Karen Steele. I'm Head of Corporate Marketing for Saba, and I'd like to be the first to welcome you to our Analyst Day. Thank you to everybody who attended the networking lunch and the general sessions this morning. I'd like to also introduce Roy Lobo, who's our Head of Investor Relations, in the back, my co-host to this event.
I just want to quickly go through the agenda and then we'll jump right into what I think it's going to be an information-packed session, set of sessions. So we're going to kick it off with Bobby Yazdani, and he's going to talk a little bit about our vision and our strategy. Following Bobby, you'll hear from Shawn Farshchi, our COO. And then following Shawn, you'll hear from Elaine, our CFO.
We're going to then do -- spend some time to give you all time to ask questions. We'll do an executive Q&A. We do have mics in the room, so if at any time you'd like to ask a question, just raise your hand. And I'm very excited to have a customer panel to cap off the day this afternoon. We have Deloitte, Coventry Healthcare and SMART Technologies who'll be joining us for a great informative customer session. We will take a break in between the 3 executive presentations and the Q&A.
So with that, I'll turn it over to Bobby. Thank you.
Great. Thank you, very much. I guess I'm going to put the safe harbor out there first. Okay. Take your time. Okay. Because I want to go -- I have to work now. Okay. Let me jump in quickly and talk about -- we have had number of major announcement this morning. We've announced new product releases. We've announced an acquisition. This is too loud. Okay, I'm standing here. It's okay. So I'm going to talk to you a little bit about the product releases, what's that all about. I'm going to talk about the acquisition of the HumanConcepts, and I'm going put them in the context of our business strategy of how all these pieces going to hang together and lay out a little bit more around our business priorities, and how all these pieces fits into our business priorities going forward.
So first and foremost is the release of our learning management suite. Okay I just got off with 4 of my customers, H&R Block. We have 160,000 people using Saba Learning Management System. I have McDonald, 250,000 people are intended to deploy and use our Learning Management. They're up to 60,000. I have International Hotel Group, they have over 200,000 people that are going to be using this system. And then we have -- Accenture actually was on the, around the table, also looking at the -- they have major project with Saba Learning Management. It's their client that they're taking the technology to.
So we have a belief that Learning Management Systems are not going to go away. Their -- our booking is growing very rapidly. Our pipeline is up significantly and if there is a belief entering in the market that this is going to get consumed by ERP vendor or consumed by the recruiting vendors, they are just purely wrong. Okay. There is so much demand on us that we have to continuously innovate and write more software for people that their job is essentially transformed to training processes in these large businesses. And guess what? Most of the people they trained, they are not their employees. So they have nothing to do with the HRIS system. Okay. And there are cases after cases after cases like this that are up there, again, on the floor and you can see.
So we have a core commitment. This is a core to our business that we're going to move this large, this long list of big client and projects forward because they demand more technology to transform the way they do learning on a global basis, an enterprise-wide basis. Whether it's compliance-driven, whether it's channel-driven, whether it's sales and element [ph] -driven and the list goes on in terms of the business cases that they have. We have completely focused and committed in the learning market, and we're going to continue investing and releasing product and innovative product in the learning management market.
The second -- an important release for the product is, of course, our Talents Management Suite. And that does include, of course, our learning product, our performance course on objective management, succession planning, compensation, profile management, Workforce Planning. And in the concept [ph] of acquisition, we announced today the HumanConcepts. All their IP will fit in and bundled in into our Talents Management Suite.
And again, this is a growth area for us. We believe that the fact that 2 of our competitors get bought [ph] by ERP vendors who are behind a firewall, it's going to create a huge opportunity for us. Because markets always look for alternatives. That's our belief. And markets actually, they hate their ERP vendors and doing business with their ERP vendors. And they want to have an alternative and a choice from the ERP vendors, and that's where we're filling.
But we've got to continue to be that alternative and the choice to the market, supplying them with a piece of technology that is employee-facing technology and is necessarily not tied to a ERP application in the back end. So we work with Oracle and SAP and the Workday and many other partners in that space, and we want to be the agnostic Talents Management Suite, and we don't want to actually tied it up to a single ERP. We think that's a competitive advantage, to create that alternative. So we're going to continue invest, and we're going to continuing invest in the Talents Management Suite and we're going to continue differentiated with some of this capability that we're going to add, including the visualization of your workforce, including the modeling and the planning of the workforce as part of the suite.
We had a major upgrade of our collaboration, realtime collaboration product. It's designed for mobile workers. It's designed for mobile infrastructure. You saw -- if you were earlier in the session, you saw example of Software-as-a-Service meeting capabilities, realtime collaboration capabilities get embedded in other applications. So we do truly have architecture, Software-as-a-Service, all realtime collaboration capabilities. Or there's a RaaS API that's essentially make available those capabilities into other applications and we can enable other applications.
The fourth one is that a demo of the product that we shared with you earlier today is the social enterprise product line. Now this is not a process-focused, top-down management system like your typical enterprise management product. It's truly a sure-shot bottoms up system. And literally, as I walk out of the hall, we had number of customers -- here's how they approached me. "How are you going to take us from here, where we are a top-down organization, to this is what we really want, is what you demoed to us today. And how are we going to get there?" And my answer is pretty straight-forward. This is not a overnight thing that's going to happen. We've got to innovate and we're going to start acquiring more customers in that category and have best practices to show the customer -- how the customers can move from here to there.
This is a new category product. This is a new category. This not an upgrade to a Learning Management System. This is not an upgrade to Talents Management System. It's a new category of product. It's a very rich product. We shamelessly have stole our best ideas out of Talents Management, our Learning Management, realtime collaboration and the social enterprise into this new stack that you saw. Go to sabapeoplecloud.com. This is a new category.
And being an entrepreneur, 3 years from now, the revenue out of this product is going to be significant contributor to growth of Saba. This is going to be a big, big hit. It's going to be a big product. We have many, many customers who are excited to start pilots on this technology. We are using this now internally for over 1 year. Literally we've -- I think March of last year or even before that, we started using this technology, and we are very, very satisfied. I tell you, as a CEO, I'm satisfied with the -- what I'm getting -- I killed our Intranet. I killed our disparate Learning Management system. I killed our performance management processes. I've killed care people directory. All of those things have been killed and get consolidated into a single system today. And that's the value proposition. I don't have any SharePoint. Our employees don't use SharePoint. We don't have a disparate Learning Management System or a Talents Management System. We don't have a directory system. Everything is not embedded into a single platform, and that's what we use. This is going to be a big category for us, the social enterprise. We think it's a very strategic and important asset to be in that category and gain experience. Gain experience and be in that market.
And then, of course, last but not least, is the acquisition of HumanConcepts. A few words on that. The company is just under 100 people, Bay Area-based, over 500 enterprise-class customers. The company had around $10 million in revenue, total revenue. Maybe about 60% of it was subscription-based revenue, something along those lines. And a very good, both cultural fit, technology fit and it's going to give us the expertise, more expertise, selling and servicing to the HR category, HR buyer, which is a core buying center for us that we need to have expertise on.
So how do we create value, both for our customers, as well as for our shareholders? And this is going to layout the -- sort of like our business plan. This is our business plan in a slide. We have a core. We build $100 million growing business in the enterprise learning, and we're going to continue invest and grow it. And we believe that today, we are the #1 supplier in the enterprise class implementation of this category. And we're going to continue to attract the best customers who are looking for an enterprise-wide solution away from the ERP vendor, away the HRIS system and they need a enterprise-wide system for managing training, learning processes, certification, compliance processes, whether is -- whether is this to be deployed internally or externally to their value chain of customers, partners, suppliers.
It's a very focus, it's the best-of-class, and it's encompassing in terms of all the capabilities it has. You don't have to integrate the virtual learning environment to it. It already has one. You don't have to integrate the testing assessment to it. It already have one. It does have content management capabilities, it has search capabilities, it has e-commerce capabilities and the list goes on. We want to have the best-of-class solution for folks who need to essentially transform. They do training inside and outside of their businesses, and that is the core of this business and we're going to continue invest and grow that.
The second -- what we call the second horizon, the second area that we have placed significant amount of investment is, of course, is the HR buying center. We believe that our heritage in the learning, and our heritage in the Talents Management give us the -- essentially the venue to be an alternative to the ERP vendors in the Talent Management space. Market wants alternatives, and we want to be an alternative to the ERP vendors in the Talent Management space. And the way we're going to differentiate it, clearly by having a strength in learning, a strength in workforce planning and have deep functionality in growth and objective management, succession planning, and the list goes on.
So again, we want to have deep expertise, and the HumanConcept acquisition strengthen horizon 1 for us. It gives us the visualization capability for talent. It gives us the capability for transition management of the talent. It gives the capability of planning and modeling of the talent, and that's where that acquisition fits in.
The third area is the new growth area which we call the social enterprise. And we see very often, everybody else start talking about this and they are 2 years away from what you saw today. Okay, 2 years away from having a realtime collaboration capability and people capability and Talents Management capability and learning capability and search capability into a single platform. This is not a work that we have started 3 months, 6 months ago. I mean this is started 2.5 years ago, and this is not, as Jim is suggesting, we have our strategy of not loading up everything all in one shot, this is one bullet at a time, who got us to here. And roughly 100 developers have worked on this over the past 2.5 years to get us to this point. And Saba is one of the biggest user of this system today. So we have plenty of validation. I can tell you, as a manager, as the leader of a business, I have plenty of validation of this is very, very strong product for us, and it's going to -- essentially it has replaced many systems and they way it's being leveraged today in our organization is nothing -- we never could have even thought about all the things that people are doing with it today. So lots going on there.
So that's our growth strategy. Jeff touched this morning around our geographical expansion, our commitment to China, our commitment to the ASEANs, our commitment to Europe. We have now as many people outside of the United States, we're close to as many people outside of the United States as we have in the U.S. We have major, major projects, distribution channels. We have grown the channel from some 40 participants to over 100 participant in our ecosystem, and these are very lasting establish. You can see the floor is now -- we were sold out by the partners. And IBM is, of course, is the largest sponsor, Accenture is here, Infosys is a partner, Satium is partner and the list goes on. We really have the best-of-class partners and ecosystem partners, both on the content side, system sides, best practices side, around the technology that we have here. Lots going on in terms of the growth and our go-to-market strategy.
Innovation, it's pretty straightforward. We have 3 priorities. We are #1 in learning and we're going to stay #1 in learning. We are going to challenge the Talents Management window [ph] in that category. We're going to keep innovating, and if we have gaps, we're going to acquire, but we are going to be an alternative and the best-of-class Talents Management system in that space. And we think the strength of the learning is only going to enhance us in that space because development and development process is core to Talents Management's strategy, we believe that.
And then lastly is this new upcoming emerging category of the social enterprise. And we feel that, again, with the strength we've had in the people management and the people processes, that's our core differentiators. We don't come from the world of information, we come from the world of people. And our angle to the social enterprise is not about how I'm going to make sharing information faster, better. It's all about connecting the right people, at the right time, in the right way with each other. So people is at the center of our design of this social enterprise that we're talking about.
So that's essentially the story and in terms of our innovation strategy, our growth strategy. They're all going to hang together and we've earned the right, as we've scaled the business to start looking at adjacency of these opportunities, and we're going through it. But a big portion of this, fair amount, going to be close to 1,000 person company by the end of this fiscal year. And we have expertise. It's not just the IT, it's actually having people who understand this market and can service this market and take care of the customers on a global basis.
And a much broader ecosystem footprint of partners, who also have been trained. I mean we have training here, I don't know how many people HP is training, 20, 25 people in this session, because they're implementing major project on our system in China. Accenture is training tons of people on our technology worldwide, because they're leading with our technology into the market, and they're taking our technology to the market, and the list goes on. We have really good relationship with Workday, with Kronos, both of those vendors. They're focused vendor. We have very little overlap with them. We work with them very closely. We have very transparence in the way we share leads and we share essentially opportunities in the field, so with both of these suppliers. And of course, we know their executives, and that goes a long way. We all know each other for a long time.
In terms of the -- what's the outcome that -- and we are putting this out there. I mean, I want to have a vision and a goal that goes beyond a quarter. It goes for 3 years, and we are going to build the company to last. We are going to invest in R&D. We are going to have a long-term product strategy. We are going to communicate that long-term product strategy to the customers and the market. And yes, we are going to put out audacious growth for our company to grow our business towards. We are going to have -- today we have 31 million users of Saba technology. Our goal is to have 100 million people that come to work every day and take advantage of the software and the technology we take to the market. Majority of those customers who go to our cloud to get access to the technology that we have built. So I have challenged our organization. As investors, as analysts, I want you all to know how we're challenging ourself, and what kind of a footprint we're trying to -- and what kind of a company we're trying to build and put together.
We like to see -- today, 80% of our business come from large enterprise, 17% come from mid-enterprise, and you can see that we want to evolve and morph and broaden the footprint of the customer base that we service. We launched the mid-market in North America. The test count positive, we are making progress. Therefore we are going to invest more growing our mid-enterprise business. 8 -- we have 8, 9 rep -- I don't know how many reps we've had last year added in North America. Jeff, it was about 8, 9 reps we started in North America? Mid-market, very good success and that -- about 10. Okay. And we're going to grow that business. The test was successful and we want to grow -- and we think that we can grow there. By the way, the size of the mid-enterprise for us, for the record, is between 2,000 to 7,000. That's what we call the mid-enterprise, with 2,000 to 7,000 employees and over 7,000 essentially on the enterprise customers.
We talked about geographical expansion. 35% of our business come from overseas. So business is fairly well-hedged geographically, and is going to be more so going forward. So we'd like to see a 50-50 split in about 3 years between our business inside the U.S.A. 25% today, partner influence deals. We want to get it to 35% over the next 2 years. So these are some core metrics. We laid out again our business strategy, the previous slide and now I'm laying out in terms of the set of metric that we are now driving the business to execute again. So now I think we would have a very important strategic company executing on these numbers over the next 2 years. Of course, with the intellectual asset, of course, with the people asset that we're going to have in this company, we would be an important long-term player in this market. We'd be an important long-term player in this market.
We continue to do extremely well in the large enterprise who are not going to the ERP vendors to get their solution. Okay. And we are an alternative, essentially, to all the ERP vendors or their failed projects. Many, many failed projects that they have attempted to use their ERP solution as we're going to do in the enterprise learning or enterprise Talents Management. And you can see that we have very strong referenceability. This is how, essentially, we sell. We want to have the #1 or #2 in the category as a reference customers, such as the project and then build on that. That's how we have grown the business today, and we're going have over, now with the HumanConcepts, we have over 2,100 customers that also have enterprise class deployment of their solution. I think the combination is quite, quite strong.
Again these are the 4 suites of product that's in our bag that we sell, and this is how it fits in. It's an important slide. This is how we -- it fits into the market and how we see it. We have qualification by the customer size. We have modification by the buyer in those companies, which we talked about the learning buyer, the HR buyer, the IT buyer or the line of business buyer. And then the segmentation and the social enterprise product is designed to give us a self-service, self-provisioning capability in the mid-market and SMB and, of course, in the mid-enterprise. We needed to have a much better product and a much better architecture. How long does it take to provision an instance of Saba People Cloud?
5 seconds. That's what it's supposed to do. I should be able to provision for any business an instance of the social enterprise in 5 seconds. You go to a website, you fill-out a form, we give you a URL address, you have your password, username, you have yourself a deployed solution.
Now the onboarding of the customers is the next phase of it. And we're building the onboarding inside the product. We don't want to build the onboarding of the product outside of the product. We need in order for this business to scale -- Jim Collins was talking about, I mean this is what entrepreneurs are looking for, an idea, but the scaling of the idea is as important as the idea. How do we scale it so that we can have hundreds and hundreds of customers taking advantage of the technology without having the infrastructure, a self-provisioning capability, an onboarding capability so that the customers can come onboard rapidly, and really help themselves to onboard? We're not going to be able to scale. We're not going to go hire hundreds and hundreds of consultants try to deploy this solution. That's not going to happen.
Now having said that, there are partners here that are developing vertical solutions around their People Cloud, because they believe that the social enterprise product can be verticalized and content could be embedded and best practices could be embedded, and that would be their go-to-market. And we will welcome them, but that's not something that we would do. We enable them to do it.
So this gives you our business strategy, our metrics in terms of what this business looks like 3 years down the line, the product line and how does product lines fit in through the customer and market segments and the buyer segments.
Now another important -- this is a timely -- I didn't know what, by the way, Jim Collins was going to talk about. I had a very general understanding of it. And this is something we do talk about, brand and culture, and we think that's something that, as -- essentially as a shareholder of our company, if you're a owner of our business, you're going to own. Whether you like it or not, you own our share, you own our brand and our culture. That's what it comes with. And we do spend a lot of time talking about and making sure that we are building a company to last. We are not showing up here today trying to sell our company. We're trying to build and grow our company.
We do have a set of ideas. We believe that this mix will only give -- already challenged the learning market and we transformed it. As I said, I used to be called the registration system. That's right where we started, and then it started to be that, "Well, you can't even exist. You have to be part of the HRIS." This what I've heard from 1992 to now every year, that we would never exist in the Talent Management space. And that's turned out to be not true, and we have built a category there and we transformed and help transform that category. And now, this new very important, very strategic space is the space of work. This is where Talents Management and Learning Management is going to come together with social. And people who come from the information space and search and managing essentially repositories of information, they have a very different view of what is social enterprise from the people who come from the people side of the equation.
By the way, when we talk about the people, we're not just talking about employees. It's about putting a process manufacturer, the designer of that product with the designer of the suppliers who provide the discrete part in the same network. Because without each other, they can't succeed. So we have a very different view of the social. It's not about, "Let me exchange this folder, and I'm done with it." It's all about the people who are on the 2 end of this equation. The people who have a requirement for the design, the people who provide and supply the design and how they're going to work and collaborate to design that product ultimately and own it and ship it.
So we are big believer that the world of work is a strategic. We want to be part of it, we want to transform it, we want to challenge it, and we think that's a very important growth area. And learning is going to get consumed by Talent Management. It's going to get consumed by a social -- all the social capability is going to be consumed by it. If we don't bring all those pieces together, we're not going to transform and impact the world of work. Again our promise is to create this notion of a transformative workplace where we create an engaging -- an environment where people can develop themself and is an inspiring place. And these are a lot of great work -- I tell that we have transformed our own business using our own product.
This morning, we have entire Saba saw that session that we delivered to that product. That's a very big deal. You don't know how many comments and emails that have got, streams that I've got from our colleagues worldwide, whether it's in our India office, whether it's in Germany, whether it's in London -- what it meant to them to participate to that -- what we saw this morning.
We do have a set of core values. I wrote these, by the way, values before I did not even have a product, because I wanted to build the company. And I believe that those are very important things in terms of attracting talent, doing business with customers, doing business with our partners, and more importantly, being accountable to all of you. That you are our shareholder. Accountable to our employees, accountable to our customers. This is the way we going to run this business. And it is going to have a set of stated core values, and we're going to stay the course and we're going to perfect it. By no means we are perfect. By all means, we have a goal, we have a set of intention and we going to work on it. Being there until we get to these set of values.
With that, I'm going to pause. Next section, I'm going to have Shawn jump in. Shawn Farshchi joined us first quarter of 2012, and we had an eye on him for a while. Eventually we picked him up after IBM acquisition of Core Metrics. Prior to that, we competed with him when he was at WebEx, and we had eye on him back then. And now, he's with us as our Chief Operating Officer.
With that Shawn, I invite you to present. Do you have a mic?
Why don't you use this?
Thank you, Bobby. All right. Actually I'm so excited because I just met with a bunch of customers, and you never know the impact of your work until you see 5 or 6 customers surround you and tell you how great it is. And so please excuse my excitement.
So just a little bit about what my responsibility at Saba. I actually -- my organization is responsible for everything that happens post-sales activities. So I'm accountable to making sure that when the -- when Jeff Carr and his team acquire a customer, what he gets to -- from that, right after they signing the contract, to what value we provide to our customers.
There are about 600 people in our organization, so it's product marketing, product management, engineering, operations, customer care and professional services. They all gather together in one organization. And again, that's what we call about handling customer from cradle to value.
One of the significance of this work chart is that I'm the accountable party for 2 things, 2 of many, but the 2 critical one. Gross margin and customer satisfaction.
A little bit talk about product strategy and from that, I think as Bobby has mentioned several times today, our -- we intend to transform the market that we actually create. And at the same time, we're going to create a totally new market with sale of People Cloud that we just introduced today.
From that perspective, we actually have 4 growth markets. We strongly believe that we have these products that address these 4 growth markets. You heard a lot about them today, I'm going to go through a little bit more in-detail information about these, and why they're so important. We talked a little bit about enterprise Learning Management system. This is the -- this is what we think is the most comprehensive and unified learning management system in the market today. We are the most advanced leadering space, and this product line actually has multiple components which addresses every aspects of a CFO life on day-to-day business. It's our Learning Management system and virtual classroom. It's our basically Social Learning. It's content management, it's test and assessment. The 2 companies we acquired last year, as well as the certification of compliance and also it addresses the extended value network or the extended enterprise. This is again the most comprehensive learning management system out in the market.
The second area is what we call enterprise talent management. With enterprise talent management, we have -- Saba has -- this is the most unified and also advanced talent management system in the market. It is a comprehensive solution that addresses the goals and objectives. It goes through the performance reviews, as well as the workforce planning, and most importantly, compensation. Again, it's a complete suite of talent management functionality within 1 product line.
Web conferencing, Saba Meeting, which we, again, was renamed. It's basically what I call the most innovative web conferencing product in the market. I should know it. I know actually every single product in the market. Extremely excited with the new release that we have, which actually provides, not only the capabilities for Saba Meetings, as well as, we call Saba Classroom, as well as Saba Webinar, but it could change the market, how people collaborate with each other. So I think that this is what we call the secret sauce associated with a realtime collaboration. What you saw today was the beginning of the next generation of truly, truly realtime collaboration product in the market.
And finally, the social enterprise, the Saba People Cloud. This is the only people-centric enterprise, social enterprise in the market. And we're going to talk more about it. It's the most comprehensive. Again as an ex-CIO, this is a dream come true for anybody who actually wants to have a comprehensive solution. One product addresses everything that an enterprise needs to do business with on daily basis.
We already have seen a lot of convergence in the market, between the enterprise learning and web conferencing. We have seen it, actually our product, the Saba Meeting, has been fully integrated and engaged and the customers were actually looking -- working with our -- very closely with each other. We see the same thing in enterprise talent management with a special social enterprise. So the -- actually the convergence is happening. So from those customers who actually looking at one cohesive product, that's where Saba People Cloud came.
We actually have about 4 specific product lines that we are actually marketing -- we have marketing in basically all growth markets. One is, as I mentioned, Saba Learning Management Suite. So Talent Management Suite, Saba Meeting and Saba People Cloud. Individually, all are fully integrated projects.
I want to talk about innovation, because this is the most critical part of what distinguish it between Saba and all of its competitors. I bought our competitive products in the previous life, so I can tell you with this strong conviction that what we're talking about here today is absolutely positive, make the biggest distinguishment between Saba and any of its customers.
The biggest secret of Saba, which I don't know why we have not talked about it a lot, is our platform. It's a very, very special platform, purposely built. This is the only platform in the market that actually has combined synchronous and asynchronous communication into one platform. There's no product out there that takes the dial tone of realtime collaboration into a transactional platform. And be so much integrated that one does not overshadow the other one versus the basically taking the whole resources for it. We are the only company out there which has that platform.
The extreme scalability of Saba is another best-kept secret. U.S. Army, 2 million soldiers are using our product on daily basis for training. You take a look at it via one of our customers, they have 20,000 concurrent users, going against the learning system in order to do what they do best. Again, if you are a technologist, you know that this is like very much big, tall order. If you are end user, you're business person, you know that you can count on it to be available for you to do your business. And if you're an end user, you know you don't have to wait. These 2 first items that I mentioned, this is the critical success factors for Saba.
Reverse architecture. We have created an environment by which that a lot of our customers, they use it to join locally and collaborate globally. We are the only platform that has the capability of providing regional services when they are tied together on a global basis. Again, that's the secret of Saba platform. It is extremely difficult to build. You ask any technology company to say how do they accomplish this thing, and nobody can do it with the scale that Saba does.
Reliability. It is basically how we can provide services with SLA, guaranteed SLA to our customers, money back guarantee. And we don't do that a lot. So when you take a look at it, again their confidence in the platform is substantial.
We are one of the few companies that have been fully certified for compliance and privacy. A lot of government agencies, whether U.S. or outside U.S., use our product for their private environments. The same thing with pharmaceutical companies or any company which actually has to have compliance certification. We are the only product that every time we release a product it goes through the full independent certification for security and compliance.
And now with Saba People Cloud, what we call extensibility. It's basically, we're going to provide SDK so that the third parties can actually write applications that would run on top of Saba platform and take advantage of our crown jewel, which is Saba Dynamic Profiles. Actually, we're using the same platform for integration of the companies that we acquire. Very straightforward, extremely fast. Any third party application that we acquire is going to get fully integrated extremely rapidly. Again, this is the secret sauce of Saba, and this is something that we want to make sure everybody understands, and we're going to be talking a lot about it, because this is we consider to be a barrier to entry. Of course, trusted. We are voted as one of the most trusted companies by Forbes magazine.
If you want to implement Saba People Cloud-type solution, which we -- again, social enterprise platform, you have to buy products from all these different companies, for example, in order to have one solution called Saba People Cloud. Again, as a ex-CIO, this is a nightmare that somebody has to get in order to get some of these products and try to integrate them together. With Saba People Cloud, you not only have one product that addresses all the functionalities that needs to be there, but also now you have created an environment which is the only environment that you can bring in not only your employees, your partners, your customers, all in one place. You have one central place that the profiles of every person that you deal with is in one location. It's not in your CRM, it's no in your ERP, it's not in your third-party, everything is one location. Again, thinking about every aspects of the corporations, from the marketing department, all the way up to the sales and support, they have one place to go in order to be able to contact the whole value chain. Extremely difficult to build because scalability is a critical part of it, and the company that actually has 2 million users, in one instance, can handle that.
We strongly believe that we have introduced a disruptive social platform. The type of innovation that has gone to Saba People Cloud you saw some of that, Amar [ph] was presenting it this morning, it's amazing. You take a look at it, the people profile, it is creating an environment, by which I have a place, I can go to take a look at every single person's profile in my value chain, in one location, and be able to leverage that for any activity. It is unbelievable. It is, it's the one that actually, again today, you cannot go to multiple system in order to grab the same information. And this is dynamic. Every action the person, that specific person makes, it gets updated automatically to the value chain. You never have an old data about an employee or a partner or a customer. You know exactly what they do on a daily basis.
PQ score. I think that's the best benchmark formation to get a person's true impact on the corporations. We saw this morning, when Amar [ph] was presenting about the PQ score. It is -- I tell you, we have seen it within Saba. People are working so hard to improve their PQ score. You can opt out. You don't have to be -- have that, but I tell you, being able to impact your visibility within the organization, your value to the organization is what we call bottoms up -- rather, top down goal setting. People now figure out exactly how they need to do, or what they need to do, in order to improve not only their career within the company, but also their personal satisfaction that their impact in the company is actually measured. And the algorithm is fantastic. Again, that's another secret sauce of the Saba's platform.
Dynamic network analysis. Again, Amar [ph] was just demonstrating it this morning. It actually truly visualizes the -- how the interaction goes within the company, and also find out if there are areas that requires management attention in order to help them. Same thing with -- we talked about realtime collaboration. We introduced the HD video. It's a multi-channel, realtime collaboration which actually has so much sufficient bandwidth the way you have manages that you can do VoiP, video and data across the globe. We have -- we are the only platform which has satellite servers which actually can provide concentration within enterprise on a local basis, but it also let everybody to be able to collaborate on a global basis. The only realtime collaboration platform that can provide that.
We already talked about social intranet. Again, this is going there replacing -- we replaced our Sharepoint. Not even one complaint from one employee that, "I miss my Sharepoint." Actually, now we have a lot more interaction of all of our documents are now live, versus just getting -- being put in a storage somewhere and nobody touches it again. Peter [ph], you can actually go to the detail of the videos, you can figure out content of the videos, you can search on it. This whole intranet has changed the way a company [indiscernible]. No more old information, no more looking for information. And you actually find the right information, the right people to give you an answer immediately with the realtime chat built into it, with the presence.
Again, unified search. This is my -- again, is my favorite, all right? This is not -- we put a technology inside our product that as what Amar [ph] was showing you this morning. You actually can search on the content, on people, people who create the content, and also every aspect of it, blogs and everything else. Extremely unique and extremely powerful. Again, this is comprehensively obsoleting the traditional intranet, let alone the way you actually do learning or you do actual day -- work in a day.
The other part, which is so critical for us, is customer care. As I said, we are very -- my accountability is that I get a customer satisfaction. My goal is to have 95% of my customers show that they are extremely happy with Saba. So from that, we call it Cradle to Value. We're going to do a holistic approach. As I said, the organization is from product definition all the way up to the customer service side of it. So that means that it's not a silent approach to the problem, it's going to be holistic approach. Everybody in the organization, whether it's an engineer on the floor, the customer service agent, is accountable for the customer satisfaction. It means that you don't put your colleague in a position that they are not as successful.
So today, we guarantee 3 lines [ph]. Very soon, we're going to be guaranteeing 5 lines [ph] reliability of our services. We think that the product that we're introducing it's a dial tone quality. It has to be there, otherwise it's not going to be adopted very easily.
We provide multiple level of services. Depending on the customer, we are so flexible that we can go from very basic service to extremely high tech services. Believe it or not, large corporations are asking for a lot more high tech services that I thought it wouldn't -- they would be actually looking for. So we are actually very flexible. And then it's our confidence that we can deliver those services the way they wanted it. We let customers choose how they want to use our services, consume our services and we deliver the way they want it.
Global support and local delivery. We actually have presence almost in every continent. We're going to continuously expand it, not only through our own employee, but through partners. We are very confident that we provide the best level of service, no matter where you are. We truly believe in local and global aspects of our product.
Our single platform, single data structure makes it extremely simple to enhance and upgrade and support. You will see that very soon, we're going to have only one version of our product at our customers or in our own data centers. Again this is the critical part because the amount of money we spend in R&D -- we have more than 250 engineers on daily basis working through our product. We want to make sure that they're all working on the latest, greatest thing. Again, innovation, barrier to entry, as well as what we call customer satisfaction.
Examples. We are actually introducing 2 new services. Our customers are now asking us to provide them with managed services. We pilot it, very successful, so actually administrative functions for their learning, for talent management, for events management, or from basically what we call the social enterprise moderation. So our customers are asking for it, we are introducing this new product. Actually during the summit, we're introducing managed services. This is something that shows our confidence how we're going to deliver service to our customers, because not only we have the technology, but we have the expertise to deliver these technologies.
Same thing with end-user support. Again, our confidence that we can actually scale. Just imagine IBM, 450,000 end-users, we are ready to handle their end-user support, with technology and with expertise, on a realtime basis through chat.
With that, I pass the mic to Elaine who's going to go through the financial numbers.
All right. Thanks, Shawn.
Well, good afternoon, everyone. I am going to start my presentations this afternoon, again with our -- wait, hold on. They did take all the Safe Harbor statement. So was going to start my presentation again with our Safe Harbor statement, and you know who the CFO is in the room, one that's presentation is started with the Safe Harbor statement.
But let me just take a few minutes to quickly introduce myself to you, because I am the newest member of the Saba exec team. I joined the company in January of this year. I am a CPA by training. I started my career at KPMG eons ago. And prior to Gaia -- I'm sorry, prior to Saba, I was with a company called Gaia Interactive for 4 years as a CFO and COO of the company. And Gaia is actually a consumer-based social network and a gaming-community company.
So coming to Saba, it was very natural for me to use Saba People Cloud. It was -- it's very natural for me, is intuitive. The way I see it is I go to work at our Redwood Shores office -- physically everyday to work, but I enter the Saba People Cloud virtually to work, though I do have to work a little harder on my PQ score.
And prior to Gaia, I spent 9-plus years with Ariba and experienced the transformation of a software company from behind a firewall to a subscription cloud-based business. And execution is hard, but success with this transformation yields tremendous value to our shareholders. So it's nothing new. It's been done before. And I actually believe that Saba has done most of the heavy lifting in this transformation already. So with that, let me jump into where we are with our transformation.
So Saba embarked on our journey of transformation to the cloud in fiscal year 2010. As you can see, and as expected, we saw a significant decline in our license revenue, more specifically from $25 million a year to about $10 million a year. At the same time, our cloud revenue grew very nicely, and we are expecting it to double this fiscal year. And as a matter of fact, the cloud revenue growth actually outpaced the decline in our license revenue. As a result, we actually experienced year-over-year total revenue growth, during the -- what I call the heavy-lifting stage of our transformation.
And as market demand continues to shift to the cloud -- as a reference, today, our cloud is -- from a pipeline standpoint, approximately 75% is in the cloud. We saw a significant growth in our cloud billings. From our most recent reported quarter, Q2 fiscal year 2002, cloud billings as defined -- defined as cloud revenue plus the change in deferred grew 89% from Q2 of fiscal year 2011. On a year-to-date basis, we grew 86% as compared to first half of fiscal year 2011.
From that growth, cloud deferred revenue steadily increased to $24 million at the end of Q2 fiscal year '12, an over 100% increase over the previous year. And resulting from that, cloud revenue steadily increased to about $10 million a quarter as of end of fiscal year 2012 -- sorry, Q2 fiscal year 2012.
Now shifting to margin. As our business continued to shift to the cloud business and higher-margin subscription revenue, we do expect to continue to expand our margin. As I call Shawn now our margin guy, I'm holding him accountable to this. If you look at our total revenue mix, for the quarter ended November 30, 2011, our subscription revenue was approximately -- well, was 63% of our total revenue. As we look ahead, we expect that percentage to increase in a 70% to 80% range. Our gross margin at the end of the November 30, 2011, was 63%. Subscription margin was in the high 70s. And if you focus on our subscription margin, we grew -- well we had a step-up function from the low 70s about 1 year ago to now in the high 70s range, and that is a 600% basis point.
Within the subscription margin, our cloud margin actually grew even faster at 2x the rate of our support business.
In looking ahead, just quickly summarize our product innovation. And yes, we are committed to continue to invest our growth with product innovation. We will continue to support our behind-the-firewall customers, even though we believe, over time, the market is going to pull our customers into the cloud. And we will continue to strengthen our Saba enterprise cloud offering. And more importantly, or equally exciting, is what we announced today, our Saba People Cloud product.
In addition to product innovation with Saba People Cloud, Saba Learning Management Suite, Saba Unified Talent Management Suite and now the HumanConcept suite of product that we're very excited about, we will also focus and invest in our go-to market expansion. Bobby mentioned internationally, we're going to continue to invest in Europe, Asia-Pac, Latin America. We're going to continue to strengthen our partnership ecosystem. Bobby mentioned that we grew from 40 participants to 100 participants, and that will only continue to grow. And the mid-market and the small enterprises, we are going to go, what I call, downstream in the greenfield, utilizing or taking advantage of our Saba People Cloud and Saba Enterprise cloud products.
I mean, as a CFO of the company, when we're talking to HumanConcept, the very first time I saw their demo, I wanted to buy it. I said, "Where do I sign?" Right? I think I can sell this product. And I'm very excited about it. I'm eager to kind of share and compare notes with you guys. It's some [ph] -- I have never -- it's such an easy sell. It's never that easy. Usually, I want to look at the terms and conditions. I want to negotiate the price. I want to make sure if I don't like it, I can return it. I want to make sure -- I saw the demo, I said, "Where do I sign?" And obviously, execution is key to success. But if we execute well, we will see growth in billings, we will see growth in revenue, and we will see growth in free cash flow.
Just quickly, I want to highlight my -- I can't hide my excitement over HumanConcept, obviously. This is Saba plus HumanConcept. From a product side, we have very complementary suite of solutions to our unified talent management offering. We add [ph] over 500, right, new talent management customers. We have a sales force that has the know-how and is dedicated to selling to HR. And obviously, what's the number, okay? So our purchase price is $23.5 million, all cash. It's approximately 2.2x of their total revenues ending calendar year 2012, and of which approximately 70% is subscription/recurring revenue.
In my last slide, I want to share with you how we think about growth, right? As the heavy lifting part of our transformation is almost complete, we still have a few more innings to go. But looking ahead, how do we think about our business? So on the left column is where we stand today. That's the first half of fiscal year 2012. The right column is how we think about the growth will take us to beyond 2012. From a subscription revenue, we're at 62% today. We're aiming for 70% to 80%. Gross margin is 63%. We can do better, 68% to 70%. Sales and marketing about 40%. We're looking at 30% to 35%, R&D, G&A, on and on. With operating margin, I think 10% to 15% or so. So that's our next target, and we're working hard to achieve that.
I think that is my last slide.
All right, well thank you, Elaine. I think we'll move right now to the Q&A session.
Okay. Question, please.
So my question is, you said that you're entering the managed service space for some Learning and Talents in different areas. Where are those resources coming? Did you hire that expertise? It is essentially partial process outsourcing. So are you providing that? Or are your partners providing that?
Actually, right now, we're starting with our own employees. As we are -- our customer service organization. They're basically, right now, the subject matter expertise, our best practices. So they're actually going to move to that position. We train our own employees to go through that, so they are again the best practices experts. So we only have like 2 customers that we provide these services. These are basically across geographies. Eventually, we actually going to be leveraging our partners. We are hoping that we actually have more and more our partners, basically, be there to do that. So we are starting it, making a business case for them to enter the market and help us.
Financial question. You put up that chart showing the margin targets in -- you said, 2012 plus. But also through the presentation, you talked about the growth versus profitability question, you answer every day. So what timeline should we think about 10% to 15% operating margins? It seems a low number relative to the potential of your business. And maybe that's a midterm goal. So can you put a timeline or revenue level on that? And then what do you think the structural margins of the business are?
I think, Elaine, you can jump in here. The -- we've always commented -- first of all, on a cash basis, the business has always generated operating cash. Just get that out of the way. In terms of the operating margin, we put up a 10% as next 12 months' goal, coming from where we are. It's the immediate kind of milestone that I'd like to see the company to hit, and then start moving that couple of points every year to get to the mid-teen -- or mid-teens, high teens, potentially, no more than 3 years. That's -- so these numbers, and kind of my operating plan for the business is 2013, '14, '15. That's how far we've laid out the go-to market strategy, product strategy, the operating plan to support it. And have kind of going through the process to get board authorization for a 3 years plan, as we speak. So we do 3 years planning. We actually do have a 3-years roadmap as much as we can, because some of these operating capabilities we need to build or expansion strategies -- I'll give you an example. One of the priorities for Jeff going into 2013 and '14 is a global inside sales team, because of the nature of the Saba People Cloud. We need to be able to scale that go-to market strategy with the inside sales team. It's going to take anywhere between 4 to 6 quarter to truly enable -- operationally enable such a capability. It's not a one quarter or one year investment, it's a multi-year investment. So we are going through that process leading up to -- you're looking at the kind of a 3-year window for this business. We hope to share more specifics in our call. And as we get authorization from our board for the next fiscal year, we'll give more details of what the run rate would looks like exiting 2012, so you can start seeing how these thing is going to accomplish. Questions please.
[indiscernible] It's a simple one as well, if I don't fall out of my chair. I haven't heard anything, say at the keynotes or thus far about pricing. Can you just specifically sort of Saba People Cloud. Can you talk about -- question about pricing. Can you talk about Saba People Cloud per person, per community, per network? How do external IDs come into play?
Sure, sure. So let me touch on this, but we can -- maybe Shawn, you can help me out. First of all, there are 2 types of pricing. There is the employee, or what you call internal versus external. So the -- you could have networks that you have anonymous users coming in. The pricing for anonymous user is very different than an employee, essentially, internal employee having access to the network. The basic price -- the base, base price with no discount is $150 per user, per year. That includes everything that we showed today. It includes our development or learning management system that's built into the social product. It includes our meeting product that you saw with high-definition capabilities. It includes goals and objective management, succession planning, all the social elements, both streaming, blog, wikis, workspaces, group management, all of that, plus the analytics that you saw, the D&A capabilities, all of those analytics are a big part [ph]. We think that we need to oversimplify everything. We don't want to go out there and have tiering on products. We want to have tiering based on the number of users. That's the way we're going to discount, essentially, looking at -- if somebody wants 5 users, that's the price. If somebody wants 1,000 users, they'll get a much higher discount based on that. Anything else, Shawn, you want to add on the pricing?
It's a great deal.
So it's just -- sorry, for one second. So if my company has 1,000 employees and I buy 1,000 at x price. The part you didn't answer is how many -- can I create external communities for my suppliers, my builders, my...
There's no extra cost for the root [ph] that I create, but then if I put 50 people from one of my customers into that community, how do I buy external IDs?
Right. So there are 2 different pricing, external ID pricing is different than internal ID pricing. So you could have a collaboration, let's say, a meeting capability. And you want to invite 5 of your tenured customers on a weekly basis to meet with you. You'll be able to give them IDs that they can get into the system, and your employees could be on the same infrastructure. The prices for the anonymous user -- external users, is essentially like 30% of the internal user price. It's significantly lower than the internal user pricing.
Is that on an annual basis?
Everything that I mentioned is at annual basis. Everything I mentioned is a single price, as I said, for the entirety of the product. You don't tier a product and break it up by different product capabilities. And as I said, the only differentiator is internal versus external. And the number of profiles that you purchased is how you do the discounting.
And you're using the term external...
Can I say something? The price information for Saba People Cloud is embargoed information. So I would like to ask all of you not to disclose it, please. Thank you.
James Holincheck - Gartner Inc., Research Division
Jim Holincheck from Gartner. Can you talk a little bit about who you see as a target buyer for Saba People Cloud? And what changes you're making from a go-to-market perspective, if any, to go after that target buyer?
Right. Good question. First of all, the social product. I had a chart up there earlier, as you might -- I don't know whether you saw, that the -- we bifurcate the market by the size of the customers. It's a self-provisioning product, so essentially it...
James Holincheck - Gartner Inc., Research Division
[indiscernible] in the organization?
Within the organization? What we have seen in the early examples of in both our initial training as well as our HR buyers are interested on those product. But really, the people who have come to the corporate visits to look at the product or spend on others are IT -- are the IT buyers. Because they're the one who consolidate a lot of the requirements for the social enterprise, and they make decision also for collaboration, realtime collaboration capability.
So that's, Bobby -- I would -- I just have one saying, and that is the IT buyers who are coming to visit us are coming with HR line of business and/or learning colleagues. So we -- again, it's that vector that we come with to the market from this people centricity or this HR background. So that's the unique twist here, as opposed to a jive chat [ph] or somebody else on the marketplace.
Eric Martinuzzi - Craig-Hallum Capital Group LLC, Research Division
Eric Martinuzzi from Craig-Hallum. My question has to do with HumanConcepts. I just wanted a clarification, and then I was going to ask a question. Elaine, I think you said $10 million for calendar year 2012. Did you mean 2011?
Thanks for bringing that up. It's actually fiscal -- calendar 2011. So when I talked about the purchase price, the approximately 2.2x of total revenues, that revenue is calendar year 2011.
Eric Martinuzzi - Craig-Hallum Capital Group LLC, Research Division
Okay. And then a 3-parter after that. Was HumanConcepts profitable? What -- the currency that you're using is cash, and as of your November snapshot, that would be cash in excess of what you had on your balance sheet back then. And then when is it accretive to adjusted EPS?
Go ahead, take a shot.
I'll take that. You can chime in, yes. So HumanConcepts, standalone, is not profitable. But we do believe there's great synergies both on the top line and the bottom line. And we do expect the transaction to be accretive in our fiscal year 2013, as early as Q1 fiscal year -- fiscal quarter Q1 of 2013.
Eric Martinuzzi - Craig-Hallum Capital Group LLC, Research Division
The balance sheet?
The balance sheet, you to wait until next week. You'll get to see the disclosure on the balance sheet. So -- but what you care if they have is we are, again, planning to pay for it cash. I'll leave it at that. Question, please.
It's P.J. [ph] from PC [ph]. Can I ask 2 questions?
Go for it.
Okay, one is a simple one. Any thoughts of offering any freebie version or anything else on People Cloud, just in order to attract more users and then like Premium?
The product is actually free for the first 90 days. So you can go into the sabapeoplecloud.com and ask for the product to be provisioned to you. Of course, they are going to validate this, because we don't want to go out and provision the technology for everyone and we issue the technology. And roughly, we're going to -- right now, what we will allow is 90 days' free access to the technology.
Great. Okay, the other question's a little bit more tricky. It caught my attention that you said that some companies are not really willing to work with ERP vendors. They prefer best of breed. So do you really believe that companies will give up on SuccessFactors or Taleo best-of-breed capabilities just because they are now dealing with SAP or Oracle, even though they might still be very autonomous companies within these and those.
I can't -- here's the confusion we see. What we know that -- first of all, SuccessFactor accounts are a combination of SAP and Oracle. So 80% of SuccessFactor accounts are actually Oracle accounts. And we need to -- it's long-term when you think about it. I have no doubt that there would be a sort of questions that's going to be asked from those suppliers, and we've seen that in the market already. And this, essentially, data comes from the public. It's not our data. That 80% of the customer base are PeopleSoft/Oracle installation. That's what our understanding is, in terms of SuccessFactor implementation. But I think there is a different sort of issues here, is that I saw the other day a chart that asked the top 100 CIOs, "Who do you think about when you think about cloud?" Well, SAP didn't show up on the top 5. Did not show up at the top 5. They look at IBM. They look at Google. They look at Salesforce. Oracle was at the top 5. But clearly, the SAP was not viewed as a top 5 cloud vendor. So I think they have a challenge, looking at cloud computing and being credible. And in our minds, SuccessFactor is not a credible cloud company. Neither the technology has evolved nor the acquisitions of technology -- a hodgepodge of acquisition technology, but it's enhanced the cloud architecture.
Could I enter that answer, Bob?
So just one clarification. So our data shows that 86% of SuccessFactors customers are non-SAP. Not all of them are Oracle, some are Workday and other ERP solutions. So almost 9 out of 10 are non-SAP shops, number one. Number two, they're on a subscription, and the subscription's going to expire. Number three, SuccessFactors itself had done 7 acquisitions in the prior 2 years before their acquisition, so lots of fluidity, lots of movement. We see plenty of opportunity there, but we're not naive about it. We know that SAP will try to wrap up the Plateau, the SuccessFactors customers, and we'll have an interesting game-on situation there. But we see lots of opportunity there, both from a Plateau learning and the SuccessFactors talent performance side of the house. As it relates to Taleo, our data there would show that -- now, they had a better mapping to Oracle/PeopleSoft, maybe 50%, just around it. And it's not exact, but guessing 50% or so of their business would be PeopleSoft/Oracle-type customers. So once again, they're all on subscriptions, all at some point of a expiration. So we see Taleo less in the marketplace than we've historically seen SuccessFactors/Plateau. But we definitely see some opportunity there as well. And well, I'll stop there.
Nathan Schneiderman - Roth Capital Partners, LLC, Research Division
Nate Schneiderman with Roth Capital. Bobby, I was a little confused on your answer to the question about margins, so I just want to ask a clarification question. Did you -- are you saying that you expect to achieve at least the low end of that 10% to 15% in your fiscal '13?
We've not provided any guidance. I was not confused about the way I answered it. I'm not giving guidance for 2013. We've given a range from 10% to 15% for what we've actually said, which was 2012 and plus. Stay tuned. It's coming to you very, very shortly. We are putting together the guidance for 2013. We're going to touch on it on the call next week. We're going to touch more on the call, as we finish the budgetary exercise for next year.
Nathan Schneiderman - Roth Capital Partners, LLC, Research Division
Okay. And then a question specifically about competition with Plateau. And I'm just curious, we've gone a quarter or so since the announcement of that acquisition. Can you talk to any changes you've seen in -- when rates are just the pattern of competition between yourself and SuccessFactors/Plateau, specifically?
Jeff, you can also jump in here. I can touch on a couple of them. We're in the midst of displacing them in a number of customers today. And there are customers here at the conference that are also have already displaced the Plateau infrastructure with Saba software. And we are seeing that -- similar patterns in some ways, in terms of the pipelines are still exist, and we still competing. It's not like it'll disappear. They're still in the market clearly, and we compete with them. And our win rate, which against Plateau remains quite high.
Jeffrey T. Carr
Yes. So I would add that they're, in our stack ranking, kind of our #3 competitor. But they are twice removed, right, with the double acquisitions. So SuccessFactors and then SAP, lots of turmoil. A lot of the Plateau talent is gone, has not been retained and kept. There was a leakage with the SuccessFactors acquisition, a talent leak. And then there was again another slight dissipation there after the SAP acquisition. But beyond that, there's a lot of confusion on kind of product strategy, that type of thing. So we see a lot of opportunity there. We had -- we did launch a marketing program, a Plateau-replacement program, to be disruptive as much as anything else and pick up a little business at the same time. We picked up some talent, post these acquisitions, ex-Plateau, some ex-SuccessFactors talent in the market as well. And we do see the Cornerstones and SuccessFactors more than we see Plateau these days in the marketplace.
Lisa Rowe [ph]. A question with regard to HumanConcepts. Did you acquire all HumanConcepts? Does it include OrgPlus? And what is Altula? Because they seem to be the official distributor of OrgPlus.
Yes, so I can answer that. OrgPlus was actually -- the product was originally called -- we switched the name to HumanConcepts once we -- back in January of last year, we sold off our desktop division. So, really, anything less than 1,000 employees over to Insperity. What Altula is, is -- we used to still have the distribution right to OrgPlus -- again, less than 1,000 employees -- in the international markets. We today are pretty much focused entirely on the enterprise. That's what HumanConcepts does. And as such, when this transaction took place, we no longer wanted the international distribution right to OrgPlus. So again, the name OrgPlus was changed really into HumanConcepts in the enterprise. And our product has different modules, which include visualization and a few other ones that I would be happy to show you later on.
So the long and short of it is OrgPlus is a product for the low end and still has that name, and it's not related to HumanConcepts?
And it was not acquired by Saba?
That's correct. We do not have a channel or capabilities below 1,000 employee channel. We do not distribute products, either ourselves or to our partners to that particular segment of the market. Our interest is over 2,000 employees.
Alan Greenberg, Wainhouse Research. You all were visionaries when you bought Centra some years ago. Then -- I cover the collaboration space. It was sometimes felt that you weren't perhaps keeping up with some of the other innovations taking place. And now, of course, you've delivered Saba Meeting. I wonder if you could talk a little bit about what does Saba Meeting really mean to you? If it didn't exist today, would you be doing exact same run rate, exact same business that you're doing now? Or is it actually helping to drive revenues? Maybe talk about what percentage of your customers -- or actually use Saba Centra, or are going to go with Saba Meeting?
Sure. I think -- Jeff, you can jump in here. First of all, we are seeing -- first of all, they are a meaningful revenue to us, especially with -- in our subscription business. But more importantly, we enable Saba to be in the cloud business by acquiring Centra's cloud infrastructure. But we weren't talking about them. People thought we were buying just the software. That was not really what we were buying. We were buying the entire infrastructure that was enabling -- and essentially, our expertise to be in the cloud business started by acquiring Centra. That was far more strategic to us to enable that infrastructure with the Saba technology, which we did. And since then, the team in Lexington was the genesis of our cloud business. And now it has grown. And with Shawn joining us, it's now a global. But everything started with Centra data centers enabling Saba infrastructure and then the list went on. So it is a meaningful revenue to us. The attach rates, especially to our Learning project, has grown substantially. So there are more and more customers today that we bundle the Centra -- the old Centra product. It's a key differentiator. When you are in the training/learning business, and you want to transform your business to Internet, you have to have a virtual learning environment. You need to have virtual classroom. And now we have that as a part of the learning management system. It's not segregated. There's nobody who shows up in a project and can show that they have a learning management system with learning -- virtual learning environment and a testing and assessment capability. We want to be able to complete that solution. And if you're in that business, you have to do testing assessment, you have to do virtual learning and you have to have a learning management system, and you need to be able to put all of this stuff in a single portal that you deliver either to your employees or to your value chain customers' partners or what-have-you. So we think that what was announced today is to take all of these integrations away from the training buyer. So I don't have to go buy all of these pieces myself and integrate them to run my business. We want to be able to have a cloud offering that has all of these pieces into one bundle. Want to comment on Centra?
Jeffrey T. Carr
Yes. I would just add a few points to that. I think our largest customers, for the most part, use it. So the ones that are using at least Learning, if not another module, Yum! Brands, Home Depot, IBM and the murmurs that went through the crowd today were real or that, in the audience, in the main ballroom, when we showed the product, the new user experience, the HD video, the panels, you could hear a little bit of a buzz, at least I could, up on the front row, going through the crowd of current customers who use it already who've been waiting to see the Version 8 product. And so it's -- when Bobby said we bundle it, we're selling at a full price. It's not a throw-in, it's not a packaging component, but it's something that our sales organization is trained to demonstrate, show, assume that an organization wants it, along with learning and now testing and assessments. And we're taking that in as package, and then we'll pull back from there. But we've kind of retooled, re-geared our sales organization. We've also been working on channels, some new channel distributors for Centra globally, and give you some specifics about that. But there's reinvigoration on that part of the business. And again, Shawn coming from the WebEx background, I think has -- probably has his point of view on this as well.
Well, I can tell you that stay tuned for a comprehensively new definition of unified communication, Okay? So you will see it in the future product announcements that is comprehensively revolutionizing what everybody else thought it was unified communication.
It goes back to the People Cloud strategy. We don't believe that you can deliver on the social enterprise without realtime collaboration embedded in it. And we don't believe you can have a social enterprise without a comprehensive people profile. And we don't believe you can have a social enterprise with modern people practices. We think all of these pieces are crucial for a solution. So we don't distinguish realtime collaboration anymore in the social enterprise. It's just there. So when you go and have a group you create, again, with a push of a button and create an event to meet the members of the group, it's embedded in the product. I don't go out of the system to schedule a web conference that sends a bunch of email that shows up, and I have to upload the content. It's just that experience is just too cumbersome for the users. They want everything to be in one place. Plus, they want the system to have a memory, so I know that this session happened. And I want to capture the whiteboard, the documents that was exchanged, the voices that was exchanged in one session. That's what the vision is, is to -- you cannot distinguish anymore realtime collaboration outside of the social enterprise. It needs to be embedded in that experience.
David Smith from Gartner. The growth of the cloud business, how was that faring among, say financial services or regulated industries? And in that manner [ph], how are you overcoming issues of data at rest and so forth?
The initial go-to-market strategy for the People Cloud, if you recall that chart that I put out, was actually not go after the largest companies, even though we are getting dragged in to do a lot of demo-ing and showing the capabilities to the largest companies to going after and really enabling the smallest companies. It's -- there's a lot of new strategies that we've deployed around these products. Couple of things. One, it's self-provisioning. Number two, you need to go to what we call a pilot phase before you can actually buy the product, because we want to onboard you whether your expectation is the lowest. And that, we think it takes a lot of friction out of the sales cycle. So enabling them differently. And then the third piece of it is we don't try to market this product to the largest companies where traditionally the enterprise product we've had has been sold to the largest company. We've taken a complete reverse approach, and we are doing it bottom up. We don't sell. We give the free product pilot adoption, and then you get it. And we've gone to the smallest of the companies, the self-provisioning environment and moving up.
We have time for about 2 last questions.
Hyoun Park - Aberdeen Group, Inc.
Hyoun Park from the Aberdeen Group. So it looks like you're really focusing on these mid-sized companies, 2,000 to 7,000 employees. And I was wondering, has some things fundamentally changed about this market space that makes it more appropriate to Saba? And are there any particular products that are pushing the mid-size interest, or is it more of a suite push?
Yes. We think that we want participate -- we think there's a growth market there that we weren't participating because of our enterprise product. So our enterprise product, traditionally as I showed, there was a data up there that most of our business was sold to the large enterprises. We feel that we needed to have a different product strategy to go after the mid-market. We've done some level of -- we've been selling into the mid-market now for 12 months and the experience was very positive. So we decided to double down and go after that but with a very different product, so that the gross margin impact is the one that we care about. Do you want to comment on the mid-market?
Jeffrey T. Carr
Sure. So what's kind of interesting, at least to me, is in the U.S. market, the North American market, obviously, much more competitive, more mature. In the mid-enterprise, we do see demand for Learning and Saba Meeting, Learning and Centra. Occasionally, maybe 25% of the time, it's the full Talent Management Suite, including Learning. We all hope that that adoption would be much higher at this point in time in 2012 than it is. But we do lead with that. We do try to go in and tell the story, paint the vision, show our capabilities. And then we will fall back and win business on a learning and collaboration basis. What is interesting is outside of North America, we lead with and we do extremely well with the full Talent -- Learning and Talent Suite in the mid-enterprise space. Different level of maturity competition maybe, but a much more -- much more of an inclination by organizations, whether it's Brazil, Asia Pacific, most parts of Europe, to go with a single solution for the learning and talent capabilities. So we have very interesting data on this, looking both U.S. versus where you do see more of this point solution mentality still, and outside the North American market, where you will see more of this adoption of the full suite. And when Bobby said we kind have been going after this for 12 months, we've really been attracting mid-enterprise-sized customers for 5,6, 7 years. But what we've done over the last 2 years is to set up a separate sales organization, separate type -- it's a different profile of a salesperson, different compensation plans, kind of a different individual who's interacting with those customers. A little bit more product-oriented and show the product -- doesn't come in with a big sales army to engage with the customer and that type of thing. So we've set up different sales -- direct sales model in the mid-market over the last couple of years. That's what we've doubled down on and expanded -- again, moving from our large enterprise roots in our background kind of down market. And we have some very interesting stuff now. We're going to play around with these lines, whether it's a 2,000, 3,000, 7,000, 5,000, we're -- we have different models there for next year. We're looking at Workday does. We're looking at what Kronos does. We know what our competition does. And so we'll tinker with the lines between SMB, mid-market or mid-enterprise and then large enterprise. And we do plan to have different models as we go into our new fiscal year, starting in June, for each of these market segments. And we do plan to be a force and a major player down market in places where we don't compete today, these smaller businesses, smaller companies.
Just getting back to the balance sheet, especially in light of the acquisition. So going forward, I mean, the stocks had a great run. Is it at the level now where you and the board would think about using it as a currency for further acquisitions or possibly to raise money?
Yes, I can't speak in behalf of the board, nor if we have a really statesman from the company. What I can tell you as a shareholder, I happen to be one. No, the price is too low. So that's the answer. And I believe -- I'm a big believer that it goes back. I think -- I'm very much on the stockholders' side. We are anti-dilution when it comes to using our stock now. I think we have to have enough discipline. We have shown enough discipline buying companies cash, paying for it cash and generating cash. And I think that that's a good gauge in terms of good healthy growth. We got to live within our means. And that's why we're going to stay within that discipline.
I know there's a lot of questions in the room. But just to stay on the timeline of the agenda, we're going to have to conclude.
Let's take a couple of more question. It's okay. Let's do a couple of more questions. Yes, please? There you go.
David Wilson from Elearnity Europe. What's the impact of the change in the mix of the business on your professional services revenues? Because one of the things I think we've looked at historically is that your ratio of services is higher than some of the other competitors, particularly, obviously, the SaaS cloud ones, say. Could you comment on that?
I don't know what particular competitors you're referring to. I don't know their numbers. They could be smaller companies servicing different markets, and that could be very well be the case. We typically have sold and serviced enterprise class, large, very large enterprises. And I cannot imagine the enterprise class projects that was not a statement work or a service level agreements that was not attached to the project. So we've typically have a company ready for the cloud, or even prior to that, it kind of was [ph], there was a Statement of Work that was attached to the project. By the way, we could have been a part of a bigger integrator, whether it's IBM or Accenture that we've played a role within their project executing this project. So that's been customer. In terms of the impact, the revenue of professional services still is growing. And we've shown growth of that business year-over-year. I don't exactly know the numbers year-over-year. But if you want to comment, Jeff, yourself, Shawn, on essentially the professional service and the cloud business. Very clear, most of our business today is cloud. Most of our projects are cloud-based projects. Now if you want to comment on the professional services attached to cloud?
Jeffrey T. Carr
Let me make a couple of comments, and then Shawn and Elaine can add to this. What I would say is that the average Statement of Work for a Saba project probably is dropping, and we're fine with that. And we're -- just speaking in ballpark terms, an 80-20 company in terms of licenses, subscriptions versus services revenue, and that's where we want to be. Where we do tend to have larger SOW, Statements of Work, are the bigger implementation projects, are government accounts, some of the big international MNC, the multinational corporations, maybe some of the European implementations, where lots of issues there with different countries, data privacy, that type of thing, and then some of our hosted or behind-the-firewall older customers. But in general, our projects are much more agile, much faster implementations, much quicker in the cloud model. Now we do work private and public cloud models at Saba. And when we -- so what I'm leading to here is when we compete the with the companies that I think you're thinking of or referring to, the public-cloud-type companies like the SuccessFactors or Cornerstone, we're very competitive as it comes to our services' costs or the cost of ownership of the product. And we've changed our methodology. We have different teams of people. We have different packagings. We productized certain our services. A number of things that we've done to change the way we go to market from being a cloud company. And it was the -- a lot of these were the right things to do. Shawn, you want to add anything to that?
Yes, actually. So you should expect the composition of our professional services revenue to change. Today, it's a lot of customizations. In the future, you see a lot of best practices. You're going to see a lot of -- what I mentioned earlier managed services. We see that our customers are moving away. And also our technology's changing. Would be a lot less customizations. It would be substantial, more staff augmentation. It's going to be a lot more, what we call high-margin professional services. And that's about because we are committed to customer success, and they're asking us to help them with that. The expertise that they want is basically -- now there's a huge appetite for that. And I think we are in the best position to deliver that. So you'll see a lot more of that.
Scott R. Berg - Feltl and Company, Inc., Research Division
Scott Berg with Feltl and Company. I have a 2-part distribution question. First is on the mid-market. You've had -- talked a lot more about mid-market over the last year, obviously, since the launch of the dedicated sales force. Can you put some framework around what we could expect that organization to look like, say in a year or 2? It's obviously a small component based on the current size. And then, two, around your partner expansion. Obviously, you've grown it from 40 to 100, according to the slides there. How do you get those new partners to sell your product predominantly? Because several of those partners have partnerships with other competitors of yours today.
Okay. So from a mid-enterprise standpoint, first question, what would it look like in 1 to 2 years, kind of the transition there. We doubled the size of the team there. These are dedicated sales reps in North America, year-over-year, FY '12 versus FY '11 for Saba, that's one of the comments Bobby made earlier. And we're looking at another increase for our next fiscal year once we approve our operating plan and our budgets and that type of thing. Whether we double or we just increase by some factor, we are winning there. The market has changed with consolidation, competition, that type of thing with some of the acquisitions. So we plan to expand a mid-enterprise, direct sales team presence. And we'll to provide more details down the road on that side of the house. In the non-North American markets, in Latin America, EMEA and Asia-Pacific, we're putting in small numbers of mid-enterprise sales reps in those markets where we've done extremely well with the large enterprise, high-end business and we're now following kind of the North American model there with this lag of a year or 2, which is kind of what we tend to do from a distribution standpoint. Second part of the question on -- from a partnering standpoint, our channels, our partners, I think the most -- some of the most important partners that are here this week I would list as Kronos, Workday and Accenture. They're all 3 new partners. They're all less than 12 months with us in terms of the partnerships, and we're just getting our go-to-market strategies, account mappings, pipeline building together, but we have major activity with all 3 firms. And all 3 of those organizations, especially Workday and Kronos, have extremely significant positions and market share in the mid-enterprise. What they like -- what Saba does for them is we help pull them maybe up into large enterprise accounts, where in the case of Workday, they're trying to go more upmarket to where we are. So there's a lot of good synergy there from a go-to-market standpoint. I just have time to pick out a couple of those examples, Kronos, Workday. And even in the Workday relationship -- Workday has now linked us with PwC, Deloitte, Towers Watson, a number of their partners who we've not worked with before. And we're having meetings with them this week about the potential of three-way relationships leveraging what they've built and leveraging our new relationship in studio integration that we have and things like that. So we've done a lot of work there that's not generating right now to the bottom line yet or to the top line yet, but it will and we're pretty excited about that. That's a big thing we're doing from a distribution standpoint, Kronos, Workday, Accenture, a few others, and there's some things we do in regional markets as well.
It's Michael Long [ph] over at Needham. So in terms of the HumanConcepts opportunity -- I guess you sized that in the install base. Could you talk about -- what is the current overlap right now with respect to the customer base and then how should we think about -- like what is the potential opportunity within the Saba base? And then another question kind of around the People Cloud. I guess I wanted to understand would that be an incremental dollar amount as you specified earlier that I don't want to refer to that would be an addition to what they're paying right now on learning? Or is that replacing that?
Saba People Cloud is not an upgrade to our learning management suite, and it's not an upgrade to our Talent Management suite. It's a different product. Now the customer choose to abandon one of our cloud service and adopt a new one, they can, of course, do that. But our intent here is -- had never been that this is being an upgrade to our existing. There have -- this is an additional product, a different product, a new product, and the customer can choose whether they want to stay within any of the suites that we offer. So that's the answer, that yes, we do expect incremental revenue both from a new product -- but more importantly, the product takes us to a market -- down market that we could have never gone with our enterprise product. So our goal is to now to instrument and enable the business to take this new product to the mid-market, where we did not have as strong of a product and a self-provision product. And this is the intent of the product. Now, Luis [ph], do you want to respond to HumanConcept?
Sure. As far as the HumanConcept question, we have historically done very well in the mid-market as well as the high-end enterprise. There is customers that we have in common, but I think the customers that are potential customers is even greater. And so again, I think that once people see what we bring to the table, there will be a pretty good uptick from the Saba customer base.
A large customer -- a large Saba customer that isn't [indiscernible], how much could they pay for...
What's the average selling price for the HumanConcept?
Yes. Again, it ranges because -- but I can tell you that a Verizon deployment was somewhere in the neighborhood of $1 million. It can range obviously from $50,000 to obviously all the way up to $1 million.
And of course, we looked at the pipeline very carefully and there were ample large opportunities both on the enterprise side. The overlap -- there were overlap, but there were also cross-selling opportunity. We have much stronger and a larger channel outside of U.S. that we can offer their product to, and we're looking forward to do that. Great, thank you very much for your time. We are again here for the next couple of days. However, we can be helpful to you, answer questions. Stop us. Stop us here in the hallways and more than happy to if you have any questions. Thanks, very much.
Thank you. We're going to pick up right now in the customer panel and several of the executives will be around after the customer panels to continue answering questions. So if the customers could please come up. We'll do a quick swap.
Jeffrey T. Carr
Okay. Folks, we're going to go ahead and start up, please. Going to go ahead and kick off the customer panel here, and I know this is a highlight of the afternoon or the day for you after hearing from Saba to have live touch points with some Saba customers. And so I'm very pleased to welcome 3 organizations here on our panel today. So the first is Deloitte. So with us from Deloitte is Peter, Peter Olguin.
Very close. Olguin.
Jeffrey T. Carr
Olguin. Okay, I'm sorry about that, Peter. So Peter is a senior manager of global learning systems at Deloitte and will tell you a little bit about the organization and what they're doing with Saba, his background, very, very interesting background, his connections with Saba going back many, many years. Next coming kind of from my right to left, we have Wayne Williams from SMART, SMART Technologies. And Wayne is the manager of learning systems at SMART and will share with you what SMART does with their -- not only their internal employees but their resellers and channels and their users out there in their ecosystem, very interesting stuff. And then finally, Katherine Frey from Coventry Health Care will also share her story and what Coventry does as well with Saba. So to kind of kick this off, what I'd like to do is have -- we'll have Peter go first and maybe come in and you can do it from your chair or just do it from up here and walk through your update.
Hello. That was pretty good. Usually, you don't get any response at all. So I'm very pleased. Okay, so I'm from Deloitte. A few things you should know about Deloitte, if you don't already know about us. A fairly large organization, $2.8 -- $0.8 -- $2 -- $28.8 billion in our fiscal '11, which is -- our fiscal year goes from June through the end of May. Our FY '11 headcount at the end of the fiscal year was 182,000, so fairly large. And we operate in 150 different countries, so a global organization.
The business lines that we have at Deloitte are audit, consulting, financial advisory, risk management and tax. So a full gamut of professional services. And our business structure is kind of interesting. And if you've never encountered it, it is a brand. Deloitte is a brand, but I don't work for Deloitte. In fact, there isn't anybody that works for Deloitte. We all work for our individual legal entities. So I work for the global entity. It's called Deloitte Touche Tohmatsu and the -- that's the global entity, the umbrella under which all the rest of the member firms operate. And there's a Deloitte LLP. That's the U.S. member firm. There's a U.K. member firm and so on and so forth. So that's our structure, kind of interesting. It's more like a club, not quite a franchise. We don't have a command and control structure. We can't push technology out and have everybody do it. We make recommendations and if people play nice, then that's a good thing. The -- and we, the organization that I belong to -- I run the learning management system, the global technologies -- the global technology, but the organization I belong to makes no revenue. So all the other legal entities are the ones that actually bring in the bacon. We, through a subscription fee, provide services to the member firms.
So now, what about the solutions we use with regard to Saba? We have 2 very long-running solutions that we use from Saba. Oh and Jeff mentioned by the way, I need to -- before I get into that, Jeff mentioned that I have a very long-running history with Saba. I was actually Saba's first technical trainer. So I used to work for Saba. Back in 1998, I was employee #77. So long-running history with Saba and then I switched over to the customer side of things in 2005. So I've been at Deloitte about 7 years.
And so this Saba solution was actually deployed before I started working at Deloitte. It was deployed in 2001. So we're going on -- we've been there 10 full years working with Saba. The audience is all Deloitte professionals worldwide, so that 182,000 and then plus some more use -- have access to our system. Languages we are deployed in are English, French, Simplified Chinese and Japanese. The reason we can get away with so few is because our international company language is English, which is -- in theory, it's English. In practice, there are certain countries that don't have such good English skills, but this seems to work okay. And then our FY '11 volume, 200 -- 2.1 million e-learning courses taken, so pretty darn good volume.
So what's our catalog like? Well, our catalog is, like I said, available to all professionals in all member firms, and it consists of both Deloitte-developed content, which is by far and away the most popular target because it's targeted, right? It's targeted at our practitioners, but we have a lot of other very popular third-party content that rounds out our catalog, content from Harvard Business School, SkillSoft, MicroMash and quite a few others.
So what's the business value of the solution for us? Well, the business value of this solution is we have this very large -- thousands of catalog items. As a matter of fact, one of the things we're doing now -- it's actually too big right now because it's too hard to find the relevant learning. So we're in the process of culling that catalog so it's only several thousand instead of nearly 10,000 items. But the fact is we've got this global catalog. Our member firms don't have to go out and hunt down effective training. We have a global catalog, things like leadership, all kinds of technical skills available to them.
Also, we have a single system of record. This is a very key thing for us. We have a single system of record for all learning transactions at Deloitte. And so this has a couple of effects. We operate a global organization. So people from one jurisdiction may need to know about the learning history of somebody else in another jurisdiction. So that's possible through the single learning management system. Also, we have a fairly robust mobility program, where people move from one member firm to another and they take their learning history with them. And then lastly, the global system means that everybody has access to the same reporting so that if you put all your learning in the same system, then the reports that you get out are very consistent. You can generate them quickly, so a big value for us.
And then the last one is economies of scale. We used to have -- before we implemented this global system, we used to have a learning system here, a learning system there, all on their own budgets. Now that we have a global learning system, it's much more cost-effective to run a single global system than a whole bunch of point solutions.
Another solution used by Deloitte is Centra. There's 2 years deployed listed up there because at first, it was really only a U.S. member firm solution. So from 2000 to 2005, the U.S. member firms were the only ones that used Centra. As of 2005, we opened that up to all member firms and so now, it's our global standard worldwide. The U.S. is still by far the biggest Centra customer, and they have a very specific need, and that's the middle bullet. The U.S. has a very specific need. Our -- the bulk of the folks that use Centra are chartered accountants, CPAs. And in order to maintain your CPA, you have to take a certain number of learning hours each year in certain fields of study. And tracking that is nightmarish and so Saba is a great as a system of record for that, for all the learning transactions.
But the other thing that Centra does is Centra allows us to deliver this vital compliance training virtually. So for example, if you have somebody who's a federal tax expert, he's in Washington, D.C. and he's got an update that's very timely that needs to go out to all our Deloitte practitioners around the country, then he can hop on a Centra session, and -- I'm not going to say a Saba meeting yet. It's too new. Sorry, Jeff. So he can hop on a Centra session. He can get 900 other tax experts on a virtual session on a Friday afternoon and impart this important information to them.
And I want to say you could do that kind of thing with a lot of other products as well. Why do they do it through Centra? There's 2 reasons: one is the interactivity, the fact that you can -- the audience members can indicate yes or no very quickly and easily. We have Live Meeting also at our organization for just general meetings. They don't use it for that because you can't -- don't get the same level of interactivity. The other reason is because of the reporting capabilities and the tracking capabilities within Saba. One of the requirements for the NASBA accreditation of these sessions is the fact that every 15 minutes, people have to respond. You have to prove that you're listening and not doing your email or something else. And so in order to do that, they -- the people that run these virtual classes put out questions every 15 minutes or so and get answers from the practitioners. And so they get double duty out of these questions. They get a knowledge check, so that they understand that people really understood the content. And then also, they meet the NASBA requirements so that the session can be certified as granting credits toward maintaining their CPA accreditation. So these are vital key things that Centra does for Deloitte. This is a mission-critical system that we couldn't function without, simply said.
And I think that should do it for me. Thank you, very much. You're too kind.
Thank you, Peter. Well, my company is much smaller than Deloitte is, so it's kind of overwhelming seeing how big that one was. My name is Wayne Williams. I'm from SMART Technology. And I guess we're best known as the world leader in the interactive whiteboard category, but we do make a whole wide range of hardware and software products that we sell globally. So everything we do, we consider global. We're in over 50 countries, and we're centered out of Canada, in Calgary in fact.
Traditionally, our customers have been in the education segment. So we're talking about teachers in the K to 12 and higher ed institutions, but we're building out our business offering quite quickly. Right now, we're sitting at about an 80-20 split, with our customers in education being the 80 side, and we forecast our business growth to equal that of our education growth in the next 5 years. This is because all the kids are coming out of school. They're used to seeing this technology, interacting with this technology in the classroom. They're going into the workplace and now they're not seeing it. So they're demanding it, and these next generation of workers need it in order to do their jobs effectively. So it connects the whole technology circle together.
We do use a channel of resellers to sell our products, our hardware and software. Our resellers also do sell training. But as a company, we do sell directly training to our customers, as well as our channels. And there's a lot of them. So we've sold about 2 million interactive whiteboards already, and it's estimated that over 30 million people will use those whiteboards over the course of a given year. So we have a really huge potential user base.
We use Saba Learning and Saba Centra. The learning is our LMS, we call it the SMART Learning Space. And what it helps us do is facilitate all our learning transactions. So we like to run a variety of delivery options. So the same content we like to dish out has optional [ph], self-paced, live online. This is like a webinar style with Centra. We have face to face, and we also have the distance or blended learning program that we're growing out very quickly. The distance part of this program involves the community forum inside Saba Learning so that assignments can be given out. There will be a trainer who moderates these forms. The participants or the learners can interact with each other, as well as ask questions of the trainer. All remotely, no scheduled sessions, just runs all the time.
We've been with Saba only about 18 months now, and we use it for all 3 types of training that we create. So we use it to train our internal staff, which is about 1,200 people. We also use it to train our reseller channel, which is about 350 companies around the world. And then we use it to train our end users out in the general public. So it's a service that we offer, a combination of free training, as well as paid training through the Saba platform.
When we converted about 18 months ago, we took over only 9,000 accounts, and we've grown that to over 50,000. We project that to double over the next year and depending on how well our marketing team does, even higher numbers than that in the following 3 years. We average about 8,000 courses a month. We try to make sure that we have continual learning going on. We don't want just one-off encounters.
We saw that our course completion rate, once we changed into the Saba platform, rose from 0.6, which means people weren't on average completing any courses. They were starting them and then dropping off right away. Now we've raised that number to 2.6 in just a short period of time, which is great because it's showing that people are enjoying the experience. They're getting some something out of it, and they're coming back to take more courses. Our user experience scores have increased over 300% since we adopted the Saba platform. Usability and ease-of-use is one of our key philosophies. And once we started using Saba, people started commenting that it was much easier than our other platform and they were really happy with that.
Our revenue has increased. To hear that stat, you might have to come to my presentation on Wednesday morning, but it's more than enough to offset what we pay for in the free courses we offer and generate revenue on top of that. So the system is now self-sustaining, and we're making money on it. So it's quite a nice setup that we have there.
And that is it for me.
Hi, there. I'm Katherine Frey, and I'm the Director of Learning and Development for Coventry Health Care. I'll just wake you up a little bit. Who out here -- out there has heard of Coventry Health Care before? Have any of you? Okay, more hands than I thought. Okay, good. I get the question a lot. Coventry does business as a few different names and health plans, and so it's often that we are not always as well known by ourselves.
So I'll just provide you with a few fast facts here on some very boring slides. Peter and Wayne have stood me up with slide presentations, so forgive me. I am a health care company, so it's not my primary skill set. But again, Coventry is a national managed health care company. Our headquarters are in Bethesda, Maryland. We own and operate commercial health plans, individual and government health plans, and we also have a specialty business division. So we got our start through purchasing HealthAmerica Pennsylvania and then grew through acquisition pretty quickly throughout the 2000 to 2009 time frame. During that time, we acquired First Health, and we went from 4,000 employees to 10,000 employees. So we call that, "The big fish ate the small whale." So we went through that mode and at the time, we did not have a learning management system. So just in the -- just on the heels of the First Health acquisition, we did launch a learning management system with another vendor and continued to use them until we just switched over to Saba 9 months ago.
We also have a large and growing government business division, as you can expect, knowing the health care space. We have increased our revenues both with Medicaid offerings, and we just announced the award of the State of Missouri Medicaid contract. And then also through Medicare, which does business mostly under the name Advantra.
We have 14,500 employees thereabout. We are in the process of hiring now to support our open enrollment season, so that number is going to start surging up as we enter the next couple of months. We have $12.2 billion in revenues and our assets of about $8.8 billion. We are traded on the New York Stock Exchange under the ticker symbol, CVH, and we are currently ranked 212 on the Fortune 500. So we're proud of that as well.
Just some additional data here. We do operate those health plans in more than 20 states. Most of them do business as the Coventry Health Care name, so Coventry Health Care Kansas, Iowa, Nebraska. We do have a few names that we have not rebranded under the Coventry name. So if we you are in Pennsylvania, it's HealthAmerica, PersonalCare, Altius. Those are few of the health plans. They are regional health plans, and our sweet spot with those health plans is the small to midsized groups. We have dabbled in having larger groups with more members, and we just find that that's just not where we are most successful. So our groups are small mom-and-pop shops up to companies that have a couple of thousand employees. We found that that's really where we have the best marketplace.
We do have over 5 million members, and we have arrangements through our network of -- with over 550,000 providers nationwide. And when I talk to people about the health plans we support, that's really the feedback we get is that we are -- we participate with the providers that people want to go to, the hospitals, the facilities, the doctors. So in the health plans and the regions that we have, we are the health plan to have because we have these arrangements with all these doctors that people want to go to.
And then we also have been diligent as we have acquired organizations, that we have one claims processing system. So that's been something organizationally that we have stayed true to and that we have that one system. So following acquisitions, we do for a time operate, as you might expect, on their system and we eventually do migrate them. That is not always as you can expect an immediate process, but it is something we've stayed true to.
All right. So again, here's my very un-fancy slide. We launched Saba in July of last year following a robust RFP process, where we were courted by all of the major competitors in the space. We again had used a competitor -- a lower-scale competitor for about 5 years, 3 or 4 or 5 years. And really, it was feedback largely from our training community that caused us to start the RFP process. The other system was just not user-friendly. We had a hard time tracking courses. We have operations trainers who do 6 weeks in some cases of introductory claims processing and customer service training, and they were just having a hard time navigating the system and doing what they needed to do. So we did select Saba, again, after a robust RFP process. We were impressed with the reporting functionality. We were impressed with the scalability of the system. We really also wanted a vendor that we could run SkillSoft and other TPAs through it as well. So we do have other organizations that we run through. The other system just did not have that functionality.
So we currently have 15,100 learners. That group does include both employees, and we also have contractors who use the system mostly for assessments. We want to make sure that we avoid co-employment issues with our contractors. So we do the training outside the system and just have them go in and complete assessments, confirming their understanding of the work that they're about to do for us.
We run our training in a couple of ways. We have certifications that we use for compliance training because we are a federal contractor and do -- and CMS is our largest employer group. We do want to make sure that we keep track of and keep good records for our compliance and ethics training program. So that's probably the biggest -- our biggest course that we run through with the 4 modules that make up our compliance and ethics program.
We also, again, have operations training so there are some new hard training that's facilitated through Saba, ongoing training. And then also -- and something that's of importance to us right now as we launch -- get ready to launch Talent Management is leadership development training. So that's the arrangement we have with SkillSoft to provide additional operations training but then also, we've also purchased Books 24/7 we run through Saba. We have executive summaries and the Leadership Advantage products as well.
So we want to be sure that, of course, we have the right people in the right places doing the right things, and having a good and healthy robust learning management system assists that. But also, we're looking forward to Talent Management to continue those efforts and give us some extra advantage in organized succession planning, organized modeling for ORC charting. We -- because we have different health plans that have operated in some cases in their own space, we have -- this will be the first tool that we're offering to our leaders that can offer some consistency around how they do those things. How they create succession in talent pools, and how they keep an eye on who the future leaders of the company are.
And I think that about covers it. Thank you.
Jeffrey T. Carr
Okay. Thank you very much, Katherine. So I think what you see here is we have 3 really different organizations. We did this intentionally. So Deloitte, very large global, started with Saba back in 2001, LMS and Centra. I think you mentioned 180,000 or so associates. Coming to SMART, Centra and our LMS solution. And even though it's a big brand, it's a small company, right, in terms of the actual internal employee staff, however 350 or so resellers. So the extended enterprise model, which is very fascinating -- and as Wayne mentioned, selling training. So more of a commercial use -- commercial model [ph]. It's a great use case. And then coming to Coventry, a good-sized company, so 14,000, 15,000 or so employees. Fortune 200 or so, but more of a U.S. model and very interesting use cases in terms of compliance and the things that they have to do to keep up their reporting and that type of thing.
So I think we have 3 pretty good models here and Roy did a good job of putting our panel together. So with that, let me go and ask a few questions and then I want to open it up to the audience. And I'll go -- I want to go pretty quickly because I know some of my colleagues here have sessions that they have to go to at the top of the hour. So we'll give you as much time as we can on this.
Jeffrey T. Carr
So the first question I will ask for the group is, we've seen a lot of consolidation in the market. We talked a little bit about that with our analyst colleagues here. And I was just curious about your thoughts on this consolidation and what it means in terms of the value of your learning or talent solutions being independent as part of an ERP stack and whether that would be like an SAP or Oracle or solution like that, and what your views are. If you don't like the question, then we can pass or go on to the next one. But does anybody want to tackle that? Kind of the -- what you see in terms of the innovation that might come from an independent provider as opposed to more of an ERP player. Anybody have a thought or point of view on that one?
So in our company, our training and professional development department is separate from human resources. And moving forward, we're seeing a greater need to combine our LMS with a talent management and an appraisal system. Right now, there -- we use another system and it's totally separate. So we've started actually talking with our HR department, and everyone sees the wisdom in purchasing this full Saba solution so that everything's integrated and connected. So we're starting to take steps in moving in that direction just because of the ease of back and forth communication between the systems and the whole integrated solution.
Sure. I mean, I'll just say that we, as an organization, do use several different vendors to provide our -- the full suite of products. And while we recognize that it would be, I think, easier to have less integration points to connect the data, so if somebody applies online, you move the data right into the system. There's no double entry. There's no double work. We are a financially conservative company. So I think making decisions about which applications we use and how they're going to work are decisions that we make carefully and that take a while for us to develop. So we're not going to be out there jumping ship, moving around really quickly. So it's going to be something -- if we do decide to go to more of a full integration model, it will be something that takes us a little bit longer.
Jeffrey T. Carr
From Deloitte's standpoint, we don't really have a lot of intention to consume the whole stack of technology. Centra and Saba are really important to us. What I do welcome though is the further integration of Centra and Saba so that they become essentially one product. That will greatly ease our -- some of our workflow issues when we're able to convert to that.
Jeffrey T. Carr
The next question is, what has your experience been with informal learning in your respective organizations? And can you describe maybe any examples there of what you've experienced?
So we have a very extensive informal learning plan that we've deployed. We run YouTube videos every couple of weeks for a variety of different audiences. So we run a channel for teachers and then we also run a business-orientated YouTube series as well, so much so that my guy who is at our booth right now, he gets stopped all the time because of the -- the reach potential there is huge. What we've started to do is build these YouTube videos into courses that we host in Saba and try to formalize the more in-social aspects. So we'll list a whole bunch of links inside a course. Say, "If you've already watched these links, go right into the assessment and prove that you've gained the knowledge, and then you can receive actual credit for the things that you've learned on the Internet." So we're expanding more and more all the time.
Sure. The importance of informal learning is hard to overestimate. Really, what our Saba system is used for right now is very primarily compliance learning. People go there because they have to to take a certain course. But what we are envisioning in the future is expanding that and having the ability to provide access to our practitioners to more informal learning. A lot of that has to do with culture. Deloitte is in a highly regulated industry. Our legal folks are very concerned about disseminating information that's not correct, widely. We're starting to overcome some of those cultural issues, and I see informal learning as really -- in our very near future.
I could say informal learning by definition happens all the time and every day at Coventry. We have mentors. We have peers. We have people helping teach each other, people talking about things. We have employees on the phone with members, who are learning something every day. We've started to try to be more organized in our social learning aspects. We've deployed some user forms through SharePoint with some limited success. Those entities and those bodies that you create in those spaces require maintenance, and they require management and oversight. So we've been dabbling in that just a little bit to get a feel for how we can best serve those needs and how we can help offer an online place for that learning to happen and how we can support it. So I would say we're still sort of in the beginning of stages of figuring out how to support that learning but have some -- the right people on our team right now to figure out how to do that better. And so I was intrigued to hear about the People Cloud today just to get a peek at that to see how that works.
Jeffrey T. Carr
Great, super. I think each of you did a pretty good job in your overviews of talking about some of the business drivers in your particular organization. But just to go a little bit further on the business, the primary driver or drivers behind your investment in learning -- in the case of Coventry, in Talent. And what I wanted to segue to is how do you measure. In your organization, how are you measuring these investments? Are you required to by management? Are you coming back and capturing value, doing some kind of a measurement process to show kind of the return in your investment?
Well, with Talent, we are taking a conservative approach, not a surprise. But we are rolling it out to a high-level group of people first. We've provided limited functionality, the profile being one of them, succession talent pools and then also the ORC chart modeling. And so we're going to roll it out and see how it works and let it kind of go on its own. Let it live by itself for about -- for a period of time and then figure out what our requirements are going to be for the next phase. So we're starting with a large group and then working our way down instead of just rolling something out to this group of executives, who in some cases have never used a tool for succession planning. So we've got a thoughtful and methodical approach, and we've gotten some good help from, as I understand, one of Saba's subject matter experts in the area of talent to help guide us through that process. So it's been an interesting process. So I think in terms of what our gauge will be, if we've been successful, I think we'll look at how many of our leaders have profiles they have completed and used. How many of them are showing up to meetings where they're talking about succession planning with their bosses with reports from Saba in their hands instead of ORC charts that have been done in Visio. So I think a lot more of it initially will be anecdotal until we get a better sense for how it's being used and how we can continue to support it.
Interestingly, we're pretty in much in the early days of really measuring this kind of thing. And I say that because at this point, we're just really counting things rather than really measuring business value. And measuring business value is really where we need to get ultimately, just not there yet. So at Deloitte, our organization has 3 very clear measures of success for my particular group that runs the learning management system in Centra. One is how many member firms are currently using Centra actively and there's a threshold number of sessions that they have to have. Number two is there is also an 80% goal. 80% of our practitioners need to have used the system in the course of 1 year. That's a goal that we have. And then also, the last one is an e-learning usage goal of -- we're going to increase by 20% from last year our e-learning usage. And of course, there is business drivers behind these numbers. The business drivers behind these numbers are, well, if you're taking more e-learning, then that means you are spending less time classroom learning and all this kind of thing is recorded. So there is business drivers behind the numbers, but we're little -- not really measuring business results yet. And I think that's where we need to get ultimately.
For us, it's pretty simple. We have 2 primary reasons that we roll out all this training and it's reach and revenue. So we need to reach as many people as possible. I did mention that we do offer a lot of free courses in our system, and this helps improve our adoption rate, which makes sure our products are being used and then helps that return sale for all of our other products. Obviously, revenue. We don't want to give the whole farm away. We do want to start building that PD continuum and getting more high-level skilled people out there so that they can help foster that whole community and continue that learning. But we also look at a bunch of quality KPIs, things like our completion rates that's showing that people are actually enjoying the training. We do a number of other assessments so that we can make sure that competency is high and people are understanding and be able to use the training that they've received from us. But when it comes down to my bosses, say, "Reach and revenue. Go out there and get it done."
Jeffrey T. Carr
A question, definitely for you, Peter, is about the global deployment aspect of a solution like this. And maybe just a little bit more good overview up here, just a little bit more about the challenges of rolling this out globally, some of the things that you've experienced on that regard. You did share with us that English is the primary language business in Deloitte. You've got 4 or 5 languages that you've deployed, but how about a little bit more about the global aspect of a solution like this from a deployment and the innovation standpoint.
Wow. Okay, where do I start with that one? The fact is our network is complicated because we don't have a command and control structure. And so one of the things that's been really complex is the fact that one member firm wants to do things one way and one member firm wants to do things another way. We've used the fact that we have a global system to try to corral some of that, but in some cases, there's really legitimate business needs for doing things different ways. And so we've had to try to take the system and make it do different things for different customers and that's sometimes been a little challenging and it's led to more customizations than we'd actually like to have. Another thing that's fairly, I suppose, unique to Deloitte because of our governance structure is the fact that -- technically, for instance with Centra, the version of Centra we're on, 7.73, we need to use a client worldwide. So it's a client that needs to be installed on people's computers. Well, some of our member firms have locked-down systems. So they don't have administrator rights. So they can't install this client on their system. And so we have to push out this client to their image build on their machine. Well, we don't have a command and control structure, and so we can make recommendations about what this builds should be but we can't force them to deploy these things on their machines. So a lot of our complexity -- I mean, it's really like as if we have 70 different Saba customers ourselves that we need to service. So that's a lot of our complexity and a lot of the challenge. One of the things that I want to say is that one of the things I like in the new Centra platform, Centra 8, and I'm looking forward to is to go from a client-based software to a browser-based client that requires no installation. That would be heavenly.
Jeffrey T. Carr
I thought you would have picked up on that this morning and so -- and knowing a little bit about the -- your environment there, I think that's going to be a great opportunity. So with that, let me stop asking questions, Roy, and open it up to the floor. And again, please raise your hand and you guys will run a microphone over?
Yes, and I think you only have time for one question still as we have to go through another panel, so...
Jeffrey T. Carr
Scott R. Berg - Feltl and Company, Inc., Research Division
Hi, Scott Berg. Quick question for -- get the name right, I think it's Peter from Deloitte -- is you've been a customer for 10 years now. I assume you're using the behind-the-firewall product for the most part.
Scott R. Berg - Feltl and Company, Inc., Research Division
What are your thoughts on moving to the new SaaS-based architecture that they have developed and released today?
It would be wonderful if we could. But right now, our environment is too complex to do that. And we've communicated this with Saba, and they've heard us. And we're working with them, but what we have is we have ingoing and outgoing feeds. We have the customizations I mentioned by the member firms. We have special provisioning we do from our Deloitte people data warehouse that -- a lot of rules that can't really be replicated in Saba right now. So there's a lot of complexity in our implementation that at this time requires an on-premise solution. But we're going to continue that conversation with Saba because we would dearly love to move to a SaaS solution if we could.
Jeffrey T. Carr
Just a quick Saba response, that is we're going to continue to try to make it attractive and viable. It could a private cloud model with certain capabilities that deal with data privacy issues. And clearly, the bigger issue would be to move any extensions, any customizations in the core product and where we don't into immediate roadmap. So we're having those kind of conversations with customers, like at Deloitte, right now. And at least, we'll try to provide that as an option and have those discussions. Okay. So is that it, Roy? No time for other questions? Okay, guys, sorry about that, but I hope it gives you, like I said, 3 different sides of customers in different industries. And I want to thank our panelists. So please, a round of applause for all 3 of them. Thank you, very much.
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