Ranjit Nayak

Sector Overview: SaaS

This list identifies a small set of publicly traded SaaS companies.There are many more mid and small sized private companies. If the SaaS model truly lives upto it's promise, we should see a lot more organic growth in 2009. Mergers should happen too if a rapid growth is necessary to compete in fragmented markets. The big software players would resort to acquisitions if they see SaaS markets grow as rapidly as the Gartner predictions in Jan 2008 suggest.

1. By 2010, 15% of large companies will have started projects to replace their ERP backbone (financials, human capital management and procurement) with new service-oriented architecture [SOA] and SaaS-based solutions).
2. By 2012, business process management suites (BPMSs) will be embedded in at least 40% of all new SaaS offerings, as providers strive to make business processes explicit and mass-customizable by their customers.
3. By 2012, more than 66% of independent software vendors (ISVs) will offer some of their applications optionally or exclusively as SaaS.
4. By 2010, 85% of SaaS vendors will offer uptime service levels of 99.5% or beyond in standard contracts, as well as performance SLAs.
5. By 2009, 100% of Tier 1 consulting firms will have a SaaS practice.

SaaS Stocks Up Nearly 15% Since July

It is very unclear as to how Wall street and investment professionals are classifying SaaS companies. The MSPMentor list includes Amazon, Dell and Ingram Micro. The natural questions are how much of Amazon's retail business is SaaS; what portion of Dell's revenue comes from software ; and what fraction of Ingram's revenue coming from the managed services?

A follow on question is- when will Wall street classify Fedex Kinko's as a SaaS offering? After all Kinko's provides a printing service online. When will Wall street group SaaS companies with business process outsourcing companies which deliver services using online software.

Ranjit Nayak

Top 8 SaaS Stocks

At the risk of being an iconoclast, I feel some other companies need to be listed in the SaaS group. Why should'nt Google or eBay belong to this group. After all they provide services like search and auction on the internet?

I do agree that this group can weather a recession better than other software companies.