Recession Proof Software? Try SaaS, Managed Services and Open Source

Jan. 15, 2008 9:41 AM ETCRM, N, NOVL, RHT1 Comment
Joe Panettieri profile picture
Joe Panettieri
77 Followers

Conventional wisdom says Software as a Service [SaaS] companies like Salesforce.com (CRM) and NetSuite (N) will perform well during a recession. Some pundits even think SaaS providers are immune to a recession.

I wouldn't go quite that far. But I do believe technology investors should focus on three markets in 2008. They are SaaS, managed services and open source. Here's why.

If the economy slows, chief information officers [CIOs] will surely take steps to delay or even cancel big internal IT projects — particularly complex application development efforts. In stark contrast, SaaS offerings from Salesforce.com and its rivals provide CIOs with predictable monthly costs and on-time deployments, and the risk of hidden costs is very low.

With these benefits in mind, SaaS remains a hot topic on Wall Street. Big software companies will surely follow Salesforce.com into the SaaS market. I continue to hear, for instance, that Symantec will launch the Symantec Protection Network in a matter of weeks.

Meanwhile, SaaS will continue to converge with managed services, as technology consultants meld their network management capabilities with application deployment expertise.

Peter Sandiford, CEO of Level Platforms, describes this convergence of SaaS and managed services in a recent blog entry for MSPmentor. The managed service industry is filled with small software companies that are hiring talent and mulling initial public offerings in late 2008 or 2009. Keep a particularly close eye on Autotask in Albany; Level Platforms; Kaseya; ConnectWise and N-able, just to name a few.

We're also seeing the convergence of open source with SaaS and managed services. SugarCRM, for instance, is a fast-growing application provider that ranks among the top 10 open source firms you should be watching. In fact, SugarCRM offers its software as either an on-premises or on-demand solution. Watch for an IPO in late 2008 or 2009.

This article was written by

Joe Panettieri profile picture
77 Followers
Joe Panettieri is a tech media entrepreneur and angel investor. His primary focus is co-founder, executive VP and content czar at After Nines Inc. and ChannelE2E (http://www.ChannelE2E.com), which guides IT service providers from Entrepreneur to Exit (E2E). Panettieri also co-hosts Tech News Today (a leading video podcast) each Tuesday. Panettieri has co-founded, built and sold multiple IT media brands -- including MSPmentor, Talkin' Cloud and The VAR Guy. He previously held senior- and executive-level posts at CMP Media, InformationWeek, Penton and Ziff Davis Media. He has hosted IT conferences and CIO events worldwide, interviewing technology leaders like John Chambers, Michael Dell, Bill Gates, Mark Hurd, Eric Schmidt and Meg Whitman along the way.

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