MGI Research

Tuesday, Feb 19th

Last update12:00:00 AM GMT

Software-as-a-Service (SaaS)

From buzzword to a multi-billion dollar market, software as a service (SaaS) has grown explosively.

  • Will the SaaS revenue growth continue?
  • Can SaaS software move beyond departmental/horizontal applications and displace legacy ERP systems?
  • What are the limits of SaaS applications?
  • How should CIOs evaluate the risks and benefits of SaaS vs on-premise solutions?
  • How can on-premise software vendors successfully transition to SaaS?
  • How can CIOs effectively balance SaaS with their legacy application software portfolios?
  • What are the best practices for evaluating and implementing SaaS solutions?
  • How should SaaS companies be valued? What are the best SaaS valuation metrics?

These are some of the topics addressed in MGI’s research agenda for SaaS.

Companies covered include Salesforce.com, Kenexa, Success Factors, RightNow, WorkDay and many others - public and private.

Can Cloud-Based Billing Drive Business Innovation? 20 Questions with CEO of Aria Tom Dibble

Tom Dibble, CEO of Aria SystemsFor a long time, billing systems were regarded as necessary but unglamorous. However, in a world of rapidly changing cloud-based business, billing is gaining a new respect. Cloud and mobile are changing the speed of business and in order to stay ahead of the curve, business need capability to quickly react to changing opportunities. Subscription-based pricing models initially drove the renewed focus on billing, but increasingly complex, granular and adaptable billing capability has come to be appreciated as a vehicle for innovation and growth, - a key ingredient of any modern, 21st century business process.  A market for on-demand “monetization in the cloud” is rapidly emerging. To shed light on the business drivers and dynamics of the cloud-based billing market, we have invited the CEO of Aria Systems Tom Dibble for 20 Questions – an MGI Research Interview Series with leading technology industry executives, innovators, and investors.

Attachments: (For Subscribers)
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Download this file (MGI Research 20 Questions with Aria CEO Tom Dibble.pdf)MGI Research 20 Questions with Aria CEO Tom Dibble.pdf

Monetization as a Service - 20 Questions with MetraTech CEO Scott Swartz

Scott Swartz - CEO of MetraTechManaging billing and compensation calculations for complex business relationships has always been a challenge for enterprises. The modern business environment with its diverse set of participants, fractured data elements and increased pace of change - have all amplified the need for robust, scalable solutions in this area. Cloud computing and SaaS brought forth a possibility of making out-of-the-box complex business functions be widely available on the Internet as web services for the Enterprise. In a way, cloud levels the competitive playing field in this area, as even small and medium sized businesses can now gain access to highly sophisticated and flexible billing and compensation calculation mechanisms that previously were only affordable by the very large firms. The market for “monetization” solutions – systems to handle both the billing (revenue) side of the equation, and the compensation/settlement side is growing rapidly as companies seek technology platforms capable of supporting new business processes. To shed light on the business drivers and dynamics of this market, we have invited the CEO of MetraTech Scott Swartz to join us for a 20 Questions session.

Attachments: (For Subscribers)
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Download this file (MGI Research 20 Questions with MetraTech CEO Scott Swartz.pdf)Monetization as a Service

System of Record in the Cloud - 20 Questions with CEO of Intacct Robert Reid

Robert Reid, CEO of IntacctThe midmarket enterprise applications market is undergoing a massive transition from legacy on-premise solutions to on-demand software as a service (SaaS) offerings. As with any technology shift, market leaders of the past are under threat from innovative upstarts. Silicon Valley-based and privately held, - Intacct is among a fast growing, next generation software vendors with a unique focus on small and midsize enterprise financials. In a 20 Questions session – an MGI Research Interview Series with leading technology industry executives, innovators, and investors, - Intacct CEO Robert Reid discusses how SaaS-based solutions enable small and medium sized companies move their financial system of record to the cloud.
Attachments: (For Subscribers)
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Download this file (MGI Research-20 Questions with Intacct CEO Robert Reid_fnl.pdf)20 Questions with CEO of Intacct Robert Reid

SAP Buys Ariba – A Fallen Angel Finds an Exit


10 Year chart of Ariba, SAP, OracleSAP’s intent to acquire Ariba underscores a fundamental change in the direction of SAP. This research report reviews opportunities and risks created when combining Ariba with SAP. We analyze the price paid (did SAP overpay?), explore the implications for SAP and Ariba customers, and detail the impact on competitors and shareholders.The bottom-line for SAP customers and investors is not nearly as encouraging as it is for SAP competitors.
Attachments: (For Subscribers)
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Download this file (MGI Research - SAP Buys Ariba - Fallen Angel Finds an Exit.pdf)SAP Acquires Ariba - Fallen Angel Finds an Exit

SaaS Valuation 2012: What Price is Right?

Our growth-based valuation approach to Software as a Service (SaaS) companies has received significant industry recognition and use. Five public SaaS acquisitions confirmed our SaaS valuation model last published in March of 2011.  During 2011 and 1Q2012, SaaS companies maintained and even expanded the valuation premium gap to the rest of the software sector.  Even though acceptance of SaaS among business and IT buyers has grown meaningfully in 2011 and Q12012, production use indicates a very early stage of adoption. As the market matures, revenue growth remains the dominant valuation factor. Other SaaS valuation variables such as cash flow growth, expansion in GAAP profitability, and a premium for dominant market share are likely to gain prominence by 2014-2015. This Research Note provides updated valuation benchmarks and a revised SaaS valuation formula. It reviews key operating data, risks to SaaS valuations, equity market performance, and MGI’s outlook for SaaS M&A. Key issues include:

Attachments: (For Subscribers)
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Download this file (MGI Research SaaS Valuation Apr 2012.pdf)SaaS Valuation 2012: What Price is Right?

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