The majority of 22 publicly traded software vendors demonstrated solid year-over-year (YoY) quarterly growth from Q2 2009 (see Figure 1).   Every SaaS vendor in the Software Insider Index® drove 14% to 26% growth (see Figure 2) despite the pick up in on-premises license sales.  Highlights for the 2010 CY Q2 2010 results:
On-Premises Trends

• JDA Software (59.19%) and Manhattan Associates (32.93%) continue to ride the CPG, retail, and supply chain investment wave.  Manhattan solidified a significant turnaround in 2 quarters of growth.
• Large mega vendor bellwethers Oracle (12.95%) and SAP (12.34%) showed significant double digit growth.  SAP's license gains of 17.31% demonstrate a turnaround in the sales team.  All indications point to BOBJ and the non-EMEA regions driving sales growth.
• The SMB vendors shared mixed results with Epicor (8.68%), Lawson (5.81%), and CDC Software (3.92%) continuing to grow key license revenues.  While IFS total revenue gains were low in the 1.40%, IFS grew license revenue by a whopping 19.77%.
• Unfortunately, other SMB vendors Exact (-4.99%) and Deltek (-7.07%) showed negative revenue momentum.  These vendors not only lost ground in license revenue but also saw declines in traditionally stable maintenance revenue.
• Maintenance fee growth remains healthy for most vendors as new programs to show value to customers gain traction.

SaaS Trends

• SaaS vendors continue to grow in mid to high double digit growth rates for subscription revenue. SuccessFactors (26.81%), Salesforce.com (24.78%), and Concur (20.49%) moved past 20% year over year quarterly growth.
• Ariba ($93.2M) nears the $100M per quarter revenue benchmark as Blackboard ($101.5M) continues to grow from this achievement in Q1 2010.
• RightNow (19.58%), NetSuite (16.83%), Ultimate Software (15.67%), and Taleo (14.63%) all showed solid quarters of growth, though these growth percentages show slight declines.

Figure 1.  Software Insider Index® On Premise Vendors: Q2 CY 2010

(Right click to view full image)

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Figure 2. Software Insider Index® SaaS Vendors: Q2 CY 2010

Despite the rocky recovery and potential for double digit recession, pent up demand drives the current on-premises vendor revenue growth.  Organizations continue to invest in technology despite the lack of job creation.  However, on-premises vendor gains have not impacted SaaS vendor growth.  In fact, most organizations continue to adopt Scenarios 1 to 3 in their Cloud/SaaS strategies. As hybrid models reach tipping points, successful apps strategies must focus on SaaS integration, SOA adoption, and information governance.