SaaS Roars Ahead – Part 2 – SAP buys SuccessFactors
December 4, 2011 by Yuval BriskerRight on the heels of my previous post – SAP announced that it is purchasing SuccessFactors, the second most prominent pure-play SaaS company after Salesforce.com, for $3.4B.
The most amazing aspect of this deal is that it represents a 10.3 multiple over this year’s revenue of $330M (a 63% premium over Friday’s stock price) and 8.5x over next year’s projected revenue of $400M (a 52% premium)! For comparison - most legacy on- premise software vendors are trading at 2-3x (4X at the absolute most).
This is the biggest transaction of its kind to date and represent the most significant validation of the transformative nature of SaaS and Cloud-based software.
Clearly, by paying a rich purchase price, SAP is embracing what it’s co-CEOs have stated publicly: that it must evolve quickly to be a Cloud-based software company in order to assure a long-term future for its business (and extrapolation – for any business).
Coming after last month’s purchase of RightNow Technologies by Oracle for an equally attractive multiple – it is clear that SaaS and Cloud-based software is truly coming into its own.
We agree!
Let’s just hope these companies integrate and invigorate their purchases not squelch them. The news the Lars Dalgaard, SuccessFactor’s founder and CEO is going to manage the company as a separate SAP subsidiary, be on SAP’s executives board AND be in charge of all their Cloud-based initiatives bodes well for this.
SaaS Roars Ahead
December 1, 2011 by Yuval Brisker“New research shows that over the past year, SaaS company valuations grew twice as much as valuations of legacy software companies rooted in the client-server world.”
An article from GigaOM highlights, with astonishing clarity, how SaaS companies have continued to show incredible resilience and pronounced strength in terms of valuation, in relation to the rest of the technology and broader market. According to the article, “SaaS valuations tower head-and-shoulders over…other…categories”. Those who follow the SaaS market know that this is not a passing fad, but a sustained strength that has been maintained for many years in a row.
Looking at the graphs in this article – we are happy with this massive public market validation for the decision that Irad and I made when we founded TOA and considered which technological and business path TOA should take. TOA is now the only provider of enterprise-SaaS solutions for mobile workforce management, serving tier one customers worldwide and processing over 65 million appointment annually, setting us apart from the field of legacy software providers with whom we compete.
We know that delivering Software as a Service is not easy or simple, and those companies who have exhibited the ability to do so and continue to grow aggressively over the years deserve the valuations that they are getting. We also know that there is no way to masquerade as a SaaS provider – you either are, and know how to do it and have all your DNA wrapped around it…or you’re not. There is no hybrid. Delivering value in this context is very black and white.
We are gratified that the long-term value that we know our solution delivers to our customers, translates directly into long-term value for shareholders.
Siri vs. Google – Now it gets interesting!
November 9, 2011 by Yuval BriskerI’ve been waiting for someone to shine a light on the fact that Siri is actually a hidden alternative to search, and that for the first time in 13 years – Google could actually be seeing some serious competition. Siri is, of course, Apple’s integrated iPhone app that’s deemed a ‘personal assistant’ but is really a form of sophisticated voice search…
Then I saw this article in Fortune…which spelled it out: Siri has the potential to be better than current search technology from Google because…:
“…Siri is more than voice recognition. It’s a form of AI that takes a few more steps closer to an app that could pass the Turing test. People are still uncomfortable with any AI application that could be mistaken for a human, but the Easter-egg answers Apple has snuck into the app defuses any potential discomfort, and in fact gives Siri a conversational interface that feels far more personal that Google’s spartan home page. It’s that conversational interface that poses the threat to Google.”
And there’s more in that article. Recommended.
What’s interesting is the fact that even when we think a company is unbeatable there is indeed always a path to beating the competition – even when that competition is a leader with the scale, breadth and depth of Google.
Now – I am not saying that Google is in any way ‘over’, but there is indeed something very different, friendly and smart about Siri that takes search to another level AND it also comes pre-installed in every iPhone 4S, which gives it instant market reach and captive users that give it the potential to be the first serious contender.
From the 50,000 foot view – Apple continues to amaze – continuously using the mind in a focused and determined way to outrun, outthink, outsmart, out-strategize the competition and never giving up an inch.
TOA’s Annual Cost of Waiting Survey 2011
November 4, 2011 by Yuval BriskerToday TOA released the Annual Cost of Waiting survey.
This is a Zogby survey which determines the cost people perceive that they have to wait at home for a good or service to be delivered to their home. The most interesting aspect of this year’s survey is its focus on the personal toll in dollars, pounds, euros and reals that consumers in four countries perceive the wait for the delivery of an in-home goods or service delivery is costing them from their own pay. In these economically challenging times – this is of particular concern.
Key Insights:
We commissioned the survey in the US, UK, Germany and Brazil, of more than 1000 adults per country – On average, 58% of respondents waited for in-home deliveries or services in the past year:
- 58% = total # of respondents who completed the survey, divided by the total # of completed respondents and # of respondents who opted out of the very first question (they didn’t wait)
The report found a potential $37.7 billion economic impact of the total time spent waiting for in-home services (like utilities, retail delivery, broadband, etc.):
- $37.7 billion = US average cost of waiting (per individual – $250), multiplied by the American Civilian labor force (based on 2010 US Census data)
The annual Cost of Waiting per individual is equivalent to removing the average American from the workforce for more than two full days:
- Cost of waiting per individual is nearly $250 annually in the US – based on respondent-reported values
- The average wait time for in-home services in 2011 was nearly four and a half hours (4.5) – two hours and 30 minutes longer than expected – and took place approximately three appointments per year
The impact of social media on the customer service process and a focus on preventative and real-time solutions will also be key to service differentiation:
- Our survey found that 55% of respondents would complain, either to their friends or social networks, if their service technician was not on time.
This year’s study showed a low consumer threshold for frustration – for every customer lost, it costs businesses $330 annually (based on respondent estimates):
- Improving customer service and investing in advanced technology tools can dramatically change a customer’s perception of a business – Of the respondents surveyed, 70% stated that they would recommend a company solely on the fact that an appointment was on time.
There has been a drastic shift in opinions of good customer service, as customers are taking note of each technician’s skill level as the main determinant of good customer service.
- 81% of respondents noted that the skill of a service technician as being critical to creating a positive service experience, and their initiative to go above and beyond, was among the most important aspects that positively impact their opinion of a company.
