Shortly after posting eVapt’s profile, I ran into this article.

Basically it’s an article explaining how Micro ISVs can survive the SaaS game. Essentially Gord from ElastX argues that the biggest problem for Micro ISVs is the subscription model. In particular, the subscription model requires users to be committed before using the software. This means customers are required to pay their monthly fee, before using the software. In addition, even though most SaaS vendors operate on month-to-month fees; these fees are generally built into contracts that last several years. So even though customers are paying per user per month, you’re locked into this one vendor for the duration of a year or two. This is the type of commitment we’re talking about. It’s not exactly Pay-As-You-Go in the purest sense. And as a result of this fear of committment, some vendors will see high attrition rates.

Gord explains that Micro ISV’s have to adopt the same pricing model as cell phone carriers. Here’s an excerpt:
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This is another entry to our ongoing series of SaaS company profiles. To view more profiles click on The Players.

eVapt is an Austin based billing solution targeted at SaaS Providers. The solution is centered around the ability for software vendors to accurately track and analyze usage of their applications. Being able to ‘meter’ your customer’s usage behaviour is advantageous on many fronts. Sales reps can better tailor and up-sell subscription packages based on a customer’s usage. With such utilization data, development teams could prioritize features to improve the application. More importantly your customers can even monitor adoption rates and employee utilization.

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Darren stumbled upon a very nice article from Rick Sherman on SeekingAlpha.com called On-Demand (or SaaS) Index: Fundamentals Matter. I have to say, from the first paragraph this article is enaging:

“The On-Demand Index [ODI] is down 18.55% YTD. This compares to YTD performance: iShares S&P GSTI Software Index Fund (IGV)  -7.69%, Dow -14.46%, Nasdaq Composite -12.69% and S&P 500 -12.94%. But the stocks in the ODI vary widely from a 24% YTD gain to a 69% loss. “

The article is a great read, the point it makes is timeless, and I agree with it 100%; and I hate when people don’t pay attention to this age-old adage. The adage being, the name or making something “cool” doesn’t matter; what matters is the whole package: products, revenue, earnings prospects, management team and competition. SaaS is something “cool”, but each SaaS company is different. Don’t invest in a SaaS company just because it’s SaaS. Check it out first, do your homework as Rick Sherman says. And to prove it: the on-demand index has gone down over the last year. Only 4 of 18 stocks on the On-demand index had a positive return last year (CRM, KNXA, TZIX, ULTI). And even the plus producers like CRM need to be researched. Critics say CRM is over-valued. As the article points out: the price-to-earnings ratio of CRM is 110 times the next year’s projected earnings. MSFT’s is 13. CRM is either “built for perfection or acquisition”.

Another reason why this article was great: there’s an On-demand index! Click on the image above to expand.

Phil Wainewright from ZDNET wrote an article recently titled Google’s culture ‘not fit’ for enterprise apps. It basically follows through the blog post of Sergey Solyanik from Microsoft. Sergey worked at Microsft since the late 1990s, quit and went to work for Google, realized Microsoft is better suited to him, recently re-joined Microsoft, and wrote this blog post on why Microsoft makes better career sense for him than Google.

Sergey’s post is interesting and offers a number of things that Google does better than Microsoft, such as peer-based reviews rather than manager-based reviews. And of course Sergey mentions things that make Microsoft a better workplace, such as the fact that everything Google makes is about “coolness” first, and quality second. At Microsoft, Sergey argues, products are made to be sold, so quality comes first, “coolness” second.

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Oracle, founder & CEO Larry Ellison believes SaaS is not profitable enough. Here’s some excerpts from an article I read:

“We continue to get better at it and grow the (on-demand) business,” he said in an earnings call yesterday. “[But] it’s not really growing any faster than our overall business.”

“If you look at the leader, Salesforce.com, they don’t make very much money and they’ve been at it for almost 10 years”

“It’s hard to point to any software-as-a-service provider that’s doing a good job of improving its profitability,”

“… the entire on-demand industry has to get better at making money in selling on-demand software.”

I decided to do a little digging to uncover the facts.

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As many of you know, Bill Gates will be stepping down this week from his day-to-day duties at Microsoft. The blogosphere has been going nuts about it. This is for sure the end of an era. Some have even gone as far as saying this is the end of the on-premise era. Ironically enough, Gates is still going to spend time working with Windows Live division (the part of Microsoft that competes with Google).

Despite all the criticism of Microsoft being stagnant and old, I don’t think any of us can deny Bill’s tremendous accomplishments and impact as a software entrepreneur.

Here’s a round-up of the coverage for Bill’s retirement.

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An update on the Google/Salesforce announcement. Just released today is an Apex toolkit for Force.com developers. This toolkit will allow developers to build applications which integrate CRM and Google Apps Data. The type of Google/Salesforce mashups we’ve been seeing so far have all been s-controls built with Javascript. But this announcement is different because it’s Apex code that runs in Force.com’s managed runtime. So instead of the integration happening on the client side (the browser); the application integrates on the server side.

What this means is that we’re literally seeing 2 clouds talking directly to each other. With the integration on the server end, developers can build applications/mashups without worrying about browser comparability. One of the major gripes about building in Javascript is that each browser has their own little quirks. Another big advantage is performance. With much of the processing happening on the server end, users don’t have to wait for their browsers to finish processing and displaying data.

Click here for more information

[Gokubi via SalesforceWatch]