Perspective, Pontification and Propoganda about Entrepreneurship and Venture Capital, brought to you by David Hornik of August Capital.

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https://me.yahoo.com/a/VHRMIAV8uOm.x8M9LVnzQcfsWhg-#b1831

while at times i think we are shouting into a hurricane, i agree that enterprise software is not dead, it just takes some creativity and different approaches as you outline. my thoughts are at http://bostonvcblog.typepad.com/vc/2007/09/the-rebirth-of-.html a post from late 2007...

Anonymous

Thanks David, for this great article. I dared to cite you on my own article about it, explaining why I totally agree to you and might add: web 2.0 software isn't dead quite yet as well ;)

https://me.yahoo.com/a/giY02pUTz_W4melgFWr8CNlrkH8-#4d21f

David, thanks for the positive blog. So much bad news out there, perspective is important. Price Optimization and Supply Chain - take a look at KSS and FuelQuest - both fit a hot area (the Energy business) that is against the trend in the market.

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There's definitely a trend within the new media technology space to write off enterprise, and I think its because these guys are just building what they know, and few have worked in big companies with SAP :-)

That being said, I think its important from a Sales perspective to distinguish between cost ROI and productivity ROI.

As a sales/bizdev guy in this market I'd be shooting for the cost ROI if I could. It would be easier to convince an enterprise to move to a SaaS model at a lower cost, than it would be to convince them to move from one SaaS service to another just because of the increased productivity.

https://me.yahoo.com/a/9fpd1qQlv56VqxUybAe4mn.wvoBMeDxlSpzk.g--#53147

Re: "[1] It is possible for a SaaS company's revenue to go down month over month, but that would require that its attrition rate be greater than its acquisition rate. For the best SaaS solutions, that is quite unlikely (given TCO, ease of use, etc.) -- they have proven wonderfully sticky. The biggest challenge for SaaS solutions is unquestionably user growth. Once acquired, SaaS customers tend to be in for the long haul"

This last statement is true, but the first misses the point that one advantage to SaaS for end-customers is if they downsize, they can downsize the bill. All SaaS companies even including Salesforce are seeing the SIZE of renewals decrease, even if the % of renewals stay strong. If I went from 100 reps to 70, I may renew, but I may only pay 70% of what I paid before ... and that's before I asked for a recession discount.

Smaller companies that are growing (like EchoSign electronic signature) won't see as great an impact as folks with large market shares like Salesforce but it hits everyone in the downturn. SaaS renewal rates will stay very high as % of customers, but as a % of TTM revenue, the numbers are dropping materially.

https://me.yahoo.com/a/w4ZmxYt2tIhBK4uTDWDFETJ5zpyKSZzHM4oe_1t87hjC1Bhp#b8d05

I agre with you David, only the enterprise software companies with strong SaaS solutions are going to continue to prosper in this economy while everyone else goes bye bye...

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It is possible for a SaaS company's revenue to go down month over month, but that would require that its attrition rate be greater than its acquisition rate. For the best SaaS solutions, that is quite unlikely (given TCO, ease of use, etc.) -- they have proven wonderfully sticky. The biggest challenge for SaaS solutions is unquestionably user growth. Once acquired, SaaS customers tend to be in for the long haul.

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