On the Road in Germany: SaaSKon and the Growth of the Cloud

Last week, Saugatuck Technology founder and CEO Bill McNee spoke at the SaaSKon conference in Stuttgart, Germany. Like many events that Saugatuck participates in throughout world, the 2-day conference was a terrific venue to gauge current and local market conditions, and receptivity to the key and emerging trends driving change in enterprise computing.

This Research Alert summarizes some of the key takeaways from this event, along with a short interview with Dr. Gerrit Tamm of SRH University, a leading academic thought-leader in Germany, and Hassan Hosseini, who recently joined Saugatuck as a member of our EMEA-focused research and consulting practice.
Amid a busy week of custom consulting and other business activity throughout Europe, Saugatuck’s McNee participated in and delivered one of the keynote addresses at SaaSKon, November 11-12. The turnout of more than 100 provider and user professionals was slightly higher than we expected. However, unlike many of the Cloud Infrastructure and SaaS- focused conferences in the US, SaaSKon was a breadth of fresh air in terms of the mix of the attendee’s – as more 40 percent were senior business and IT professionals (as well as a handful of academic thought-leaders), rather than solely the domain of vendors and services providers.

McNee’s Day 2 keynote updated the attendees on Saugatuck’s current SaaS and Cloud Infrastructure adoption scenarios, as well as calling out key market drivers and preferences. In addition, it included an update to our forecast as it concerns future growth for SaaS and traditional on-premise ISVs in light of a recovering global economy. McNee stated that Saugatuck is in the process of revising its recently published model comparing two global market baskets of publically traded SaaS and on-premise ISVs (see Research Alert RA-650, “SaaS Vs. On-Premise Growth: Before and After the Crash,” published 08 Oct. 2009) based on recently announced Q309 financial results.

McNee suggested that the SaaS market basket that Saugatuck is tracking would likely rebound to greater than a 30 percent annualized revenue growth rate by 2011 (up from 20 percent in 2010). While Saugatuck’s market basket of traditional on-premise ISVs will likewise rebound (from the depths of the new license revenue collapse experienced by many ISVs worldwide during calendar Q2-Q3 2009), at most Saugatuck anticipates top-line revenues to grow 10 percent by 2011, which may be a high-water mark in terms of revenue growth for this sector thereafter.
More importantly, Saugatuck walked away with two key takeaways from the conference, specific to market conditions in Germany:

•    The Time is NOW For German ISVs Get on the Cloud Bus: Throughout the conference, Saugatuck gained the strong sense that traditional ISV and infrastructure providers recognize the need for, and are now in the mood to make the move toward the Cloud. The recent economic turmoil only reinforced the shift in future buyer
behavior – which is like handwriting on the wall. Having attended and spoken at last year’s conference, Saugatuck’s Frank Sempert (Senior Program Executive, Germany) shared that “the level of urgency among the vendors has dramatically increased.”
•    Users Will Embrace Hybrid Cloud Architectures: In both the main tent sessions, and in hallway conversations, it was very clear that the user executives that we spoke to realized that “the Cloud” was not just market hype, but an important longer-term trend. We see this as an important sign-post given the conservative heritage of technology adoption among German user executives (see below). More than a third of those that we spoke to were planning targeted 2010 investments that would test the viability of emerging hybrid architectures – both in the form of mega-vendor driven initiatives from companies such as Microsoft and SAP, as well as through their own integration efforts that are bridging pure-play SaaS assets (that they either have or will be acquiring), and on-premise data and processes.

In support of some of these themes, we thought it would be helpful to share highlights from an interview / conversation that McNee had with Professor Gerrit Tamm, Business Informatics at the SRH University in Berlin, and the founder and CEO of Asperado GmbH (as well as several other research institutes that he directs) while at the conference.

Dateien