SaaS is driving the world's 60 fastest-growing software companies, study finds

Here is the first third of CIOZone.com's list of the top 60 fastest-growing, public software companies with revenue of at least $150 million.

(Credit: CIOZone.com)

CIOZone.com has ranked the top-60 fastest-growing (public) software companies of at least $150 million in revenue, with VMware leading the pack and Red Hat claiming 12th place with a 33.6 percent growth rate. Not bad for a company that gives away its software for free.

But then, perhaps it's not surprising since Google, ranked second on the list, largely does the same.

What's most impressive in the list, however, is the growth rate being sustained by Oracle and Microsoft, because they're growing from a much larger base. It's fantastic that Red Hat is growing at 33 percent on a ~$500 million base. But Microsoft is growing by 25.7 percent on a $57 billion base, and Oracle is rising 24.9 percent on a $20 billion base.

That's amazing.

For smaller companies (more than $50 million in sales and less than $150 million), Omniture (Utah-based - hurray!) leads the pack with a 79.5 percent growth rate on a $143 million base. Not too shabby.

While the list is predominately comprised of proprietary-software companies, CIOZone points out that these vendors are succeeding precisely because they, too, are changing the game from a proprietary license model to a subscription model:

Software that increases the efficiency of corporate data centers, or that runs as an Internet-delivered service, is on a roll. Most of the fastest-growing software companies are doing one or the other....

While it was a good year for many software vendors, it was particularly good for companies that have discarded the older paradigm of install-and-maintain and are making their products available as online subscriptions.

This bodes well for open-source companies, for two reasons. One, many SaaS companies depend on open source (and will pay for it) to run their businesses.especially as an increasing number operate with a dual-mode model wherein they make their software available as an open-source download, with a pay-for-SaaS model to complement that. Kaltura, Loopfuse, and others are adopting this model, and I think it promises to be a highly profitable model for those that can pull it off.

[dessner]

It's true - open source was the first big step to reducing the costs of business software, and SaaS is now starting to lead the way in making serious software available to more companies. It's great to see the two models starting to support one another as well.

- Danny Essner, http://www.Intermedia.net

[ctkeene]

I linked to your recent blog article on how SaaS is driving software vendor growth in my recent blog posting:

http://www.keeneview.com/2008/05/saas-platforms-for-isvs-who-wins.html

The point I make is that although the SaaS development platform has gotten a lot of attention, it has so far been remarkably closed and proprietary. The Platform as a Service leader, SalesForce, has both a draconian hosting policy (host your apps anywhere, as long as it?s with us) but also a proprietary language (who needs Java when you?ve got Apex!?). I think the same trends driving open source adoption everywhere else in the industry will ultimately drive SaaS adoption of open source, particularly by ISVs whose business plan does not include a low multiple sale to their proprietary hosting provider.

[avenger9]

What I think is interesting is that I know a large number of those SaaS we've had discussions about the importance of them being able to truly manage service-levels. And that it is a headache because they have to deal with multiple tiers, plus the internet and then the networks of their customers.

Some of those thoughts were posted on http://www.realuserwebops.com

Would like to hear others thoughts on what this means for the future of SaaS and how smaller players are going to tackle.

[avenger9]

Hmm...I guess the link would be:

<a href="http://www.realuserwebops.com">http://www.realuserwebops.com</a>

[thudock]

Hi Matt, thanks for posting the fastest growing companies! We're glad to see SaaS being a part of this list. We linked to your post but added a healthcare angle.

<a href="http://www.gotanga.com/blog/index.php/2009/02/19/healthcare-on-the-internet/">Healthcare on the internet</a>

Keep up the great posts.
Tom