Most Software Execs See Rebound This Year - InformationWeek

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Cloud // Software as a Service

Most Software Execs See Rebound This Year

According to the findings of a new survey, most software CEOs and CFO see a return to pre-recession levels this year and cloud computing, particularly among SMBs, is the big driver for the rebound.

The results of a survey released today by Sand Hill Group point toward a software recovery this year. The survey of more 100 software CEOs and CFOs indicated a widespread sentiment that business will soon return to pre-recession levels. In fact, 42% say that it already has and another 27% believe it will happen before the year is out. As a result of this optimism, more than 90% have already begun hiring or plan to hire this year.

Commenting on the survey findings, Sand Hill Group CEO MR Rangswami said, "It's not often you get to review CEO and CFO forecasts from more than 100 leading software companies. Seeing the optimism of these executives is a terrific indication that we are rebounding from the recession in Silicon Valley. One thing is clear - software is back, driven by the rapid adoption of cloud computing. The results also show that software companies will have to adapt to the market's new reality in order to ensure their future success."

Though these results are encouraging for the economy as whole as well as the IT sector, they indicate particular optimism for SMBs. Of the 107 software CEOs and CFOs participating in the 24-question survey, 92% were in companies of 500 employees of less. The online survey was conducted in February and March of this year polled executives in five segments - application software, infrastructure, verticals, service providers, and data storage - with 60% from application software firms.

In a webcast today at 11 am Pacific Time, representatives of Sand Hill Group will review the key findings of the Software CEO/CFO Outlook 2010. Webcast registrants will receive a complimentary copy of the report, which was underwritten by web-based financial management and accounting application provider Intacct. In addition to the overall optimism about the prospects for software firms, the survey findings also reveal strong momentum for cloud computing, SaaS, and other on-demand software models, particularly among smaller organizations.

"The SMB segment is adopting cloud-based solutions at two times the rate of large companies," said Rangswami. He believes that we're just at the beginning of cloud ascendency and that SMBs, in particular younger companies, will be embracing cloud computing because they don't have the same level of investment in legacy software and hardware as many large enterprises.

The key data points on adoption of cloud computing and SaaS as key growth drivers for software include:

  • 44% see on-demand cloud and SaS models as the method most customers prefer to software purchasing
  • Only 43% indicated plans to add SaaS and cloud offerings, though that's tempered by the 53% who already have offer a cloud or SaaS model
  • 63% use an on-demand or SaaS pricing model
  • 10% use a cloud-computing or pay-per use pricing model
  • 60% or more of vertical software providers use on-demand SaaS pricing
  • 60% of more of the infrastructure and security firms use traditional software licenses

Benjamin Tomkins is editor of InformationWeek SMB.
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