In November 2005, JMP Securities released a great report titled Flipping the Switch about the benefits and power of Software-as-a-Service.
The report detailed the customer benefits - independence from IT, more timely software upgrades, financial risk mitigation, lower IT costs, high service levels, and funding from operating rather than capital budgets; as well as the vendor benefits - lower R&D costs, lower support costs, visibility into customer activities, and inherent piracy controls.
While Salesforce.com is a well-deserved pioneer of the model, seven years ago Hummer Winblad invested in Employease, a SaaS provider of human resource management software. Last week, ADP acquired the company and the event serves as real validation of the management's teams foresight in building a true multi-tenant application based on a recurring revenue model. At the time of exit, the company had over 1,500 customers and tremendous visibility into future growth and revenue. ADP, a major reseller and partner, lived with the company for some time as a partner and acquired the business as part of the company's Employer Services Division.
Congratulations to Phil Fauver (CEO), the management team, and to John Hummer for the foresight to help pioneer a new business and delivery model seven years before the analyst report was published!