Cloud Computing

Martin Veitch (Global) - Google, Salesforce, Workday Lead the New Status Quo in Enterprise Software

Browsing the data junkies’ must-read site, Google Finance, this morning I was struck by the valuations of pioneers in what was once known as Software-as-a-Service and now goes under the rather catch-all name of cloud applications. Most notably that Workday, the ERP firm co-led by PeopleSoft founder Dave Duffield and itself founded as recently as 2005, now has a market cap of around $9bn. This is despite there being no hint of dotcom fever in the air, rumours of a gold-rush, Tulip Mania or South Sea Bubble. Indeed, since leaping on its October 2012 IPO, Workday’s valuation has remained notably consistent.

Nine billion dollars. It’s a lot of money for such a young company but then even a cursory look at peers suggests that there is a new world order in enterprise software where several other cloud concerns also have a mature look about their valuations and trending.  NetSuite, a 15-year-old ERP firm that largely targets the SMB/SME sector, is capped at $5bn while in business travel and expenses, 20-year-old Concur Technologies is pegged at $4bn., the 14-year-old bellwether and toastmaster for its generation of online business software, is ‘worth’ (the quote marks are advised because we know that stocks may go up and down) $26bn.

Others have been subsumed by giants for notable sums. Oracle bought employee management firm Taleo (so named in 2004 but with roots dating back further) for close to $2bn and CRM firm RightNow Technologies for $1.5bn a year ago. SAP had picked up Taleo’s rival SuccessFactors, founded in 2001, for $3.4bn a few months earlier, and within months SAP added cloud trading network platform provider Ariba for $4.3bn.

And of course, companies have also organically grown their cloud application rosters: witness Microsoft’s broad offerings from client applications to messaging and back-office programs or the way that Google Apps is becoming the default application platform for many startups.

What has happened here is that amid the hype, hoopla and hullaballoo surrounding the cloud, a solid generation of applications companies has grown up. If they were human, these companies would mostly be children or adolescents, but internet years being halfway to dog years, these are now mature organisations with familiar ecosystems and processes. You almost feel like the gran seeing kids for the first time in a while: my, how they’ve grown up!

IBM, CA, Digital and others dominated software in the age of Big Iron and then Microsoft, Oracle, SAP, Lotus, WordPerfect and Borland defined the client/server era. Just as in previous times, some players will be acquired and some will fall by the wayside but the cloud crew is the modern generation of software. In art historical terms they no longer represent the shock of the new and they can’t be seen as avant-garde. These companies no longer have to explain what they do for a living; they have become the multi-billion-dollar status quo and simply represent the current state of business technology infrastructure today.


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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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