Tag - Sap

In the late 1990s, the tech world scoffed at the notion that corporate America would ever accept the concept of paying to download software from the Internet. But today, a growing number of small and medium-sized businesses are using on-demand software, or software-as-a-service (SaaS), for convenience and as an effective way to trim IT costs.

Market researcher IDC predicts that SaaS, which currently accounts for less than 2% of the global software market, will grow 25% annually and become a $14.5 billion industry by 2011. The popularity of on-demand software is growing so fast, in fact, that it is beginning to transform the business software industry. The rise of the SaaS delivery model has software giants Microsoft Corporation (Nasdaq: MSFT), Oracle Corporation (Nasdaq: ORCL) and SAP AG (NYSE: SAP) a little nervous; all are plowing billions into efforts to respond to the emerging SaaS threat.

The emergence of the on-demand software trend reflects companies' growing desire for less cumbersome and more economical means of using information technology (particularly, Web-based systems) to their advantage. For example, a new generation of Tech-savvy workers and global talent shortfalls have changed the face of human resources, which has become a hot segment for on-demand software specialists at a time when even a tiny company may have a tangled mess of disjointed IT.

San Francisco, Calif.-based Taleo Corporation (Nasdaq: TLEO) is a developer of on-demand software that helps companies manage their human resources operations. HR is an area that is often challenging for smaller companies with less manpower dedicated to the department and inefficient ad hoc systems — often based on Excel spreadsheets and emails. Taleo software, which is easy to install, manage and integrate with existing software, helps growing businesses bring their human-resources functions up to snuff by simplifying recruitment, screening and tracking chores. The company sells its software directly to customers and through HR outsourcers with which it has established partnerships.

Secrets of the consumer are coming undone, exposed by DemandTec’s breakthrough marketing software. DemandTec, Inc. (Nasdaq: DMAN) leaves little to the imagination: its suite of scientifically infused software  tells retailers and makers of consumer products how to attract sales, price goods, run promotions, mold and predict demand, and drive profits.

Trading publicly since August but started in 1999, DemandTec has grown into a leader of commerce software, sporting a client list of the biggest retailers: Wal-Mart Stores, Inc. (NYSE: WMT), Safeway Inc. (NYSE: SWY), Target Corporation (NYSE: TGT), Best Buy Co., Inc. (NYSE: BBY) and Office Depot, Inc. (NYSE: ODP), among others. It also markets to consumer products companies, including Campbell Soup Company (NYSE: CPB), Cargill, PhilipMorris and Johnson & Johnson (NYSE: JNJ).

Even DemandTec would find it hard to better shape its own returns since its initial public offering at $11 per share. Its shares have rallied 50% in a little more than two months, closing Friday at $16.59. The high so far is $18.55 on Oct. 10, hit as the company rallied after second-quarter returns released Oct. 4 exceeded analyst expectations. Its market capitalization has grown to more than $420 million.

Revenues in the second quarter of fiscal 2008 ended Aug. 31 rose 40% from the previous year to $14.7 million. Sequential growth was 11% from the first quarter. The company gets its revenues from customer agreements that cover the use of DemandTec’s software and services that go with it. Revenue is recognized over the term of the agreement, which tends to run two to three years. On a non-GAAP basis, the quarterly loss was $0.02 per share, versus a penny gain in the same quarter a year earlier.

DemandTec also pleased investors by projecting revenues for full fiscal 2008 of $60.2 million to $60.7 million—up 40% year-over-year. The San Carlos, Calif.-based company said on its quarterly conference call that earnings for the year would be $0.07 to $0.08; in the third quarter, DemandTec expects to earn $0.03. 

“DemandTec’s consumer demand management solutions are clearly resonating within the retail and consumer goods verticals and we believe that the company is in the early stages of a multi-year growth opportunity,” analyst Jason Maynard at Credit-Suisse wrote in a research note following the conference call. Maynard repeated his “outperform” rating, saying that the company’s second-quarter results reaffirmed a very attractive small-cap growth story.

Businesses big and small often have a difficult time keeping track of their employees. Whether their workers are tethered to a computer screen, holding down a spot on an assembly line, or out in the field making sales and service calls, most companies depend on software solutions to assist in their scheduling and work-force management.

Given the complexities of doing business in the 21st century, ClickSoftware Technologies (Nasdaq: CKSW) is successfully selling products that simplify labor management to businesses of all sizes in North America, Europe and other regions, including Asia. Its business partners that help cross-sell ClickSoftware wares to their customers include International Business Machines Corp. (NYSE: IBM), Accenture Ltd. (NYSE: CAN), Microsoft Corp. (Nasdaq: MSFT) and SAP AG (NYSE: SAP).

In the past year, investors have seen the stock price of the Israel-headquartered company more than double, with plenty of hiccups along the way, but where can it go from here?

ClickSoftware Technologies, which bases its U.S. operations in Burlington, Mass., has a mature suite of software products reflected in the roster of big companies that have adopted them: Best Buy Co., Inc. (NYSE: BBY), Xerox Corporation (NYSE: XRX), Ericsson, Vodafone Group Plc (NYSE: VOD) and several large utilities, to name a few. The ClickSoftware offerings help with shift planning, workload forecasting, wireless work force management and business analytics.

During a July 11 presentation at the C.E. Unterberg, Towbin Emerging Growth Conference, ClickSoftware’s chief financial officer, Shmuel Arvatz, outlined how Best Buy was using his company’s products since the electronics retailer became a customer in late 2006.

Two strategies for making a profit on stocks: 1) buy a deeply discounted stock and hope for a rebound, and 2) pick a stock at or near its highs, in the belief that if things are good now, they can only get better.

The two business software makers profiled here fall squarely under that second investment strategy. Their stocks have already enjoyed a good run, but demand for their products is still gaining momentum, suggesting they have further to go before they peak.

When it comes to business, or enterprise software, there are the very largest companies like International Business Machines (NYSE: IBM) or SAP AG (NYSE: SAP), and there are a host of smaller firms that make add-on products designed to help companies further organize their data. These products generally help businesses sort data into more understandable formats like brief summaries, charts or graphs. They often add analytic features for better understanding the data and additional services for retrieving it and sharing it securely.

The more material that companies store, the more challenged they are to organize all of it, which is why software makers like DataWatch Corp. (Nasdaq: DWCH) and Actuate Corp. (Nasdaq: ACTU) have generated so much investor interest. The proliferation of cheap storage technology means that most companies are swimming in data. Imagine trying to retrieve some basic company statistics from a roomful of old metal filing cabinets jammed with paper, and you get some sense of the challenge of organizing electronic files.

The Russell 2000 (NYSE: IWM) moved up and Dow Jones Industrial Average (INDU) cleared the 14,000 mark for a new record close. The small-cap index added 5.94 points, or 0.70%, to 851.85. The Dow gained 82.19 points, or 0.59%, to 14,000.41. The record close for the Russell 2000 is 855.77, established on July 13.

The bulls seized the day from the start, following a series of upbeat earnings reports from some major players.

German business software solutions provider SAP AG (NYSE: SAP) outpaced expectations with a 10% jump in quarterly profit, while Armonk, N.Y.-based IT giant IBM Corp. (Nasdaq: IBM) saw its quarterly profit rise 12%, its most impressive result in five years.

And that wasn’t all.

The Russell 2000 (NYSE: IWM) is gaining and the Dow Jones Industrial Average (INDU) is flirting with 14,000 on news of upbeat earnings reports.

At 10:27 a.m. ET the Russell 2000 was up 5.23 points, or 0.62%, to 851.14. The Dow Jones Industrial Average had added 74.47 points, or 0.54%, to 13,992.69.

The Russell 2000 futures are pointing up and the small-cap index is poised for a bullish opening following news of upbeat employment data.

Initial jobless claims for the week ended July 14 decreased 8,000 to 301,000, the U.S. Labor Department reported this morning.   That’s the second consecutive week of declines, causing the four-week average to fall 6,250 to 312,000, from the previous week’s average of 318,250.