While most discussions about the Software as a Service (SaaS) market revolve around the likes of Salesforce.com, NetSuite, Google, IBM, Oracle, Microsoft, OpSource, etc., the name Progress Software Corporation (NASDAQ: PRGS) rarely comes to mind, unjustifiably.

While Progress itself is to blame in part for a less aggressive marketing effort (and for the-best-kept-secret-in-the-market status), it is still puzzling that the Bedford, Massachusetts (US)-based provider of application infrastructure software for the development, deployment, integration, and management of business applications is not more regularly mentioned within the press and analyst circles.

A company that was founded in 1981 and with about US$500 million in revenues in 2007, with over 110,000 customer sites and over 2,000 employees in 90 offices worldwide certainly deserves due attention. This is especially the case given the company’s long espoused goal to maximize the benefits of information technology (IT) while minimizing its complexity and total cost of ownership (TCO).

While many more details about the company will soon come to light in a series of articles on TEC’s Web site and newsletter, it suffices for me to say here that Progress provides an impressive application infrastructure that includes the Progress OpenEdge platform, an integrated platform optimized for the development and deployment of service-oriented business applications, and the Progress Sonic ESB (Enterprise Service Bus), an integration backbone for highly distributed and federated environments. Users and providers of enterprise applications built on the OpenEdge platform claim to be reliable and scalable, with a lower TCO compared to the majority of other counterpart platforms.

Indeed, Progress’ OpenEdge application platform, Sonic ESB middleware, Actional service oriented architecture (SOA) and Web services management platform, and DataDirect integration tools (to name only some products) make up an awesome combination that has been adopted by a 2,000-strong independent software vendor (ISV) partner base (as well as direct large enterprise customers) to serve mainly the small-to-medium business (SMB) market segment.

It’s All About Ecosystem

Looking from an ecosystem aspect, the Progress community boasts over US$5 billion in total annual revenue and a whopping 3 million users worldwide. These 2,000 ISV partners deliver 6,000 business applications in manufacturing, distribution, financial services, retail, healthcare and other markets. The VAR Business magazine has given a five-star rating for Progress’ partner program, which each year adds about 600,000 new users on average. The following facts are staggering: 60 percent of Fortune 500 manufacturers use Progress technology, while Progress serves the leaders in many markets such as:

• four out of five of the world’s largest electronics companies;
• three out of four of the world’s largest medical organizations;
• four out of five of the world’s largest beverage producers;
• two out of four of world’s largest food manufacturers; and
• 16 out of 25 of the world’s largest automotive suppliers.

A Well Thought-out Partner SaaS-enablement Process

Coming back to enabling its partners in SaaS deployments of their software, before jumping at the related results thus far, I should first mention Progress’ approach to SaaS-empower its loyal partners beyond merely helping them host their software. The credit here (as an honorable exception to the media silence) goes to ZDNet’s blogger Phil Wainewright for reporting on Progress’ SaaS forays.

Namely, the all-encompassing process starts with SaaS assessments, so that both Progress and the partner can better understand the business opportunity and the new market potential, and then evaluate the health of the prospective business. Then comes the business planning phase, whereby Progress works with partners on the development of a new business plan, with the idea of helping them change their business model from that of a software provider to more of a provider of software-based services.

After that, the market planning phase focuses partners on understanding new target market opportunities for SaaS, whereby the goal is to develop competitive strategies including positioning, pricing and value proposition. Finally, the technical empowerment phase should result in the best practices around architecting for SaaS, and with an expected and needed transformation of application for SaaS requirements such as multi-tenancy, personalization and configuration.

As a recap, unlike other SaaS programs that focus merely on hosting, Progress Software and its partners develop a complete solution for transforming outdated on-premise client/server applications into true on-demand offerings using SOA and multi-tenancy reference models. The Progress business and technical empowerment programs include assessment, business planning and technical planning. These programs have helped with guiding ISVs through every step of the transformation process, with the aim of reducing the cost, complexity and time-to-market for the SaaS-enabled enterprise management software.

Certainly, Progress cannot do everything on its own, and thus it also has technology partners, such as Aria Systems for on-demand provisioning and billing, OpSource, 7Global and IBM for hosting in different geographic regions, OnDemand Solutions for SaaS-enablement consulting, and so on. Also, I should not forget to point out that OpenEdge, Sonic ESB and Actional are already rewritten in a SaaS manner, with other Progress products soon to follow suit.

Progress’ SaaS Ecosystem

Progress’ SaaS results to date are impressive, to put it mildly, given that over over 200 ISVs and 20 business service providers today offer over 500 SaaS applications. The ecosystem has posted a 35 percent revenue increase in 2006 over 2005. As for the enablement program participation, there were over 70 new participants in the first half of 2007, whereby 40 percent of partners say that SaaS delivery is expected to be over half of their business by 2010.

In 2006, the aggregate global SaaS revenues collected by Progress partners ecosystem were about US$350 million and with over 300,000 end users in 22 countries. Key business applications/vertical sectors have been Healthcare, Travel, Legal, Financial Services, and a number of esoteric Manufacturing sectors (e.g., plastic extruders, slaughterhouses, etc.).

It is a well-known fact that initial enterprise resource planning (ERP) system deployments can be complicated and costly, creating a barrier that many companies do not have the resources to manage. By leveraging Progress Software’s Products, many ERP vendors have effectively removed the significant upfront barriers to success associated with initial ERP deployments by providing its customers with needed ERP capabilities via a monthly subscription, available through any web browser.

The SaaS business model has allowed a number of vendors to offer ERP systems with a predictable cost model, zero upfront costs, and easy Internet access. It is also often essential that the system can run without a great deal of on-premise support or heavy duty IT resources. This opens up many new business opportunities for aspiring vendors and allows them to offer their applications to an even broader market.

Concrete SaaS ERP Examples

While Plexus Systems has long been on-demand and QAD is working on SaaS enablement of QAD Enterprise Applications [evaluate this product] with deeply involved Progress’ help (and we should soon hear about Epicor and Infor’s similar efforts, also possibly via leveraging some Progress technologies in part), the most recent high-profile SaaS ERP example would be the leading Latin American vendor Datasul S.A. (Bovespa: DSUL3).

Datasul, a Progress application partner and Brazilian market leader (with 20 percent market share in the upper mid-market, according to IDC) with over 2,000 employees and $US 90 million in revenues in 2006, serves over 2,800 customers and 274,000 end-users in Latin America. By further leveraging Progress Software products and technology, Datasul, a trusted regional supplier of custom-built enterprise management technology, now offers a comprehensive ERP system, tailored to specific business needs and deployed using an affordable SaaS subscription model.

The vendor, which has been in the market for almost 30 years, is a Brazilian public company with presence in seven countries (about 70 international customers) and is a pioneer in the development of integrated ERP solutions for corporate management. Datasul EMS [evaluate this product] software is designed for automating and managing customers’ critical processes, such as: finance, human resource (HR), logistics, manufacturing, and customer relationship management (CRM) among others.

Datasul ERP applications are based on the Progress OpenEdge business application platform, which enabled the vendor to recently (from 2005 on) rejuvenate its applications in SOA and to also deploy its applications as a SaaS, on-demand offering. The application business drivers that Datasul wanted to achieve were:

• to extend traditional ERP to outside the office (supply-chain);
• to achieve an uniform user interface (UI) and integration layer for all Datasul applications (over 100 different enterprise solutions that came from many mergers and acquisitions in the past);
• to improve time to market (faster and more frequent product releases);
• support of Linux on the client side (platform agnosticism); and
• to improve user experience (via flexibility of processes and user personalization).

To that end, the vendor selected the following SOA technology set:

• For UI: Adobe Flex;
• For Business Logic: OpenEdge and Java 2 Enterprise Edition (J2EE);
• For Application Server: OpenEdge- and J2EE-based;
• For ESB: a proprietary solution (NeoGrid);
• For Messaging: Sonic MQ (Message Queue) and others;
• For Business Intelligence (BI): a proprietary solution (albeit evaluating the Progress EasyAsk natural search engine); and
• For Database: OpenEdge, Oracle and Microsoft SQL Server.

The results were as follows:

• The business logic was separated from the UI (in the SOA foundation);
• A modern and updated UI (over 8,000 screens were converted);
• A Web services enabled product (via the SOA foundation);
• Native Internet support and Linux support;
• Development productivity improved (by using Eclipse-based integrated development environment [IDE] — Progress OpenEdge Architect); and
• 2006 revenue growth was 14 percent up over 2005.

Today, more than 350 Datasul customers use subscription-based, on-demand applications. While this number represents only 10 percent of the company’s 2007 revenue, Datasul expects the on-demand portion of the business to grow to at least 20 percent over the next year.

What are your opinions towards multi-tenanted on-demand deployments, or even better, your experiences with deploying on-demand ERP systems? Do the notions of SaaS, on-demand, multi-tenancy, etc. enter the picture of your enterprise software evaluations and selections yet?