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Software 500 2012: 17% Revenue Growth

More than 1.6 million employees in system integration services and IT services/consulting; Software 500 employment up 9% to 4.5 million.

By John P. Desmond

Overall growth for the Software 500 companies is up 17% from the past year, with 85% of companies reporting positive revenue growth versus 72% in last year’s survey, according to findings of the 2012 Software 500 ranking of the world’s largest software and services companies, now in its 30th year.

Total 2012 Software 500 revenue is $643.6 billion, up from last year’s $549.3 billion.

The shift to hiring outside service firms to perform critical IT functions continues, with system integration services and IT services/consulting business sectors having 57 companies and more than 1.6 million employees between them. Outsourcing services firms reported 294,692 employees in 18 firms, further exemplifying the trend.

Cloud computing is a new sector this year, with five companies in it. Those companies reported employee growth of more than 1,800% from the previous year, the sign of a young sector. Social business/social analytics is another new sector, comprised of two companies—Jive Software at No. 298 and Bazaarvoice at No. 318—representing efforts to generate revenue from social media.

The total number of employees in the Software 500 was up 9% to 4,495,407, compared to 4,122,638 in last year’s survey.

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Small Changes at the Top
The top eight ranked companies stayed in the same order this year. IBM, Microsoft, HP, Oracle, Accenture, EMC, SAP, and Computer Sciences Corp. take rankings one through eight, respectively. In rankings nine through 15: Capgemini moved up to No. 9 from No. 11 last year; Hitachi maintained the No. 10 position; NTT Data Corp. dropped to No. 11 from No. 9 last year; General Dynamics appeared on the list for the first time at No. 12; SAIC took No. 13, down from No. 12 last year; SYNNEX Corp. maintained the 14th position; and Atos appeared on the list for the first time at No. 15.

Growing dramatically in the top 10 was Capgemini, with worldwide software and services revenue up 34.7% to reach $15.6 billion.

In employee terms, IBM continues to be the largest employer with 433,362, a reduction of more than 30,500 positions, or 6.6% of its workforce from the previous reporting year. Other companies reducing staff in the top 10 this year are Hitachi, down 9.6% to 323,540, and Lockheed Martin, down 7% to 123,000.

Top 10 companies increasing head count included Hewlett-Packard Co. (HP), up 8% to 349,600; Accenture, up 15.7% to

236,000; Tata Consultancy, up 24% to 198,614; Cognizant, up 32% to 137,700; Infosys, up 15% to 130,800; Wipro, up 11% to 120,000; and Capgemini, up 10% to 119,707.

The public/private breakdown of the 2012 Software 500 is 80% public/20% privately held.

Number one in revenue per employee was No. 489 Peerless Systems Corp., which licenses imaging and networking technologies to digital document markets. Peerless reported $1,541,250 in revenue for each of its four employees. Next was TIO Networks Corp. at No. 375, with $1,226,246 in revenue per employee. Third was No. 180 Network Engines, with $1,149,654 for each of its 237 employees; the firm concentrates on application deployment for software developers and original equipment manufacturers (OEMs).


Leaders in R&D spending as a percentage of revenue—an important indicator of whether a software company is investing in the future—include: No. 329 Smith Micro Software, spending 72.2% of its $57.8 million in revenue on R&D; No. 327 Nucleus Software Exports, spending 68.1% of its $58.7 million in revenue on R&D; No. 156 Polaris Software Lab, spending 65.2% of its $358.7 million in revenue on R&D; No. 492 ImageWare Systems, spending 48.7% of its $5.5 million in revenue on R&D; No. 378 Wave Systems, spending 44.5% of its $36.1 million in revenue on R&D; No. 385 NexJ Systems, spending 44.2% of its $30.6 million in revenue on R&D; No. 478 Direct Insite, spending 43.9% of its $8.6 million in revenue on R&D; No. 448 TigerLogic Corp., spending 43.6% of its $13.7 million in revenue on R&D; and No. 298 Jive Software, spending 40.2% of its $77.3 million in revenue on R&D.

Average R&D investment for the entire 2012 Software 500 is 10.8% of revenue.

Companies acquired since the 2011 Software 500 include: AppLabs, acquired by CSC; Approva, acquired by Lawson, which itself was later acquired by Infor; Authoria, acquired by PeopleClick, which is now called Peoplefluent; Autonomy, acquired by Hewlett-Packard (HP) Co.; Bitstream, acquired by Monotype Imaging; Blackboard, acquired by Providence Equity; Borland Software, acquired by Micro Focus; DemandTec, acquired by IBM; Dyadem, acquired by IHS; i2 Technologies, acquired by JDA; iSOFT, acquired by CSC; MKS, acquired by PTC; NetQoS, acquired by CA; Novell, acquired by The Attachmate Group; Q1 Labs, acquired by IBM; S1 Corp., acquired by ACI Worldwide; SPSS, Inc., acquired by IBM; The SCO Group, acquired by UnXis, Inc.; TRIRIGA, acquired by IBM; and Vovici Corp., acquired by Verint.

Revenue Growth Leaders: Over $1 Billion
Number one in growth among companies with more than $1 billion in revenue is Research in Motion (RIM), which grew revenue 44% on the strength of its BlackBerry smartphones and related software, including cloud infrastructure; RIM is ranked No. 36 on this year’s survey. The company recently announced Q1 fiscal 2013 results for the period ending June 2, 2012, indicating a reduction of 33% in revenue from the prior quarter, which experienced a reduction of 19% in revenue from the third quarter of fiscal 2012. The revenue slide reflects challenges in the BlackBerry market posed by the Apple iPhone, especially. RIM is making a huge bet on the BlackBerry 10 powered by the QNX operating system, expected to launch this year.

Next is Atos S.A., new to the Software 500 at No. 15, growing revenues 42.3% to $9.5 billion on the strength of its IT services business, which is expected to receive great exposure from its contract with the 2012 Olympics in London. The company works with clients in virtually all markets.

Third in growth among companies with more than $1 billion in revenue is another IT service provider, Capgemini at No. 9, growing revenue 35% to reach $15.5 billion. The company recently issued a report entitled Digital Shopper Relevancy, which found that digital shoppers in developing countries tend to leapfrog the traditional retail infrastructure in place in mature markets. "For example, 72% of respondents from India and 69% from China said they purchase more products in a single transaction online than in a physical store," compared with just 31% from the U.S., the report stated. Headquartered in Paris, France, Capgemini touts its ability to help customers respond to changing market dynamics as a strength.

Revenue Growth Leaders: $100 Million to $1 Billion
Among companies with $100 million to $1 billion in revenue, the growth leader is Advanced Computer Software Group, which grew revenue 215% to reach $147.5 million, ranking it No. 237. The UK-based IT services and consulting provider offers applications in its business solutions division, healthcare products, and managed services, such as cloud computing and support for core IT functions.

iGATE Corp. was next in the category with growth of 178% to reach $779.6 million, ranking it No. 98. Recent wins by the IT services firm that focuses on integrated technology, operations, and business outcomes, include: a project to help a U.S. Fortune 1000 bank support a program to prevent money laundering; selection by a European Fortune 1000 drug manufacturing company to assist in compliance programs; and selection by a Fortune 1000 European engineering company to help build competencies in energy-related projects in emerging countries.

Epicor Software Corp. grew 85% to $762.9 million to reach No. 101 in the Software 500. Founded more than 20 years ago, Epicor delivers applications for manufacturing, distribution, retail, and service industries, serving midmarket organizations and divisions of Global 1000 customers. Epicor recently renewed a contract with True Value hardware retailer for point-of-sale software systems.

Merge Healthcare achieved 66% growth to reach $232.4 million in revenue, ranking it No. 197. The company provides clinical systems, including enterprise and cloud-based applications for image-intensive specialties, and applications that help engage consumers in their personal health.

VASCO Data Security International grew at a 56% clip to reach $168.1 million in revenue, ranking it No. 226. The company recently announced a consumer version of its hosted authentication platform, which provides secure login services to Web applications. The firm has a customer base of some 9,000 companies in more than 100 countries. Its Magento e-commerce platform is used by more than 110,000 merchants worldwide.

Revenue Growth Leaders: $50 Million to $100 Million
Among companies with $50 million to $100 million in revenue, the growth leader was Lexmark International—yes, the printing company. Its software division provides a fraction of corporate revenue but grew 154% to reach $94.8 in revenue, making it No. 276. Lexmark offers Web-based enterprise software to help IT centrally manage thousands of networked printers and document printing.

Second in the category is ServiceNow, offering cloud-based services to automate enterprise IT operations, growing at 114% to reach $92.6 million in revenue, making it No. 278. Third in the group is Emailvision—with products concentrated on relationship marketing using data from email, mobile computing, and social media sources—which grew 112% to reach $90.8 million, making it No. 280.

Two companies marked the dawning of the business sector we call social business/social analytics, recognizing the effort to translate social media site participation into revenue. Jive Software grew 67% to reach No. 298 with $77.3 million in revenue. Jive describes its social business platform as being able to combine the power of big data, enterprise integration, and social collaboration. Bazaarvoice also grew revenue 67% to reach $64.5 million, attaining No. 318. The company describes itself as a social software and data analytics company, which brings the voice of customers to the center of business strategy. Bazaarvoice publishes quarterly research called The Conversation Index, which converts consumer conversations into data signals for brands and marketers. One finding was that 82% of all consumer opinions are positive, but baby boomers are more positive than millennials.

Revenue Growth Leaders: $30 Million to $50 Million
Among companies in the $30 million to $50 million revenue range, NQ Mobile is the leader with growth of 130% to reach revenue of $40.7 million, making it No. 364. The Beijing-based company provides Internet services focusing on smartphone security. Second is Sitecore Corp., a customer relationship management player with a focus on marketing campaign management, growing 99% to reach $42.7 million in revenue and No. 358. Third in the group is Black Duck Software, dedicated to enterprise-scale adoption of open source software, growing 95% to reach $30.9 million in revenue, making it No. 383.

Revenue Growth Leaders: $10 Million to $30 Million
Among companies with $10 million to $30 million in revenue, the growth leader is SecondFloor BV, offering IT services to the financial industry, growing 69% to reach $14.3 million. Next was Macadamian, focused on mobile application design and development, which grew 68% to reach $15.2 million, ranking it No. 435. Third was SevOne, offering real-time network performance management tools, growing 67% to reach $14.8 million in revenue, making it No. 437. Bronto Software, with its email marketing offerings for retailers, was fourth in the category with growth of 54.1% to reach $17.1 million in revenue.

Revenue Growth Leaders: Less than $10 Million
Among companies with less than $10 million in revenue, the leader was 3C Software, growing 70% to reach $6.8 million in revenue. The company develops cost management accounting systems for manufacturers in a range of industries. Second was NetDimensions—offering talent management for compliance programs, for example—which grew 59% to reach $8.9 million in revenue. Third was Peerless Systems Corp., previously mentioned imaging player, growing 27% to reach No. 489. Next was Intetics Co., No. 473, growing 26.1% to reach $9.2 million in revenue on the strength of its offerings to help support remote teams working on application development, systems integration, and other technical projects.

Here is a review of selected business sector results in the 2012 Software 500.

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IT Services/Consulting
The sector is home to 31 firms that employ 260,179. SYNNEX Corp. leads on the strength of its IT design to distribution business process services offerings. The firm grew revenue 21% in the past year to $10.4 billion, attaining No. 14. Other notables in the group include iSoftstone Holdings, growing revenue 44% to reach $283.4 million, ranking it No. 181. Based in Beijing, the firm concentrates on the Chinese market with its offerings of IT services, consulting, and business process outsourcing.

French firm ALTEN achieved growth of 22% to reach $1.5 billion in revenue, ranking it No. 62. The company carries out design and research projects for technical and IT divisions of major clients primarily in the telecommunications industry. ALTEN recently announced plans to increase head count in India from 800 engineers today to 2,500 by 2016, an effort to expand in India and in Asian markets.

Northgate Information Solutions of the UK grew its revenue 19% to reach $1.3 billion, ranking it No. 65. Active in the UK education market, the firm recently won a contract to deliver IT services to the City of Leicester College and Crown Hills Community College. Cancom AG of Germany grew its revenue 20.3% to reach $758 million, ranking it No. 103. Cancom offers cloud computing services, managed services, unified communication and collaboration systems, and SAP support for small and medium enterprises.

Financial Applications
This sector is also occupied by 31 companies in the Software 500, employing 93,861, total. The revenue leader is Fidelity National Information Services (FIS), which saw growth of 9% to reach $5.7 billion, ranking it No. 21. Formed in 2006 with the merger of Certegy and Fidelity Information Services, the firm today is a leading provider of core financial institution processing, card issuer and transaction processing services, mortgage loan processing, and related information products. FIS has processing and technology relationships with 31 of the top 50 global banks.

Bottomline Technologies grew 21% to reach $180.6 million, ranking it No. 220. The company provides cloud-based payment, invoice, and banking solutions to corporations, financial institutions, and banks around the world. Its Paymode-X business-to-business settlement network is being used by more than 185,000 vendors as of June 2012.

PROS Holdings grew 36% to reach $96.6 million in revenue, ranking it No. 273. The company offers software to help set prices and manage revenue. Recent wins have included Etihad Airways, the national airline of the United Arab Emirates, which will use PROS products to support international expansion and revenue goals.

BlackLine Systems grew at a 52% rate to reach $15.7 million in revenue, ranking it No. 432. The company offers easy-to-implement applications that improve financial controls for companies of all sizes and across all industries. The firm in 2012 announced alliances with KPMG and Deloitte.

Infrastructure Network Management
The sector is occupied by 16 companies in the 2012 Software 500, employing 373,711, total. Among the leaders is BMC, which saw growth of 8.1% to reach $2.1 billion, ranking it No. 54. BMC has taken up a firm position in cloud computing and IT service management, serving more than 20,000 IT organizations in more than 120 countries worldwide. In a recent win, BMC won a contract to help consolidate the IT centers of the state of Connecticut, beating out HP, CA and ServiceNow.

CA Technologies had its share of wins too, growing revenue 5% to reach 4.4 billion, ranking it No. 26. Its recently released Data Center Infrastructure Management (DCIM) 4.0 product helped CA gain recognition by IDC analysts as a worldwide leader in data center infrastructure management. UK-based IT services provider Logicalis reported achieving 159% ROI and an 11-month payback on its use of CA’s energy management technology, which is included in the new CA DCIM product.

IT service management player SolarWinds is winning converts to its approach of making enterprise software easy to find, buy, deploy, and maintain. SolarWinds saw 30% growth to reach $198.4 million in revenue, ranking it No. 214. With its focus on IT agility and cloud computing, F5 Networks also saw 30% growth, reaching $1.2 billion in revenue and No. 72. Splunk prides itself on real-time operational intelligence, making data from any network device searchable; the company had revenue growth of 89% to reach $66.2 million, ranking it No. 316.

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The healthcare business sector has 20 companies in it this year, employing 79,768. Among the revenue growth leaders is Allscripts, a company providing electronic health records for doctors, hospitals, clinical education and medical services. The firm saw 47% growth in revenue to reach $917.3 million, ranking it No. 85. Another company, MedAssets, saw growth of 48%, reaching $578.3 million and No. 119. The firm’s products aim to help healthcare providers capture revenue, control costs, and improve margins and cash flow. MedAssets recently announced a contract with the Salvation Army to help achieve cost savings in the purchase of food and nutrition supplies for the 30 million Americans the nonprofit helps each year. Meditech Information Technology grew its revenue 37% to reach $545.2 million, ranking it No. 124. The firm concentrates on electronic health records.

Cloud Computing
New this year, cloud computing had five firms selecting it as their primary business sector, those firms employing 2,660. The revenue growth leader is the aforementioned ServiceNow, which saw its revenue rise 114% to reach $92.6 million, ranking it No. 278. The firm aims to transform IT via cloud-based services that automate enterprise IT operations. In a recent win, ServiceNow was selected by Deloitte to provide more than 13,000 Deloitte employees with intuitive, self-service IT.

Acme Packet saw its revenue grow 33% to reach $307.3 million, ranking it No. 171. The firm concentrates on unified communications services and applications across IP networks. In a recent win, the China Telecom Corp. selected Acme Packet’s Net-Net Session Directors session border controllers to help replace is legacy public-switched telephone network with IP Multimedia Subsystem (IMS) architecture. That enables next-generation voice, video, and data services for fixed-line subscribers.

InfoBlox saw 30% growth to reach $132.8 million in revenue, ranking it No. 246, on the strength of its appliances for scaling networks more easily. InfoBlox’s partnership with F5 Networks is boosting recognition as well. SW

Sep2012, Software Magazine


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