Industry Sees Growth Again; System Integrators Continue to Gain

Industry Sees Growth Again; System Integrators Continue to Gain

Overall Revenue Up 12 Percent

By John P. Desmond

Overall growth for the Software 500 companies was up 11.7% in the past year, with 72% of companies reporting positive revenue growth versus 60% in last year’s survey, according to findings of the 2011 Software 500 ranking of the world’s largest software and services companies, now in its 29th year.

Total 2011 Software 500 revenue is $549.3 billion, up from last year’s $491.7 billion.

The shift to having outside service firms perform critical IT functions continues, with the System Integration Services/IT Consulting sector having the greatest number of companies at 30, and the most employees of any sector by far, at 1,296,373 employees. Outsourcing Services firms reported having 319,641 employees in 23 firms, and IT Services/Consulting/Staffing firms reported having 68,393 employees in 26 firms, also exemplifying the shift to IT resources outside the company.

The total number of employees in the Software 500 was up 15.7% to 4,122,638, compared to 3,562,407 in last year’s survey.

The top five companies stayed in the same order this year, with IBM, Microsoft, Hewlett-Packard (HP), Oracle and Accenture taking rankings one through five. In rankings six through 10, EMC moved up to No. 6, SAP maintained its position at No. 7, Computer Sciences Corp. dropped to No. 8, NTT Data moved to No. 9 from No. 12 last year, and Hitachi dropped one position to No. 10.

Growing most dramatically in the top 10 was EMC, with revenues up 21.3% to reach $17 billion.

In employee terms, IBM is the largest employer with 463,869, up 6% from the year before. The next leaders are: Hitachi with 359,746, same as last year; HP, which increased head count 7% to 324,000; and Accenture with 204,000 employees, an increase of 15.3% from the previous year.
PUBLIC/PRIVATE BREAKOUT
No. of Companies Percent of Software 500
Public 371 74.2%
Private 129 25.8%

The public/private company breakdown of the 2011 Software 500 is 74% publicly and 26% privately held.

Number one in revenue per employee was Vendtek Sysems, Inc., ranked No. 237, which achieved $3,985,000 in revenue for each of its 30 employees. The company licenses transaction automation system software focused primarily in the prepaid telecom and financial services industries. Next was No. 14, SYNNEX Corp., with $1,155, 640 in revenue per employee; the company’s Global Business Services unit is engaged in a range of IT services. Third was Innodata Isogen, Inc., No. 295, with $1,025,217 in revenue per employee; the firm helps media companies create and manage content.

Leaders in R&D spending as a percentage of revenue, an important indicator of whether a software company is investing in the future, include Macadamian Technologies, No. 467, spending 73% of its $7.6 million in revenue on R&D, followed by No. 296, Nucleus Software Exports, spending 68% of its $61.1 million on R&D, No. 160, Polaris Software Lab, spending 64% of its $285.6 million in revenue on R&D, No. 187, Zylog Systems, spending 64% of its $207.7 million on R&D, and Diversinet Corp., No. 487, spending 63% of its $4.9 million on R&D.

TOP 10 R&D SPENDERS
In millions
Rank Company Corporate Revenue % Total Spending R&D Spending
466 Macadamian Technologies, Inc. $ 7.6 73.0% $ 5.5
296 Nucleus Software Exports Ltd. $ 61.1 67.7% $ 41.4
160 Polaris Software Lab Ltd. $ 285.6 64.3% $ 183.5
187 Zylog Systems Ltd. $ 207.7 63.9% $ 132.8
486 Diversinet Corp. $ 4.9 63.1% $ 3.1
161 MindTree Ltd. $ 273.4 61.6% $ 168.4
477 ANTs Software Inc. $ 6.2 53.7% $ 3.3
416 TigerLogic Corp. $ 13.9 44.1% $ 6.1
276 DemandTec, Inc. $ 79.1 40.8% $ 32.3
71 Cadence Design Systems, Inc. $ 936.0 40.2% $ 376.4

Average R&D investment for the entire 2011 Software 500 is 11.2%.

Companies acquired since the 2010 Software 500 include: Art Technology Group (ATG), acquired by Oracle; CyberSource Corp., acquired by Visa; i2 Technologies, acquired by JDA Software Group; IDS Scheer, acquired by Software AG; Intelligroup, acquired by NTT Data; McAfee, acquired by Intel; Metastorm and Nstein, acquired by OpenText; Peopleclick, acquired by Authoria; PGP Corp. and VeriSign, acquired by Symantec; Proginet Corp., acquired by TIBCO; PSS Systems and Sterling Commerce, acquired by IBM; Savvion, acquired by Progress Software; Spectrum Human Resource Systems, acquired by Epicor Software; Surgient, acquired by Quest Software; and Xenos Group, acquired by Actuate.

Revenue Growth Leaders
Number one in growth among companies over $1 billion in revenue is Research in Motion (RIM), which grew revenue 46% on the strength of its BlackBerry smartphone and related software; RIM is ranked No. 40 in this year’s survey.

Next is Google, growing revenue 42% on the strength of the $1.1 billion in software and services revenue on which the Software 500 ranking is based, a fraction of Google’s $29.3 billion in total corporate revenue for 2010.

KEEPING FAST COMPANY I
Leaders in Software/Services Revenue Growth
Above $100M
Growth in software/services revenue, 2009 to 2010
TOP 10 COMPANIES >$1B
Rank Company 2010 Software/
Services Revenue Growth
40 Research in Motion Ltd. $2,417,226,000 46.1%
64 Google Inc. $1,085,000,000 42.4%
58 Sykes Enterprises, Inc. $1,158,718,000 42.4%
18 Fidelity National Information Services, Inc. $5,269,500,000 42.0%
34 VMware, Inc. $2,857,343,000 41.2%
22 Cognizant Technology Solutions Corp. $4,592,389,000 40.1%
15 Tata Consultancy $ 6,334,053,572 29.6%
26 Adobe Systems Inc. $3,800,000,000 29.0%
35 ManTech Intl. Corp. $2,604,038,000 28.9%
38 HCL Technologies Ltd. $2,490,675,000 28.0%

TOP 10 COMPANIES $100M–$1B
Rank Company 2010 Software/
Services Revenue Growth
249 SXC Health Solutions Corp. $ 106,789,000 157.6%
224 Merge Healthcare Inc. $ 140,332,000 109.9%
137 Kofax plc $ 341,467,602 100.3%
203 Longtop Financial Technologies Ltd. $ 169,057,000 88.8%
150 Datalink Corp. $ 293,679,000 64.9%
142 AsiaInfo-Linkage, Inc. $ 328,566,000 63.2%
167 MicroTech $ 261,019,935 60.8%
103 JDA Software Group, Inc. $ 617,209,000 60.0%
122 Micro Focus Intl. plc $ 432,579,000 57.5%
112 Syntel, Inc. $ 532,133,000 55.4%

Third in growth in companies over $1 billion in revenue is Sykes Enterprises, a business process outsourcing firm that acquired the multinational call center and outsourcing company ICT Group in 2010. Sykes grew its revenues 42% as well and is ranked No. 58 with $1.2 billion in software and services revenue.

In companies $100 million to $1 billion in revenue, the growth leader is SXC Health Solutions Corp., ranked No. 249, which grew revenue 158% to reach $106.8 million. The company offers pharmacy benefit management services and pharmacy technology support services.

Merge Healthcare is next in the category, with growth of 110% to reach No. 224 with revenue of $140.3 million. The company concentrates on imaging products for radiology, cardiology, and orthopedics; a suite of products for clinical trials; and software for financial and pre-surgical management.

Longtop Financial Technologies, No. 203, grew 89% to reach $169.1 million in revenue. Longtop focuses on the IT needs of financial institutions in China and is the first Chinese software company to be listed on the New York Stock Exchange.

Another highlight in the category is No. 103 JDA Software, growing 60% to reach $617.2 million. The supply chain software supplier’s acquisition of i2 Technologies in 2010 added the global customer base and robust product line of a market leader.

Micro Focus International, No. 122, grew at a 58% clip to reach $432.6 million in revenue. The company is getting traction from its legacy modernization business.

KEEPING FAST COMPANY II
Leaders in Software/Services Revenue Growth
$30M to $100M
Growth in software/services revenue, 2009 to 2010
TOP 10 COMPANIES $50M–$100M
Rank Company 2010 Software/
Services Revenue Growth
271 Edgewater $ 82,692,000 76.8%
265 Magic Software Enterprises $ 88,578,000 60.0%
259 BSQUARE Corp. $ 96,774,000 50.3%
277 Helios and Matheson IT Ltd. $ 77,160,627 44.7%
302 Emailvision $ 58,786,000 43.9%
261 BroadSoft, Inc. $ 95,623,000 38.8%
268 AppLabs $ 85,925,145 38.3%
266 Enghouse Systems Ltd. $ 88,116,050 37.4%
305 Merced Systems, Inc. $ 55,511,994 34.0%
297 Absolute Software Corp. $ 60,697,117 32.0%

TOP 10 COMPANIES $30M–$50M
Rank Company 2010 Software/
Services Revenue Growth
327 Support.com, Inc. $ 44,177,000 152.5%
321 CyberDefender Corp. $ 45,568,545 141.8%
350 Roadnet Technologies $ 34,979,000 141.2%
343 Tableau Software $ 38,000,000 109.6%
313 CriticalControl Solutions $ 49,223,855 88.7%
337 Xoriant Corp. $ 40,640,000 63.3%
328 Cornerstone OnDemand, Inc. $ 43,731,000 49.1%
347 NetSol Technologies, Inc. $ 36,779,896 39.1%
339 Opera Software ASA $ 40,110,186 35.6%
352 Allocate Software plc $ 34,780,592 33.6%

In companies from $50 million to $100 million, the leader in growth is No. 271 Edgewater, growing 77% to reach $82.7 million in revenue. The strategic consulting firm has expertise in Oracle, Microsoft, and SAP product lines. Second in the group is Magic Software Enterprises, No. 265, growing 60% to reach revenue of $88.6 million. In business for more than 25 years, the company offers application platform and business integration products. Third in the group is BSQUARE Corp., No. 259, offering embedded system device makers with production-ready software products, speeding their time to market.

Among companies in the $30 million to $50 million revenue range, Support.com is the leader with growth of 153% to reach revenue of $44.2 million and No. 327. The firm is succeeding with its offering of remote technology support services to consumers and small businesses. Second is CyberDefender Corp., antivirus and antispyware software supplier, growing 142% to reach $45.6 million and No. 321. Third is Roadnet Technologies, offering route planning and transportation management software, growing 141% to reach $35 million and No. 350. Next is Tableau Software, supplier of data analysis and business dashboard software, growing 110% to reach $38 million and No. 343.

Among companies between $10 million to $30 million in revenue, the growth leader is BackWeb Technologies, No. 424, offering data, content, and application delivery products, growing 470% to reach $13 million in revenue. Second is NetQin Mobile, headquartered in Beijing and offering security for mobile devices, including smart phones running Android. The company grew 205% to reach $15.3 million in revenue and No. 409. Third in the group is Trunkbow International Holdings, focused on helping mobile telecom providers in China with mobile application services. Trunkbow, No. 368, grew at an 85% rate to reach $24.8 in revenue.

The leader among companies in the under $10 million revenue category is Cortex Business Solutions, No. 491, growing 280% to reach $4.1 million in revenue. Cortex offers electronic procurement tools for enterprises. Second in the category is Route1, No. 488, offering identity-based secure remote-management tools. The company grew 97% to reach $4.6 million in revenue. Third is Make Technologies, the legacy modernization and code transformation player making great strides of 75% growth to reach No. 450 with $9.4 in revenue.

Here is a review of selected business sector results in the 2011 Software 500:

KEEPING FAST COMPANY III
Leaders in Software/Services Revenue Growth
Below $30M
Growth in software/services revenue, 2009 to 2010
TOP 10 COMPANIES $10M–$30M
Rank Company 2010 Software/
Services Revenue Growth
423 BackWeb Technologies $ 12,980,000 470.0%
408 NetQin Mobile Inc. $ 15,268,000 204.5%
368 Trunkbow Intl. Holdings Ltd. $ 24,843,836 84.5%
441 Park City Group, Inc. $ 10,874,560 82.3%
436 Bronto Software $ 11,131,130 68.8%
391 QHR Technologies Inc. $ 18,507,979 52.1%
443 BlackLine Systems $ 10,362,656 49.6%
381 Foliage $ 21,400,000 47.6%
414 SmartDraw.com $ 14,550,000 45.5%
375 Covario, Inc. $ 22,200,000 45.1%

TOP 10 COMPANIES <$10M
Rank Company 2010 Software/
Services Revenue Growth
491 Cortex Business Solutions Inc. $ 4,112,098 279.7%
488 Route1 Inc. $ 4,565,180 96.6%
450 Make Technologies, Inc. $ 9,442,000 74.6%
481 DatamanUSA, LLC $ 5,391,513 71.0%
483 3C Software $ 5,158,225 66.4%
495 Tiempo Development, LLC $ 3,200,000 60.0%
457 Nitro PDF, Inc. $ 8,942,504 44.9%
452 TDCI, Inc. $ 9,350,000 41.0%
448 Computer Solns. and Software Intl. $ 9,566,000 40.7%
474 CSI Software $ 6,700,000 34.6%

System Integration Services/IT Consulting
The sector is home to 30 companies with 1,296,373 employees. It is a close cousin to Outsourcing Services, which has 23 companies in the 2011 Software 500 and employs 319,641, and to IT Services/Consulting/Staffing, which has 26 companies and employs 67,231.

Among the top performers was Tata Consultancy Services (TCS), growing revenue 30% to reach $6.3 billion and No. 15. Among highlights in 2010: Gartner put TCS in the Leaders Quadrant for the SAP ERP Implementation Service Providers in North America; Hilton Hotels signed a multiyear service agreement; Forrester Research named TCS a leader in the Forrester Wave Global Banking Platforms Q4 2010 report; and Rolls-Royce selected Tata to expand its engineering services footprint in India.

Cognizant Technology Solutions, No. 22, grew at a 40% rate to reach $4.6 billion in revenue. Highlights in 2010 for the IT services leader include: contributing a grant to launch the Center for the Future of Work research center at Carnegie Mellon University; extending a managed services engagement model with 3M; reaching an agreement with Oracle to help companies migrate to Oracle’s Fusion CRM application; and reaching an agreement with Microsoft to help companies deliver cloud-enabled applications to the enterprise.

Also achieving healthy growth in the category were Sapient Corp., No. 81, growing 29% to reach $823.5 million in revenue; Computer Task Group, No. 140, growing 20% to reach $331.4 million; and The Hackett Group, No. 198, growing 40% to reach $180.9 million.

Financial Applications
The sector of firms selling a range of accounting packages is occupied by 33 companies employing 93,731. Tops in revenue in the sector is No. 18 Fidelity National Information Services (FIS), a global provider of technology and services to the financial services industry, serving more than 14,000 clients in more than 100 companies. The company has grown by acquisition since its founding in 1968 as Systematics, most recently with the acquisition of Capco, a business and technology consultancy, in 2010. FIS grew 42% to reach $5.3 billion revenue.

TOP 10 IN SOFTWARE/SERVICES REVENUE GROWTH
FOR OVERALL SOFTWARE 500
Rank Company 2010 Software/
Services Revenue Growth
423 BackWeb Technologies $ 12,980,000 470.0%
491 Cortex Business Solutions Inc. $ 4,112,098 279.7%
408 NetQin Mobile Inc. $ 15,268,000 204.5%
249 SXC Health Solutions Corp. $ 106,789,000 157.6%
327 Support.com, Inc. $ 44,177,000 152.5%
321 CyberDefender Corp. $ 45,568,545 141.8%
350 Roadnet Technologies $ 34,979,000 141.2%
224 Merge Healthcare Inc. $ 140,332,000 109.9%
343 Tableau Software $ 38,000,000 109.6%
137 Kofax plc $ 341,467,602 100.3%

Banking software company Temenos, No. 119, saw a 21% increase in revenue. Founded in 1993 and headquartered in Geneva, Switzerland, Temenos serves more than 1,000 financial institutions in more than 125 countries.

SS&C Technologies, No. 141, saw a 21% increase in revenue. The firm provides the global financial services industry with a range of specialized software and services to assist operations.

Other top performers in the sector include: ConvergEx, No. 143, growing 18%; Enterprise Engineering, No. 387, growing 22%; BlackLine Systems, No. 443, growing 50%; and 3C Software, No. 483, growing 66%.

Vertical Industry Applications
This sector, describing companies that narrowly focus on a specific industry, includes 23 companies and employs 171,989. Growing at a 13% rate to reach $631 million in revenue, No. 102 Solera Holdings is focused on the claims processing industry.

TOP 10 IN SOFTWARE 500
FOR REVENUE PER EMPLOYEE
Average for 500 = $204,403
Rank Company 2010 Employees
2010 Software/
Software/
Services
Revenue/
Employee
237 Vendtek Systems Inc. 30 $119,550,000 $3,985,000
14 SYNNEX Corp. 7,454 $8,614,141,000 $1,155,640
295 Innodata Isogen, Inc. 60 $61,513,000 $1,025,217
150 Datalink Corp. 299 $293,679,000 $982,204
182 Network Engines, Inc. 226 $221,620,000 $980,619
487 Peerless Systems Corp. 5 $4,843,000 $968,600
62 Check Point Software Tech. Ltd. 1,160 $1,097,868,000 $946,438
145 Technology Integration Group 425 $316,048,550 $743,644
262 CSP Inc. 139 $95,018,000 $683,583
167 MicroTech 408 $261,019,935 $639,755

Constellation Software, No. 110 at $556.3 million in revenue, grew 27%. Constellation acquires, manages, and builds industry-specific software businesses that provide specialized software. The group includes Constellation HomeBuilder Systems and Volaris Group.

Other top performances in the sector include: Ebix, No. 229, serving the insurance industry and growing 35% to reach $132.2 million; Sapiens, No. 308, also serving the insurance industry and growing 14% to reach $52.2 million; GSE Systems, No. 318, providing simulation and training software for the power industry, growing 18% to reach $47.2 million in revenue; Xata Corp., No. 319, providing fleet management software, growing 23% to reach $46.9 million; Construction Software Technologies, No. 376, growing 24% to reach $21.9 million; No. 441 Park City Group, focused on food safety, ordering, and replenishment, growing 82% to reach $10.9 million; and No. 474 CSI Software for health and other membership clubs, growing 35% to reach $6.7 million.

Application Development/Testing/Lifecycle Tools
Focused on companies that build tools to help developers build software applications, the sector includes 20 companies and employs 12,801. Micro Focus led the sector with its 58% increase in revenue, and Magic Software saw its revenue increase 60%.

SOFTWARE 500 COMPANIES
SOFTWARE/SERVICES REVENUE GROWTH
2010    2009
No. of Co.'s %    No. of Co.'s %
Growing 100% plus 10 2%    8 2%
Growing 50% to 99% 21 4%    17 4%
Growing 25% to 49% 92 19%    42 9%
Growing 0% to 24% 232 47%    221 46%
Declining in revenue 135 28%    190 40%

No. 268 AppLabs, focused on testing and quality management, grew at a rate of 38% to reach $85.9 million. Headquartered in Philadelphia, Pa., the company has a number of certifications, including CMMI Level 5. TechSmith, No. 332, with products focusing on screen capture and recording, grew 25% to reach $42.7 million.

Other top performers in the sector include: No. 400 DeviceAnywhere, a mobile application testing platform provider, growing 15% to reach $17.1 million; and Black Duck Software, No. 406, dedicated to enterprise-scale adoption of open-source software, growing 26% to reach $15.9 million.

Healthcare
The growing segment of healthcare software providers includes 23 companies this year, and they employ 71,701. The leader is McKesson Corp., No. 32, at $3 billion in revenue, growing 4% since last year’s ranking. The company has a range of businesses falling into two main categories of pharmaceutical distribution and healthcare IT system development and installation.

Cerner Corp., No. 49, grew 11% to reach $1.8 billion. Cerner’s products focus on eliminating waste, variance, and errors for healthcare providers and consumers. Allscripts, selling platforms supporting collaboration of critical patient information, ranked No. 115, growing 38% to reach $478.5 million in revenue. Quality Systems, No. 165, offering practice management and electronic health records products, grew 19% to reach $265 million.

Other top performers in the healthcare sector include: No. 205 Medidata Solutions, growing 19% to reach $166.4 million; No. 212 Computer Programs and Systems, growing 20% to reach $153.2 million; No. 249 SXC Health Solutions, growing 158% to reach $106.8 million; and No. 391 QHR Technologies, growing 52% to reach $18.5 million.

WHERE THE JOBS ARE — TOP EMPLOYERS
Rank Company 2010 Employees
1 IBM Corp. 463,869
10 Hitachi 359,746
3 Hewlett-Packard Co. 324,000
5 Accenture 204,000
15 Tata Consultancy 160,429
13 Lockheed Martin Corp. 132,000
94 Emerson Electric Co. 127,700
21 Infosys Technologies Ltd. 113,800
11 Capgemini 108,698
23 Wipro Ltd. 108,000
Total Software 500 Employees Growth
2010 4,122,638 15.7%
2009 3,562,407 -3.9%
2008 3,707,957 25.6%
2007 2,953,016 1.3%
2006 2,914,480 14.7%
2005 2,539,872 -4.6%

Infrastructure/Network Management
The business sector focused on keeping the data centers and networks running includes 16 companies that employ 530,476.

Among the top performers, Juniper Networks, No. 25, grew 23% to reach $4.1 billion in revenue. Juniper talks about the macro trends of cloud computing and mobile computing driving the need for “new networks” of high performance infrastructure.

EMPLOYEE GROWTH BY BUSINESS SECTOR
WHO’S HIRING
Primary Business Sector % Change # Co.'s
Infrastructure/Network Management 216% 16
Customer Relationship/Call Center Management 34% 12
Outsourced Product Development/Testing 31% 6
IT Services/Consulting/
Staffing 26% 26
Database 21% 6
Outsourcing Services 21% 23
Application Development/Testing/
Lifecycle Tools 20% 21
Application Service Provider/Managed SP 20% 4
Software as a Service 19% 11
Messaging/Communications 18% 11
Telecommunication Services 17% 15
E-Business Applications/Services/Tools 17% 25
Asset Protection and Management 17% 4
Wireless/Mobile 15% 12
Supply Chain/Manufacturing 11% 10
Content Management 11% 13
System Integration Services/IT Consulting 11% 30
Security Tools/Systems 10% 24
Enterprise Application/
Data Integration 10% 16
Healthcare 9% 22
Human Resource/Workforce Management Systems 9% 15
Information Management 7% 6
Financial Applications 5% 33
Marketing/Sales Management 5% 8
Lifecycle Management 5% 4
Storage Management 4% 6
Business Process Management 3% 5
Enterprise Resource Planning (ERP) 1% 16

WHO’S NOT
Business Intelligence/
Analytics -1% 11
Vertical Industry Applications -2% 23
E-Learning -4% 9
Engineering -10% 5
Business/IT Service Management -52% 7

F5 Networks, No. 77, grew 35% to reach $882 million. The company provides a backbone IT infrastructure that includes a platform, a rules-driven development language, an open API for communications, and a data management operating system.

No. 86 Quest Software, offering a range of products including administration, data protection, identity management, and performance monitoring, grew 10% to reach $767.1 million.

Other top performers in the sector include: MindTree, No. 161, growing 24% to reach $273.4 million; Network Engines, No. 182, growing 49% to reach $221.6 million; SolarWinds, No. 215, growing 31% to reach $152.4 million; Radware, No. 220, growing 32% to $144.1 million; and Notify Technology, No. 468, growing 20% to $7.2 million.

COMPANIES ACQUIRED SINCE THE
2010 SOFTWARE 500
Company Acquired by
ACS Xerox
Aleri Labs Sybase
AmberPoint Oracle
AMICAS Merge Healthcare
Archer Technologies EMC
Art Technology Group Oracle
Chordiant Software Pegasystems
CyberSource Corp. Visa
Day Software Holding Adobe
D02 Technologies ADP
i2 Technologies JDA Software Group
IDS Scheer Software AG
Intelligroup NTT Data
Maconomy Deltek
McAfee Intel Corp.
Metastorm OpenText
Nstein OpenText
PGP Corp. Symantec
Proginet Corp. TIBCO
PSS Systems IBM
Savvion Progress Software
Spectrum HR Systems Epicor Software
Sterling Commerce IBM
Surgient Quest Software
SCO Group UnXis Group
VeriSign Symantec
Xenos Group Actuate