Following up on our series of entries on the Software as a Service industry we have conducted the following interview with Steve Savignano, CEO of Ketera Technologies.

Q1: What does Ketera do? Please provide a brief description.
A1: Ketera Technologies is the leading provider of on demand spend management solutions, providing companies with the applications and services needed to control and reduce corporate spending at a low cost of ownership. Ketera Spend Management includes solutions for the entire procure to pay process; spend analysis, sourcing, procurement, contract and content management, payment, and reconciliation. Ketera's offerings are delivered via an on demand delivery model, which combines hosted spend management applications with the "heavy lifting" services required for success, including supplier enablement, hardware infrastructure, project resources, system administration and solution upgrades.

Q2: Why should a company use spend analysis and procurement tools at all? Many companies have operated for decades without ever touching a SAP MM module.
A2: Historically, enterprises viewed procurement as a tactical function, utilizing ERP and SCM applications which added little value, and left substantial money on the table. Realizing they can boost top line revenue through cost control, companies are starting to see procurement as a strategic initiative. By using spend management tools and services companies can save millions of dollars. Through the software as a service approach, our customers are boosting revenue by 1% to 4%.

Q3: How does Ketera differentiate from a 'marketplace or exchange model,' which was followed by Commerce One and Ariba with little success?
A3: Ketera is doing for spend management what ADP has done for payroll. Ketera's on demand integrated solutions deliver a greater return than software solutions with a 5-10x lower investment and overall Total Cost of Ownership (TCO) and a 3-5x faster Time to Value (TTV). The value created can be seen in the cost savings in material and service costs of between 5% and 10%, reduction of off-contract spend of between 50% and 90%, and increased operational efficiencies. Plus, Ketera's four to six week implementation versus traditional solutions' six to 12 months save customers between 60% and 80% over old model alternatives.

4: Do you sell hybrid (licenses and SAS)?
A4: No, we sell only sell SAS. We sell our software as a service and customers buy subscriptions for a three to five year term. Customers are up and running within 30-60 days and see positive ROI within the first nine months. The subscription costs vary with the number of suppliers, size of company, etc. We provide both an SMB and enterprise offering.

Q5: Pricing in a SAS environment is often challenging. How often have you changed pricing schemes in the last three years?
A5: Never

Q6: What is the percentage of service vs. product value in an average SAS deal?
A6: All service. Our subscription services scales to the company usage therefore larger companies spends more because of the large number of users and visa versa.

Q7: Can you tell us more about a typical deal size in a SAS environment?
A7: Typical enterprise deal size is one million over three years; deviation is based on company size and solution offered. Mid market deal sizes start at $100 per user per month.

Q8: Where do you see the future in this market and why?
A8: The SAS market will continue to mature and capture increasingly more share of the software market. The on demand model provides a ROI that's not possible with traditional software. The trend, to buy software as services, that we are seeing today will continue to grow and will span multiple application categories including CRM, payroll and our category, Spend Management.

The interview was done via email. We thank Steve and the team from Text 100 for their help!