This IDC study reviews Ultimate Software, a provider of people management solutions, and its transition from delivering exclusively on-premise solutions to SaaS as a publicly traded company. Each quarter, IDC had an opportunity to meet with CFO Mitchell Dauerman to talk about how Ultimate made this transition. Many independent software vendors have been reluctant or have struggled to make this transition because it is very hard to do when the company has a solid base in the licensed software world and the shift to recurring revenue often causes a reduction in current revenue as the company moves from recognizing revenue immediately to recognizing it monthly over a multiyear period. A look at Ultimate Software's results over a 15-year period while it made this transition provides a useful example of the focus and discipline required to succeed.
"Many ISVs have struggled to make the turn from selling on-premise software, with its large up-front payments, to a SaaS model that recognizes revenue on a monthly basis. Ultimate Software has successfully made that transition in a big way, without losing focus on its core value of "people first" and as a publicly traded company. It's an inspiring story and the entire team at Ultimate is to be congratulated on their success," says Christine Dover, research vice president, Enterprise Applications and Digital Commerce.