Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from Richard Davis – Needham.
Richard Davis – Needham
One of the things that you’ve talked about in the past is about how a lot of your ISB customers are switching their business models to software to service and that obviously tends to do that business model often times elongate your revenue recognition which in theory would come back to you guys since you charge at least not, especially on the OpenEdge side of the world kind of a percentage of the value of the software.
Is that a accurate statement and have you been able to kind of assess how much impact that has and then thirdly is if that isn’t true then would it be rational as once these customers kind of switch to the software to service business you’ll start to eventually have apples-to-apples comparisons which would indicate they, the business in theory could reaccelerate.
Joe Alsop
The answer to your questions are, yes, to the first, it has an impact. It’s I would say no to the second, can you quantify it. There are several offsetting things going on. On the one hand, we are essentially deferring revenue when a deal is done on a SAS basis versus on an upfront license basis.
However we believe and Dave may jump in because I remember a remark he made to me after going to our partner conference earlier this year about how bullish many of our partners were on SAS and they’re now, I think 200 plus in the program. So there’s a marketing, market penetration benefit, i.e. many of our partners are able to either be more competitive within the markets they serve or go after additional customers by virtue of SAS and you know that has a positive benefit.
So there’s sort of a mixture of things going on here that just may, your third part is sort of well can you make an apples-to-apples comparison and you know the basic answer is that that that’s very tough. But I would say, for example that our second quarter OpenEdge SAS business was up over 30% over the prior year. Sorry I can’t plug it into the model that easily.
Richard Davis – Needham
Second thing is, would you describe the corporate IT environment, because what we’re hearing from a whole bunch of different sources, it’s not a disaster but every transaction is taking a little bit of extra effort or people are putting a sharp pencil to everything. So do you just kind of, is that what you’re seeing in your markets?
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