The company, which makes software that helps firms manage staff performance, posted a 37 percent jump in 2009 revenue. Revenue for 2010 is expected to grow 18 percent to 19 percent.

The company trades at a whopping multiple of 1,138 times forward earnings -- 25 times the sector average. Its shares have risen more than two and a half times in the last one year.

In contrast, Oracle trades at 14 times forward earnings and SAP at 17.

DemanTec, another possible target, provides pricing and merchandise optimization for retailers. Its largest customer is Wal-Mart Stores Inc.

"For DemandTec, it was initially about fitting large global retailers like Target Corp or Walmart to buy the best buy, but then they started selling software to their suppliers," Tillman said.

The company's products manage the same stores sales environment and help improve gross margins, he said, which could make it a valuable addition to large systems integrators that these retailers rely on, or even large enterprise companies.

Shares of the company have, however, dropped about 40 percent in the last one year.

Recent Consolidation
The software sector has recently seen a flurry of activity with SAP AG's offer to buy Sybase Inc and IBM's move to acquire AT&T Inc's business-to-business software unit.

Analysts believe these buyouts could accelerate the pace of consolidation in the tech industry in the next 12 months to 18 months.

"Just the fact that a large application vendor like SAP could become more aggressive increases the urgency of what other players like Oracle, IBM, Hewlett Packard Co or Microsoft Corp feel about M&A," said Tom Roderick, analyst at Thomas Weisel.

Roderick's pick in the SaaS space is Salesforce.com, but he said the company did not look like an immediate target.

"It is the property that has the most strategic value. It is the market leader in SaaS by a long shot and CRM technology is certainly one, if not the hottest, application sectors in the marketplace right now," he said.

The company's revenue grew 21 percent in fiscal 2010, compared with fiscal 2009 and is expected to grow 18 percent to 19 percent in fiscal 2011 to between $1.55 billion and $1.56 billion.

The company trades at 75 times forward earnings and its shares have more than doubled in value in the last 12 months.