According to research conducted by IDC last year, four out of five new commercial software applications are being built for cloud delivery. That number is likely to rise. The majority of software companies have left their old business models of one-time license fees behind, and moved to a subscription-based deliver model. But those two business models require different ways of monitoring and measuring performance and if you try and use the same metrics to run your SaaS business as you ran your perpetual license business, you’ll have a tough time finding success.
So how does a software company in transition from licensed to SaaS sales successfully monitor and evaluate financial performance? Knowing the right metrics is the first major step, and NetSuite CFO Ron Gill, a tech industry financial veteran, will address that topic at the NetSuite SuiteWorld 2014 (opens in new tab) session "Critical Metrics for the High-Value SaaS Business." Gill, who was named CFO of the year by the San Francisco Business Times in 2013, will provide an overview of each key indicator, and explain why it’s the right metric to use and when it’s best applied.
The session will cover indicators for recurring revenue, new customer bookings, customer churn and retention, and sales and marketing efficiency. One example of a SaaS metric for measuring success is LTV/COCA, that is the lifetime value of a customer divided by the cost to acquire that customer; this is often referred to as the ultimate effectiveness of a SaaS business., . That can tell you what types of customers are most valuable to a business and whether the business is keeping more of them, or losing them, over time – which in a recurring revenue model is critical.
The SaaS model offers greater revenue stability through recurring revenues, but it also requires a new set of metrics for setting and meeting goals. To learn what your software company needs to do to succeed as a cloud-based business and gain better knowledge of your finances, join Gill on Tuesday, 5/13/14 at 3:00 PM PT, Room 210 E & F, Concourse Level. There will also be time at the end to ask questions about your company’s own unique challenges.
Want to learn what else we have in store for software companies at SuiteWorld 2014? Check out our Software Industry session line-up.
