How SaaS Companies Blaze Their Own Trails to Success
By Paul Johnson
CPA, CGMA, MBA
When it comes to today’s software and technology business metrics, if Saas and software-related VC companies want to succeed, they need to blaze their own trails to success by stepping outside traditional software’s benchmarking norms. Find out how they do it.
Why SaaS Metrics Are Different
Traditional on-premises software companies spend most of their time and energy measuring their financial metrics, such as recognized revenues, operating expenses and profits. However, software-related venture capital and other Saas businesses have a lot more moving parts – like revenue recognition, growth rates, and new customer acquisition costs, just to name a few.
This means these businesses need to focus on customer metrics, revenue metrics, cash, and metrics for cost, expense and profitability, so they can track the really important data that goes along with providing subscriptions as a service.
How SaaS Companies Blaze Their Own Trails
Because Saas companies have greater complexities with their products than on-premises software companies do, they need more flexible, responsive systems in place that can accommodate their unique service needs.
These software and technology companies need strong data tracking systems that give managers deep insights into the right KPIs, and real-time visibility into data that they can leverage to create powerful business growth strategies. Real-time tracking solutions provide insight into:
- Churn rates, customer segmentation, customer lifetime values, and sales and marketing expenses – that are valuable, especially in the beginning stages of a business.
- Revenue growth rates that rise with initial startup momentum for managers to monitor company value.
- Customer acquisition costs (COCA) and customer lifetime values (CLV) that are critical to measuring a businesses’ profitability.
Managers of today’s software and technology companies carve their unique paths to success by closely following deep insights into revenue recognition and growth rate indicators by using best-in-class solutions like Sage Intacct.
With this kind of responsive financial management system, teams can accurately forecast with a high level of predictability, and easily identify key aspects of their services that are working great, or not-so-great for their business, and their clients. Ultimately, these companies don’t miss a beat as they handle the fast growth that SaaS companies typically see.
Today’s software and technology companies that want to continue on the path to success need to blaze their own trails, by bringing in robust, responsive systems that best fit their unique needs. If your Saas, or software related VC company is ready to take your business forward, drop us a line – we can help!