A Couple SaaS Generations Ago…
Traditional software companies managed sales, product development, finance and HR in siloed organizations by function. Cross functional management was attempted but often not effective. In the early SaaS days, management structure was essentially the same. Separate Sales, Marketing, R&D, Accounting/Finance organizations were headed by a senior executive.
The siloed management structure paralleled the key components of Operating Expense, making it easy to report backward-looking Income Statement expenses and recognized revenues, but not cross-functional customer and product lifecycle metrics, critical to managing a SaaS company. And HR was essentially a resource administration function, often sitting under the CFO.
Today’s Focus on Customer Lifecycle Management, People, Product and Performance
But today, SaaS management is evolving to bring functions together across the business lifecycle in a high-performance SaaS model. The SaaS operating model requires execution across functional activities. Metrics and analysis of product and the customer lifecycles is fundamental to growth decision-making in a SaaS company.
Underlying all the functional processes are myriad systems supporting and handing off each business activity to the next step, from quote to cash, from customer interview to product development to customer engagement analytics in the product. In the best companies, these systems are well integrated, giving management critical insight into performance, with tight forecasts. In most companies, though, Finance and various “Ops” groups spend huge amounts of time pulling together data from various systems (which are still based on siloed functional areas) to eventually come up with one set of the “truth” in order to provide Management with the data for decision-making.
To combat this and be more agile, SaaS management is morphing and restructuring functional management and multiplying the number of new C-Suite titles like Chief Customer Officer, Chief Revenue Officer, and Chief Product Officer, not to mention Chief Performance Officer and Chief Security Officer. To stay on top of the fast paced, evolving digital world, issues like hiring and managing a diverse and highly skilled SaaS workforce, as well as security and privacy concerns impacting everything from customer contracts to product strategies and new market development, HR and security management is being elevated into in the C-Suite.
Here’s a few of newer titles that we are seeing in SaaS companies, even in smaller and mid-sized companies.
Chief Performance Officer
According to PWC, the Chief Financial Officer is well suited to become the Chief Performance Officer. The CPO takes an organization-wide view of performance, developing measurements to gauge the results of various units, working with stakeholders to improve them, and reporting on performance to the CEO. The CPO role was publicized when Barack Obama appointed Anthony Politano, as the first US Government CPO. Politano described the role as having the ‘six Cs’: “Collect, consolidate, and condense performance-related data; communicate the results; collaborate with others; and control and govern the process.” The CPO integrates the functions which once might have been led by a Chief Operating Officer and Chief Financial Officer, with a stronger focus on performance-related reporting and data analysis.
Chief Performance Officers sometimes evolve, though, from a CIO function, as compared to coming from the CFO. In this structure, the Chief Performance Officer is more focused on data, analysis from both information and business systems and supporting the commercial, product and finance functions. We’ve seen both evolutions of the Chief Performance Officer.
Chief People Officer
While some companies combine the CFO and HR functions into the Chief Performance Officer, in others, HR has been elevated to an executive position on its own under the CEO. Where once HR sat under the CFO and was managed as an expense, in its new role under a “Chief People Officer,” a strategic HR team can directly help the company increase market share and sales, grow the customer base, drive product innovation, and help the company be agile and able to adapt to the changing digital landscape. The Chief People Officer has a seat at the table of executive management and is responsible for talent acquisition, diversity, retention, training and human resource management across the organization. The CPO directly affects the ability of a SaaS company to grow and expand operations.
Chief Customer Officer or Chief Revenue Officer (CRO)
The CCO and CRO positions are very similar but reflect slightly different focuses. The Chief Customer Officer includes all of Sales and Marketing and covers the whole customer journey, from lead through customer renewal. Account based selling is best supported through this type of integrated Sales and Marketing organization.
The CRO is similar to the Chief Customer Officer, but sometimes has a slightly broader mandate to manage all business functions touched by revenue generation. The CRO leads Sales, Marketing, and Operations, plus often Customer Success. This structure integrates systems and data, ideally resulting in tight management of the quote to cash process. RevOps, with a broader mandate usually than SalesOps, sits under a CRO to ensure alignment among all systems and support each part of the business lifecycle.
Chief Product Officer
In some companies, the product and CTO are morphing into the Chief Product Officer, responsible for product marketing, management, development, and sometimes Customer Success as well, if Customer Success is more focused on customer engagement and satisfaction, rather than sales. CTOs, however, aren’t disappearing quickly in the R&D-driven SaaS world, and many would argue that it is impossible to manage both product definition and product innovation, development, and delivery well under one organization. Lots of companies have both a Chief Product Officer (CPO), and a Chief Technology Officer, where the CPO is more of an elevated Product Marketing/Management executive.
Integrated Management Supports Value Creation by Reducing Bottlenecks
These new management structures in SaaS companies reflect the imperative to manage and track customers, products and employees strategically throughout the entire business lifecycle. The old, siloed management structures separated Sales from Marketing from Finance and Product, led to difficulties for many companies getting accurate data for key SaaS KPIs and measuring critical business performance. With a cross-functional organization, the systems supporting that organization tend to be better integrated, so that the activity in one area can immediately be seen and more importantly, understood, in the rest of the organization.
What’s important about these new management trends is the focus on eliminating bottlenecks across activities and performance analysis throughout a SaaS business. In addition, it reflects the diminishing value in income statement reporting to managing the health and growth of a recurring revenue business. To learn more about becoming part of a SaaS benchmarking and metrics community and stay abreast of topics like this, contact us at email@example.com.