SaaS & Software Best Practices

With the right methodology, cost productivity discipline not only helps fuel steady growth and big initiatives but also are rewarded by shareholders, leading to substantially higher TSR, in both good times and downturns, according to Bain long-term research.

By Bain & Company and Lauren Kelley | April 13, 2023

With the right methodology, cost productivity discipline not only helps fuel steady growth and big initiatives but also are rewarded by shareholders, leading to substantially higher TSR, in both good times and downturns, according to Bain long-term research.

By Bain & Company | January 24, 2023

CFOs should think about automation as an “additional teammate” in their financial departments as they look to push digital transformation initiatives forward in the new year.

By CFO Dive | January 10, 2023

In an increasingly data-driven world, a surplus of conventional wisdom and “generally accepted benchmarks” constantly bombard SaaS company executives.  When performance benchmarks are used correctly, there is a tremendous value creation opportunity which starts and ends with precision cohorts.

By OPEX Engine | January 3, 2023

Usage-based pricing is good for the customer but makes predicting revenue difficult. CROs & CFOs are challenged w/ predicting how much revenue is expected and when it will be realized. This guest post from revVana explains a simple approach to improving your revenue forecasting.

By revVana | December 6, 2022

During October, Tomasz Tunguz held Office Hours hosting Carilu Dietrich, marketer and advisor at Atlassian to discuss how to successfully run a PLG program. Dietrich shared the 5 pillars in this guest post from Tomasz Tunguz.

By Tomasz Tunguz | November 29, 2022

Both the Customer-Centric and Industry-Centric classifications provide valuable frameworks for evaluating SaaS companies. The CFO’s role is to provide operational and financial insight to the management teams and translate business performance into reporting for investors. Therefore, the CFO must understand both frameworks to succeed as a SaaS CFO.

By Eric Mersch | November 22, 2022

Improving visibility into company cash flow and gaining tighter control of data is essential for financial leaders as they brace for the possibility of a recession, according to a study.

By CFO Dive | November 15, 2022

It’s no secret that the current uncertain economic climate is taking a toll on our work and personal lives. During times of uncertainty, executive leadership teams make more conservative financial decisions in order to prepare for and/or prevent any major difficulties for the companies that they lead. These decisions and preventative actions have repercussions that […]

By Kevin Dallaire | October 4, 2022

Recruiting, hiring and retention of productive employees is critical for SaaS companies. An area that I don’t think gets enough attention from any company is the qualification and interview process for new hires. Especially in 2022’s competitive, inflationary environment, improving this process is both cost-effective and necessary for almost every company. Dave Kellogg, an amazingly thoughtful CEO and advisor provides interviewing best practices – focusing both on what the organization needs to do to prepare and then the interview process itself.

By Dave Kellogg | April 12, 2022

R&D is the backbone of any SaaS company, yet to many CFOs, it is still a black box.  Most companies track R&D as a % of revenue, and maybe a few metrics about activity, but few CFOs can answer the question of what’s the ROI on their R&D investment.  Perhaps even more importantly, what are […]

By Lauren Kelley | March 29, 2022

In the first 10 years of the SaaS industry, US SaaS companies didn’t need to go overseas to build highly valuable companies. But that dynamic has changed in lockstep with the growth of the SaaS market. Gartner forecasted that global spending on SaaS applications is easily going to exceed $1Trillion by the end of the decade—if […]

By Lauren Kelley | March 15, 2022

Over the last three years, start-ups have raised funding every 15 months. As your SaaS company grows in complexity and expectations, you reach a point where manual processes waste time away from analysis, and you struggle to collect and act on your growing range of financial and operating data. At this point, you need to […]

By Sage Intacct | March 8, 2022

When it comes to IPOs, 2021 was an excellent year for SaaS companies. Accelerated digital transformation across industries put SaaS companies firmly on the hypergrowth path. But this kind of hypergrowth doesn’t happen overnight. In this guest post, written by Mike Beach, insights are shared with CFO on how they can prepare their SaaS enterprise for hypergrowth.

By CFO Dive | February 1, 2022

With 331 SPAC deals enthusiastically closed in 2021, and the collective pool now trading on average 42% below purchase price— we are living in a far different landscape of capitalization opportunities than we were this time last year. Against this backdrop, every SaaS company would be well-served to consider three things as they plot their path to public capitalization: speed to market, the cost of its finance team’s capitalization efforts, and investment scrutiny.

By Lauren Kelley | January 25, 2022

Consumption pricing–a licensing model where software is sold based on use (actual traffic, transactions, etc.) rather than a fixed fee–is making the headlines these days. “Subscription-based pricing is dead: Smart SaaS companies are shifting to usage-based models” headlined a recent TechCrunch article. “How Usage-Based Pricing Fueled Two 2020 IPOs” led one from Insight Partners. It’s the kind […]

By Chris Mele | January 4, 2022

A usage-based pricing model, which leads to increases or decreases in revenue based on how much customers engage with a service, has been gaining on the more traditional subscription model as the main way SaaS companies make money. There is an appetite for usage-based pricing and is expected to continue to accelerate.

This guest article from CFO Dive delves into why some are making the switch. However, there’s one category that hasn’t moved over to a usage-based pricing model. Read this article to learn who is not using it.

By CFO Dive | December 7, 2021

Although EBITDA and FCF measure very different things and can move in opposite directions depending on companies’ responses to changing market conditions, accounting teams should be prepared to do their own calculations when trying to raise credit capital. In this article, we focus on these two terms and how they should be used carefully and in context.

By CFO Dive | September 28, 2021

Tech debt refers to the cost of redeveloping existing products and code that would otherwise not be able to scale or evolve over time to meet shifting consumer needs. And while the concept has been around for years, for most of that time, tech debt was primarily the concern of product and engineering teams. In this guest post from Espresso Capital learn to measure tech debt and understand why it matters.

By Espresso Capital | August 31, 2021

Business operates in a climate of constant change. Here’s how you can make your planning and budgeting process more Agile.

By Bain & Company | August 24, 2021

If you’ve underestimated the importance of financial operations for both the short and long-term success of your SaaS business, you’re not alone. With the explosive growth of the SaaS business model impacting businesses worldwide, many are navigating SaaS financial operations and subscription management for the first time.

These 7 best practices work for growing B2B SaaS businesses.

By Business 2 Community | August 17, 2021

Flexibility and Budgeting rarely appear in the same sentence. That’s a shame as better budgeting and planning tools can bring far more flexibility into the planning, forecasting, and budgeting process. A new budgeting/planning tool should usher in a new process, new insights, and new metrics for running the firm.

This guest post from Sage Intacct explains what an ideal new solution should help with and how to identify if your organization may need to update its budgeting and planning tool.

By Sage Intacct | August 9, 2021

As companies commit to transforming their FP&A function, choosing the right focus and pace is essential. They should align with business leaders on the sources of value creation for the future, then work backward to redesign FP&A around them. And they should carefully choose their spots for investment. That will raise the odds of FP&A shifting its role from scorekeeper to a true business partner.

By Bain & Company | August 3, 2021

CFOs benefit from tracking and sharing customer experience and other operational key performance indicators; it can help in getting alignment on investment priorities across the organization. CFOs oversee operations or are asked to make budget decisions based on what operational metrics are showing, they can benefit from setting up these types of metrics if they don’t have them.

By CFO Dive | July 20, 2021

This is the 3rd in our 5-part series on the benefits of Software as a Service (SaaS). Our initial post offered some definitions of cloud and SaaS. Our last post explored the value of SaaS in terms of cost savings. In this post, we turn our attention to a different kind of value: innovation. By way of review: All […]

By Sage Intacct | July 13, 2021

Venture debt is a specialized form of corporate credit that differs from traditional corporate lending in a number of important ways. While traditional credit is typically backed by assets or cash flow generated by a business, venture debt is used by fast-growing companies that are consuming — rather than producing — cash to support their […]

By Espresso Capital | July 6, 2021

The sales strategy of “Land and Expand” is common among software companies. So common, in fact, that it might be fair to call it accepted wisdom. First land the customer, then expand them. In this guest post by Chris Mele, CEO of Software Pricing Partners, you will learn the advantages of ‘Expand and Land’ and how to integrate a strategic monetization model.

By Chris Mele | June 29, 2021

The CAC Payback Period, also known as Months to Recover Customer Acquisition Cost (CAC), measures the number of months of subscription revenue it takes to recover the costs to acquire one customer. This metric is one of the many ways to look at the capital efficiency and profitability of a SaaS business.

By Lauren Kelley | June 23, 2021

As non-GAAP measures, they might be based on variables other companies don’t share, but they can be made more accurate, says SaaStr head Jason Lemkin. If your monthly recurring revenue (MRR) numbers don’t add up to your annual recurring revenue (ARR) when you extend them out for a year, you’re misreporting the financial health of […]

By CFO Dive | February 24, 2021

Last week, FLG Partners, a group of experienced CFOs in the Bay Area, put on a webinar called “Pivoting to SaaS: Best Practices, Lessons Learned, and Case Examples” for traditional software and hardware companies. I participated, along with a terrific panel moderated by CFO Eric Mersch, to talk about the lessons learned over the past […]

By Lauren Kelley | February 2, 2021

While many of these mistakes or potential issue items are likely to be more prevalent in a business with a lean (or essentially non-existent) finance team, we’ve seen large businesses deal with many of these same challenges. Here are the top 8 mistakes I see most frequently (along with some potential fixes if you are […]

By SaaSX | November 23, 2020

Modern tools use integrations to eliminate rekeying data, share information across teams or departments, and gather intelligence to enable broader analysis and faster decisions. For most companies following a best-in-class technology strategy, the finance system is the hub for the other systems they use. It becomes a go-to point for making strategic decisions that affect […]

By Sage Intacct | August 4, 2020

At a Glance It often seems as if traditional strategy development processes have no place in the fast-moving, always changing technology industries. But in many respects the way top tech performers define a mission, shape a portfolio and allocate resources looks a lot like what companies in more traditional industries have done for decades. The […]

By OPEX Engine and Bain & Company | July 28, 2020

Mention the words “dark data” and it immediately conjures up images of the Matrix, hackers, black hat tactics, and so on. Yet despite its cyberpunk connotations, this couldn’t be further from the truth. Dark data is an incredibly useful source of information that SaaS businesses can tap into to improve their processes. But what is […]

By Lighter Capital | July 21, 2020

SaaS customer onboarding is critical—it’s really where the customer relationship is won or lost. There is a ton of great customer success information out there—but nothing that’s “block and tackle” specific, like an actual on-boarding cadence example. The key to great customer onboarding is pro-active communication and collaboration inside your organization and with your customer.

By SaaSX | July 14, 2020

You hear the terms SaaS, subscription, term licenses and perpetual license software tossed around frequently.  The terms aren’t universally understood, nor are the implications of each on the financial model of a company, so the following is an effort to provide an overview. At OPEXEngine, we pull apart the different nuances of each business model […]

By Lauren Kelley | June 11, 2020

In this third installment of our blog series ‘React, Adjust, Recover – Strategies for Professional Service Organizations During the COVID-19 Outbreak’, we focus on strategies to help businesses recover faster as restrictions begin to lift. You may be too busy reacting to the crisis to think about recovery at this moment, but research shows you […]

By Sage Intacct | June 9, 2020

As I’ve written about, progress normally comes at us gradually, but COVID-19 has changed that and rapidly accelerated our progress toward the future. Virtual work, on-demand delivery, and telemedicine were all catapulted forward due to this terrible tragedy. And I discussed in the previous post, it’s likely we’re going back to the old world for some […]

By Nick Mehta | May 12, 2020

In the early stages of a major business transformation, the leaders of a large global airline faced an urgent new priority—responding to the impact of Covid-19 on employees and passengers. Their first moves were grounded in empathy and compassion: keeping customers and employees safe, and maintaining the operational network long enough to return passengers home. […]

By OPEX Engine and Bain & Company | April 28, 2020

When will a start up’s management team feel comfortable telling employees they’re safe to return to work? Is it when the government declares it safe? Or schools re-open? Or customer prospects agree to meet in person? Or when we each record a positive antibody test? How will we conduct meetings? With masks and gloves? What […]

By Tomasz Tunguz | April 21, 2020

In the 1970s, J. Patrick Kelly, the first sales ops group leader, described his responsibilities as “all the nasty number things that you don’t want to do, but need to do to make a great sales force.” More than 40 years later, much has changed about sales processes and cross-functional collaborations, yet three things remain […]

By Workday Adaptive Planning | March 31, 2020

Insight. The one true currency of a finance professional. If we don’t have any insights to share with our business stakeholders, then we’re not helping improve decision-making. A lot has happened on the insight front in recent years. We’ve talked about going from insights about past events to insights in real time. Few finance functions […]

By Workday Adaptive Planning | March 17, 2020

I am surprised by how many startup CEOs leave the board hanging at the end of the quarter.  As a CEO my rule of thumb was that if a board member ever asked me about the quarter then I’d failed in being sufficiently proactive in communications.  In tight quarters I’d send a revised forecast about a week before […]

By Dave Kellogg | March 3, 2020

Imagine that you have just signed an LOI for the acquisition of your company.  You, the CFO of a mid-sized SaaS company have spent the last 2-3 years getting your financials, your retention, CAC and other key metrics, in shape so you are offered an attractive valuation multiple.  Your investors are excited about seeing the […]

By Lauren Kelley | February 27, 2020

I have a bit of a love/hate relationship with the freemium model. Done right, freemium can lead to amazing success. One of the best examples is Dropbox, which Tomasz Tunguz called the “King of Freemium”. What makes the company unique, he argues, is how it transformed its free users into evangelists. “Unlike other SaaS companies, Dropbox […]

By Christoph Janz | February 25, 2020

At SaaS Capital, we have a lot of respect for GAAP financial statements. We think GAAP financials generally do a better job than cash-based financial statements in reflecting the underlying financial performance of a SaaS business. GAAP is the standard, and if your numbers are not based on GAAP, then they do not actually conform […]

By SaaS Capital | February 18, 2020

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 […]

By Lauren Kelley | February 13, 2020

Business technology continues to evolve at lightning speed. As more applications transition to the cloud, information has never been easier to gather. Data is becoming more and more essential to remaining competitive and succeeding in any industry. However, despite the growing importance of data, many CFOs and Finance Leaders feel they’re underusing it in their roles as […]

By Sage Intacct | February 11, 2020

As Chief Credit Officer at Lighter Capital, I work behind the scenes grappling with the data that informs all of our decision-making regarding financing deals, from revenue-based financing (RBF) to term loans and lines of credit. Similar to a venture capitalist (VC), I try to understand where startups are in their life cycles — and where they can expect to […]

By Lighter Capital | January 28, 2020

How analytics can guide companies from insight to action. Beyond generating insights, leading sales and marketing groups deploy analytics to prescribe specific actions that raise the odds of closing or expanding deals. Prescriptive analytics frequently takes three forms: guided marketing, guided selling and guided pricing. These forms of guidance all hinge on the organization having […]

By OPEX Engine and Bain & Company | January 21, 2020

The typical SaaS company grows faster, loses more money, and has a higher valuation than product sale companies. Weighted Average Profitability Cash Flow from Operations Growth Price/Revenue Ratio Public SaaS Companies -8% +15% 33% 8.7x Public Software Companies +8% +28% 8% 3.3x Source: SEC filings – weighted average by company revenue Many factors drive the […]

By Cloud Strategies | January 14, 2020

If there’s one thing a finance professional can do forever, it’s analyze stuff. We’re never short of data to analyze, and there are always more details to be ironed out. We love analyzing stuff so much that we almost forget the purpose of doing the analysis. The purpose is to improve business performance through improved decision-making. That […]

By Workday Adaptive Planning | January 7, 2020

Here’s how more advanced methods of automation, including machine learning, can help CFOs transform the finance function to be more of a strategic advisor to the business. In a recent McKinsey survey, only 13 percent of CFOs and other senior business executives polled said their finance organizations use automation technologies, such as robotic process automation (RPA) and […]

By Workday Adaptive Planning | December 24, 2019

By excelling at these moves, marketers ensure that their message breaks through the noise. At a Glance Getting a product, service or brand launch right matters more than ever for long-term success, which has become more difficult because of the proliferation of launches. Launch leaders have learned how to cut through the din of messages […]

By OPEX Engine and Bain & Company | December 10, 2019

Cash efficiency is one of our favorite metrics in SaaS. Measured as recurring revenue in the latest year / equity + debt invested, it’s every bit as important as growth. We did an analysis looking at the revenue, equity, and debt of 88 publicly traded SaaS companies at the time they went public. Using the […]

By Sammy Abdullah | November 26, 2019

During the annual budget and planning process, SaaS Finance leaders focus on making sure that resources are allocated appropriately across the company so the company achieves its performance goals – usually revenue and profitability goals – for the upcoming year.   Resource allocations should be fine-tuned by looking at how the Return on Investment (ROI) can […]

By Lauren Kelley | November 21, 2019

Think about some of the online tools you can’t live without. Chances are, you backup your work to Dropbox, keep your colleagues updated on your progress via Slack, and automate your marketing emails with a service like Mailchimp. And what all these companies have in common, according to Forbes, is that they’re product-led growth companies. The […]

By SaaSX | November 19, 2019

A widely held view on strategy in the 1980s defined two ways to compete: firms could pursue either a low-cost advantage (usually through scale) or a differentiation advantage (by building intimate customer relationships). The prevailing approach to running a firm at the time (what we call the professional management system) was perfectly tuned to steer most large companies […]

By OPEX Engine and Bain & Company | November 12, 2019

Can financial reporting analysis really help your business grow? Absolutely! To employ a data-driven finance approach, CFOs need to move finance functions up the analytic value chain to offer more detailed analyses, better forecasting, and increasingly granular information on products, suppliers, customers, and more. In turn, their analyses inform the business, increase corporate agility, and point the […]

By Sage Intacct | November 5, 2019

Heading into the 2020 planning season, SaaS FP&A teams are working to finalize 2020 budgets and planning. Over the past decade benchmarking software and SaaS companies, I’ve had the chance at OPEXEngine to work with hundreds of amazing Finance execs who work incredibly hard at getting the right data to support their company’s goals.  I’ve […]

By Lauren Kelley | October 31, 2019

Eighty percent of economic profit created by companies globally comes from 20% of the companies. Yes, the Pareto principle applies here too! What’s the secret sauce for becoming one of the 20%? The bad news? There is indeed a sauce and a recipe for how to make it. The good news? The recipe is not […]

By Workday Adaptive Planning | October 22, 2019

This is the first in a three-part series where we address the main hurdles facing finance today, and identify some tools and technologies that can help you overcome these hurdles. Gone are the days when finance leaders were simply bean counters. As a finance leader, of course you must take on the responsibility for the integrity […]

By Sage Intacct | September 24, 2019

We often get questions from SaaS companies about GAAP versus non-GAAP expenses, and whether the benchmarks for expenses are distorted by GAAP accounting.  According to GAAP, expenses typically include charges, like stock option expense and other SaaS expense benchmarks which may be associated with acquisitions, and aren’t necessarily relevant to operational budgeting and planning.    GAAP […]

By Lauren Kelley | September 19, 2019

When it comes to FP&A forecasting, most companies base their long-range forecasts on static planning processes, rather than more relevant, dynamic plans that reflect the complexities of the business. Relying on a forecast that doesn’t enable continuous monitoring of company performance, instead of implementing a modern, rolling forecast approach, is like using an old-school road map to guide you […]

By Workday Adaptive Planning | September 17, 2019

Traditional software companies – and most tech companies in general –  are building Software-as-a-Service (SaaS) businesses.  Enterprise SaaS revenue is hitting the $100B run rate, according to Synergy Research in its most recent report.  That’s still only 20% of the total enterprise software market, but it’s growing quickly. An increasing number of customers demand the […]

By Lauren Kelley | September 12, 2019

Eighty-four percent of new software today is delivered as a service (SaaS). Yet, as we turn the corner toward 2019, many businesses remain ill-prepared for the unique challenges and opportunities that come with moving to a subscription model and managing a SaaS business. The most noticeable pitfalls lie in the way SaaS businesses manage the […]

By SaaSOptics | September 3, 2019

A recent survey from KBCM Technology Group (previously Pacific Crest Securities) shows the substantial impact that up-selling, including expansions, can have on your SaaS business. Up-selling is the key way to lower the cost to acquire revenue which in turn shortens the payback of the customer acquisition cost. Per the survey, the cost to acquire […]

By Paul Ressler | August 27, 2019

Did you ever hear the phrase “you are your numbers”? In most companies, business leaders live and die by their numbers regardless of the circumstances in which they hit or miss them. External conditions could be favorable, and you could hit them with little effort. Being faced with a lot of headwind and missing your […]

By Workday Adaptive Planning | August 22, 2019

In our engagements at FLG Partners, we often encounter situations in which companies default to systems to try to improve their business processes. Unfortunately, this approach can give a management team a false sense of security and almost always results in performance below expectations. At FLG, we typically find that process gaps are underestimated by […]

By Eric Mersch | August 13, 2019

Cloud channel strategies have evolved significantly over the past 20 years. Today there are a variety of SaaS channel sales models that companies have leveraged to exponentially increase sales and their potential customer base.

By Lauren Kelley | August 9, 2019

Cost of Revenue (COR) is the second highest expense bucket for most SaaS companies, yet it often gets overshadowed by the highest expense category, Sales & Marketing.  Sales and Marketing gets a lot of deserved attention since it can make or break a company’s revenue growth. Yet, COR spending directly affects the customer and losing […]

By Lauren Kelley | August 2, 2019

In this week’s 2019 State of the Internet presentation, Mary Meeker, the Midas List Kleiner Perkins/Bond Capital partner behind Spotify, Dropbox, Instacart, Slack, Square, Airbnb and Houzz, as well as Facebook and Twitter, captured how the internet is transforming the consumer and enterprise world, and even the political and regulatory sphere.   Given at Vox/Recode’s Code […]

By Lauren Kelley | June 14, 2019

Two/thirds of the SaaS Finance executives in this week’s webinar audience said they don’t feel they are getting a high level of return on their R&D investment. Tom Huntington, an experienced SaaS CFO and I explored the R&D “Magic Number,” and how the SaaS model and Lean Start-Up methodologies are helping to make R&D investment […]

By Lauren Kelley | June 7, 2019

Everyone loves recurring revenue and rightly so: it’s far more valuable than one-time revenue to VC and acquirers.  But, don’t forsake one-time revenue.  Whether it’s for services, onboarding, licensing, or some other one-time event, revenue of this type is incredibly valuable especially at early stages.   There are three big reasons it’s valuable: It’s a Source […]

By Sammy Abdullah | June 4, 2019

As the ways in which we do business change and evolve, the tools we use for SaaS revenue recognition should, ideally, change as well. Unfortunately, that’s not always the case. A recent study found that just 40% of CFOs felt confident about their system’s ability to provide relevant insights, and half reported that their systems did […]

By SaaSX | May 28, 2019

This week, we announced a strategic relationship with Bain Consulting.  Bain is using our benchmarks with their strategic consulting to help clients better understand how they compare to peers and market leaders, and where they can improve.  Data plus insights makes the analysis concrete and actionable.  Our decade long benchmarking of software and SaaS companies […]

By Lauren Kelley | May 23, 2019

After sales skyrocketed in 2003, Salesforce was bursting at the seams. Employees worked full-time in hallways and conference rooms because no one was prepared for the company’s explosive growth. Arguably the first true software-as-a-service (SaaS) company, the story of Salesforce exemplifies the dramatic expansion of the entire SaaS industry over the past two decades. Still, […]

By SaaSOptics | May 21, 2019

Back in 2014, I wrote a post titled “Five ways to build a $100 million business”. If you haven’t seen it yet, the central idea of the article was to look at how many customers you need, for a given ARPA, to get to $100 million in annual revenue and what this might mean for […]

By Christoph Janz | May 14, 2019

We had a great discussion with Andrew Setness, VP Finance at DialSource this week on evolving the Finance organization as a SaaS company grows.  We talked about the processes, metrics and systems that change as a company goes from a Series A, to B, to C and beyond. Andrew, based in Sacramento, CA, highlighted that […]

By Lauren Kelley | May 10, 2019

I’m a huge practitioner of data-driven SaaS management. I believe that almost everything in a SaaS business can and should be measured. But there are two important caveats to measurement that I’ve recently seen overlooked. First, the data you use for KPIs or OKRs must be understood by your teams. And second, it must have […]

By SaaSX | May 7, 2019

A customer journey is typically defined as the sum of all the experiences that your customer has with your brand and product. In the case of your SaaS product, it includes interactions prior to buying, the actual buying process, on-boarding, continued learning about how to use the product including best practices, up-selling, technical problem resolution, […]

By Paul Ressler | April 30, 2019

Many finance teams consider board reports the most challenging type of report that they put together. And, in many ways, it’s because board members want so much more than numbers, such as nonfinancial information and customized analysis. Standard slide templates and data charts may satisfy most board members. But to really dazzle them—and establish the […]

By Workday Adaptive Planning | April 23, 2019

Employees are the biggest asset of a SaaS company as well as the single largest expense.  Compensation & benefits alone represent from 65% to 80%+ of revenue.   With the Enterprise SaaS market generating revenues of $20B a quarter, the venture community continues to pump funds into new and expansion companies. The resulting competition makes it […]

By Lauren Kelley | April 18, 2019

Anna and I are about a year into our SaaSX and Beacon9 stories and about 15 months removed from the acquisition of our SaaS company. We worked with some amazing recurring revenue SaaS companies in 2018. Our journey, our clients, and the new year have caused me to reflect on our mission to help SaaS […]

By SaaSX | April 9, 2019

Alignment between Finance and Sales, especially SalesOps, is critical for SaaS companies to effectively manage growth and expenses.  Miscalculating quotas, attainment and On-target Earnings (OTE) for account executives can drive up CAC, not to mention impact revenues and forecasts. Lauren Kelley and Eric Stephenson, Director of FP&A at Domo discussed in SaaS Conversations this week best practices […]

By Lauren Kelley | April 5, 2019

A founder posed me a question earlier this week: Do you have any data/perspective on whether it’s worth keeping the unassisted free trial flow vs. providing only one path which leads to a demo and an assisted free trial? This is a complex question. Let’s break it down.The unassisted free trial has benefits. There’s a […]

By Tomasz Tunguz | April 2, 2019

Just coming back from SaaSConnect, the annual meet-up of the Cloud Software Association (CSA), a terrific conference for SaaS and Cloud business development professionals.  If your partner exec isn’t involved with the CSA, they should be.  The organization is run by a dedicated group of volunteers, ranging from business development at Google and Microsoft to […]

By Lauren Kelley | March 29, 2019

By 2020, more than 80 percent of software providers will change their business models from “traditional” perpetual license and maintenance to subscription-based models. A perpetual model requires customers to pay a fee upfront to purchase a license for the system or application, whereas a SaaS model requires a monthly subscription fee. While some providers, such […]

By SaaSOptics | March 26, 2019

This post won’t save your life, or your company.  But it might save you a few precious hours at 2:00 AM if you’re working on your company’s SaaS metrics and can’t foot your quarterly and annual churn rates while preparing a board or investor deck. The generic issue is a lot of SaaS metrics gurus […]

By Dave Kellogg | March 19, 2019

SaaS Sales and Finance collaborate together in planning, forecasting and day-to-day Sales management issues.   That collaboration can be smooth and extremely productive, or there can be less productive friction.  Working with hundreds of SaaS and software Finance organizations to collect and benchmark key Sales-related metrics, we’ve seen some best practices that tend to make the […]

By Lauren Kelley | March 16, 2019

Over the last year or two, many of SaaS Capital’s portfolio companies have initiated channel sales strategies, and many more are contemplating it. Given the trend, this was the focus topic at a recent portfolio company CEO roundtable. The stories and anecdotes from the room of about 10 portfolio company leaders shared a common theme: […]

By SaaS Capital | February 5, 2019

SaaS companies selling in the SMB market are structured operationally very differently from SaaS companies selling in the enterprise market.    Everything from Sales structures to Marketing to R&D is organized differently depending on whether you are selling a low-priced product to a high volume of customers, or selling a high-priced product to a smaller number […]

By Lauren Kelley | February 1, 2019

For any growing business, capturing and analyzing financial data is critical for scaling and making informed decisions. With the right performance metrics and insights at your disposal, you won’t be blindsided by changes in the business. You can proactively address issues quickly and drive growth confidently. And when you’re ready to seek capital, you can […]

By SaaSOptics | January 29, 2019

Preparing for an audit isn’t usually on anyone’s list of favorite things but it’s a necessary evil. For software-as-a-service (SaaS) businesses, audit preparation can be particularly stressful because the business model presents its own set of unique challenges related to financial operations that play a critical role in any audit. With the right preparation, however, […]

By SaaSOptics | January 2, 2019

Raising capital can be a challenging, sometimes grueling, process. In the last 20+ years, I have seen how the sausage is made from many different perspectives. Prior to starting SaaS Capital in 2007, I was a partner at a venture capital firm with a focus on funding Series A and B for software companies. It […]

By SaaS Capital | December 26, 2018

Yesterday, at the Boston SaaS Finance Meet-Up for the SaaS and Software benchmarking community, we discussed some of the issues with determining customer count for B-2-B SaaS companies.  Last week, the same question came up at our San Francisco SaaS Finance Meet-Up as well, so it is clearly an issue.  Many companies, especially those selling […]

By Lauren Kelley | December 14, 2018

Customers will pay you to build your SaaS product. It’s one of the great advantages of a SaaS model. Annual prepay contracts – wherein customers pay for a year’s cost on day – is a free loan from customers. And every startup can benefit from this advance. There’s only one requirement: you must be able […]

By Tomasz Tunguz | December 4, 2018

Your startup is just getting off the ground. You might have a few account executives and a sales leader in place; maybe some revenue and a handful of customers. The sales team costs real money, and the question before the company is: how do know what quota plan to assign to the account executives? I’ve […]

By Tomasz Tunguz | November 27, 2018

SaaS entrepreneurs have to go out on a limb and spend to grow.  That’s a fact of the SaaS world.  At the same time, spending before revenues come in and investing in growth is a big risk, and it requires tight discipline, like walking on a narrow balance beam requires tight discipline not to fall […]

By OPEX Engine | November 20, 2018

A really smart and experienced investor said to me the other day that with these 3 things, he could absolutely increase any SaaS company value (and would invest in doing so): The right operational data about the company and good, comparable benchmarks, Intelligent interpretation of the data, especially around go-to-market Improved business processes focused on […]

By Lauren Kelley | November 16, 2018

I think it would be hard to overemphasize the importance of upgrade and upsell strategy in SaaS product marketing. In an industry where free trials, freemium versions, bargain basement subscription prices and simply hoping to recover customer acquisition cost with first year revenue are the norm, few things are sweeter than a customer that actually […]

By Joel York | November 6, 2018

Earlier this week, we published a blog by Tomasz Tunguz, How the Economics of Professional Services Have Changed in Software. He demonstrates that professional services strategies and gross margins vary widely across public SaaS companies and have done for some time in the SaaS world. Despite large variances in professional services metrics, public SaaS companies […]

By Lauren Kelley | November 1, 2018

A founder asked me recently if there were any trends in the economics of professional services across public SaaS companies. I had examined the gross margins and share of revenue from professional services about 3 years ago. Professional services are consulting fees software companies charge to customers for software configuration, customization and education. What has […]

By Tomasz Tunguz | October 30, 2018

In early markets, customers prefer entire solutions, not best in class point products. These solutions often include significant professional services and education. At the beginning of a new wave, most customers don’t understand the technology well. So, they seek experts to guide them. Companies that provide services and education often win the early market. They […]

By Tomasz Tunguz | October 18, 2018

Here’s a super interesting perspective from Sunir Shah, founder of the Cloud Software Association, a 2000 member organization dedicated to promoting partnerships and business development among SaaS companies that we like a lot.  From the early SaaS days when few believed the SaaS subscription business model could support partners and indirect channels, the SaaS partnership […]

By Cloud Software Association | October 16, 2018

Harvard Business Review published an article last year describing a new method they dubbed the Customer Based Corporate Valuation (CBCV) method focused on SaaS valuations and subscription companies. CBCV takes a “bottoms-up” approach to determining a company’s value, focusing on its customer base and the value of its customers.  By contrast, traditional valuation methods take a […]

By Lauren Kelley | September 27, 2018

For SaaS companies targeting fast growth to $100M and beyond, the company’s data management of its own business information can enable the growth path or bog it down.   Manual and “heroic” efforts to get the data out of business systems for reporting and analysis will get harder and harder to do as systems, records and […]

By Lauren Kelley | September 20, 2018

It seems a little late in the game for me to be asking a question like “What is SaaS?” But, I’ve always harbored a few embarrassing little secrets on the subject and I think it’s time I came clean. There is a classic Harvard Business School case study called Marketing Myopia by Theodore Levitt that […]

By Joel York | September 18, 2018

You hear the terms SaaS, subscription, term licenses and perpetual license software tossed around frequently.  The terms aren’t universally understood, nor are the implications of each on the financial model of a company, so the following is an effort to provide an overview. At OPEXEngine, we pull apart the different nuances of each business model […]

By Lauren Kelley | September 13, 2018

Your sales team is starting to close some terrific accounts. As your startup grows, your sales team will experiment with different sales techniques. For example, qualification, pricing, positioning, incentives and contract structure. This is a wonderful phase for a startup. However, there’s a common mistake to avoid. Your VP of Finance should model the impact […]

By Tomasz Tunguz | September 11, 2018

When I’m not completely absorbed with my agile marketing software startup, I do a bit of SaaS consulting on the side. SaaS colleagues come to me with a wide variety of problems from positioning to sales compensation to churn analysis, but lately I’ve noticed a common theme: poor SaaS customer alignment. SaaS businesses develop intimate, […]

By Joel York | July 12, 2018

Choosing the right go-to-market sales model for your SaaS startup can be a make it or break it decision. Choose right and you grow smoothly from seed funding to A round to B round and beyond. Choose wrong and you spend precious cycles chasing your tail as cash runs out. While most B2B SaaS startups […]

By Joel York | June 14, 2018

Sales is the revenue engine of any B-2-B SaaS company and thus absolutely critical to company growth. Sales is also often the biggest single departmental expenditure in the company – another reason why Sales efficiency is critical to ensure companies are getting the best productivity for their investment in the Sales organization and everything the company […]

By Lauren Kelley | May 8, 2018

Pricing in the SaaS world is particularly complicated. Pricing can make or break your SaaS company with its impact on both profitability and revenue growth – the two major indicators of company valuation. SaaS pricing is a fast-moving target and every SaaS CFO should be re-evaluating their company’s pricing on a regular basis.  As a […]

By Lauren Kelley | March 19, 2018

Coming back from the annual SaaStr mega conference in San Francisco, it is clear that SaaS is huge, it is expanding and it is going to impact companies both in the United and States and abroad. The Expanding SaaS Sector The rapidly expanding SaaS sector numbers something like 10,000+ revenue-earning vendors.    While the majority of […]

By Lauren Kelley | February 19, 2018

One of the hottest trends in the evolving SaaS playbook is the influence of Account-Based Selling (ABS) and Account-Based Sales Development (ABSD). The Account-Based approach changes two important aspects of growing a SaaS company:  firstly, it changes business processes, and secondly, it changes organizational structures.  The focus is to pull together Marketing, Sales, Customer Success, […]

By Lauren Kelley | February 12, 2018

Are we any good at SaaS product investment? No, not really.   I looked at 145 public and private SaaS companies with revenue of $5 million and greater in conjunction with the team at OPEXEngine.  Our goal was to find a relationship between product spending and payback once companies achieved product market fit.  What happens […]

By Lauren Kelley | June 26, 2017

The SaaS business model requires the integration and coordination of far more operations than traditional software models.  R&D, Sales, Marketing, Customer Success, Finance, and Operations all need to work together to produce profitable unit economics which are the basis of a successful SaaS company.  The annual budgeting practices process is a methodical way of allocating […]

By Lauren Kelley | November 22, 2016

Does your company provide free food for all employees every day or just on Wednesdays? Concierge services?  FastPass payments?  Free beer and wine?  Doggie day care?  Massage, acupuncture – the list goes on.  Tech companies large and small provide some of the most extensive company employee benefits for their employees in the competition for the […]

By Lauren Kelley | October 28, 2016

On the last day of August, as we go into the final stretch of Q3 and 2016, SaaS valuations are evolving.  Benchmarking the financials and operating metrics that drive these valuations is what OPEXEngine, the member-based benchmarking community for SaaS companies, is all about. Forward multiples have rebounded for companies maintaining strong revenue growth at […]

By Lauren Kelley | August 31, 2016

Who does sales ops report to within your organization? According to Lauren Kelley, your company’s sales ops may be sitting in the wrong department. Kelley is the CEO and Founder of OPEXEngine, a member-based SaaS benchmarking company. She was previously the SVP of sales and operations at ATG, later acquired by Oracle, and also spent two […]

By Lauren Kelley | March 23, 2016

Benjamin Graham, father of value investing, famously described the stock market as a “voting machine.”  His star protege, Warren Buffett, would later expand that to “a voting machine over the short term, and a weighing machine over the long term.”  What the heck was Graham talking about, and why did Mr. Buffett feel the need to […]

By Lauren Kelley | February 8, 2016

Annual Study Finds Private Software Industry and SaaS Firms Seeing Strong Growth,  More Hiring and Significant Venture Capital Flow. One year after reporting that private U.S. software companies saw the largest revenue gains since the recession of 2008, the 2015 Software & SaaS Industry and Benchmarking Report shows even greater acceleration in topline growth. Announced today, […]

By Lauren Kelley | September 29, 2015

We announced recently that average annual revenue growth for the fastest growth private SaaS companies had jumped from last year’s median of 100% to this year’s 150% annual revenue growth.  The press release got a lot of attention and was reported in InfoWorld, ZDNet, CPA Practice Advisor and the Kiplinger Letter, among others.    How […]

By Lauren Kelley | September 24, 2015

Even a 1% improvement in renewals can drive significantly higher valuations for a SaaS company over time

By Lauren Kelley | July 17, 2015

The social media world and business advisory firms, consultants and other pundits keep alerting businesses that the objective of return on investment (ROI) is diminishing in importance, or even dead, due to the increasing focus on return on user experience (ROE or ROX). We asked three experts to share their advice on ROI versus ROE as […]

By Lauren Kelley | May 5, 2015

COGs are the second highest expense bucket for most SaaS companies.  If you aren’t continuously delivering problem-free, high speed and secure access to your SaaS product, customers won’t stay.   Delivering high performance to an exponentially growing subscriber base costs a lot, which drives up COGs.  In addition, you need to invest in your hosting […]

By Lauren Kelley | March 18, 2015

Borrowing from the basics of Six Sigma, keep the following in mind as you define and manage your SAAS performance management and benchmarking: 1. Define the metrics All metrics should be clearly defined so that an organization can benchmark its success. One way to keep metrics understandable is to use the SMART (specific, measurable, achievable, […]

By Lauren Kelley | October 27, 2014

order essay online Annual Study Finds SaaS Driving Largest Revenue Gains, and Indications of Growth Outside Silicon Valley, Massachusetts & Other Traditional Tech Centers. Small and mid-sized companies in the U.S. software industry are thriving in the post-recession economy, with software-as-a-service (SaaS) firms consistently experiencing the greatest revenue growth and hiring expectations, according to a study […]

By Lauren Kelley | October 17, 2013

Imagine this scenario:  your company is relatively healthy and becoming established in the market but needs to keep up a fast growth pace or maybe even to grow faster.  Your heads of sales and marketing suggest that the best avenue to growth is that you need to add headcount in their respective departments.  Hard to […]

By Lauren Kelley | July 8, 2013

Render unto Caesar … I recently met with a client CFO of a $100M software (not SaaS) company and in the course of our conversation she repeated a question her CEO had put to her recently: “Why do we pay so much in taxes; why can’t we pay something more like what GE pays?” It […]

By Lauren Kelley | May 7, 2013

I recently spent two full days at a Retail Analytics and FP&A conference, which was terrific for many reasons. Retail FP&A (Financial Planning and Analysis) folks are very innovative in tying customer behavior to financial performance indicators. We in the software industry are true babes in the woods compared to retail companies on this one, […]

By Lauren Kelley | March 17, 2013

If you are a SaaS company, you surely watch customer churn rate like a hawk.  When your company is working hard to add new customers, and then losing a good portion of them every year, that’s a bad thing.  It says a few things about your business: You may not have as good customer relationship […]

By Lauren Kelley | April 23, 2012