Articles

The Top 5 Growth Initiatives for SaaS Investment in 2021 - Part Two

April 14, 2021

What Are the Most Significant Factors Impacting the Business Environment for Your Company in 2021?

This is the second analysis in a three-part series that highlights different business observations uncovered when we conducted our Q1 2021 SaaS CFO Pulse Survey in March.

In today’s post, we review the results regarding the “Top Growth Initiatives for 2021,” “Internal Investments,” and “Strategic Finance Goals” that those surveyed are planning to make.

2021 is expected to be a year in the SaaS market where competition for customers, product category leadership, and employees is hot. 2021 growth strategies are all about staying ahead of the competition and improving products.  

Top Finance Growth Initiatives in 2021

Our survey concluded that SaaS Finance executives are planning for investments in customer satisfaction, retention and upselling, new product initiatives, and sales and marketing hiring as their top growth investments for 2021.

These top investment priorities reflect what OPEXEngine is hearing from CFOs in conversations and in our current benchmarking, as well as in this survey. For most cloud-based vendors, 2020 was about managing costs and many ended up with improved EBITDA as sales picked up in the second half of 2020.  Many have mentioned that they wish they hadn’t held back on investments as much as they did, and now are playing a bit of catch up. This year, everyone is jostling for market position as investors are continuing to fund both new companies, as well as their platform plays through M&A combinations.

In 2021, it is common knowledge that the market landscape is evolving rapidly.  Finance execs are implementing 2021 growth plans through targeted investment in new products, product expansions, and new features. They’re also focusing on sales and marketing, productivity tools, and training.

Finance Department Investments

Alongside these growth investments, are increasing internal investments in analytics, AI, and better training for employees in general. In fact, 34% of survey respondents indicated that they would invest internally in upgrading their analytical capabilities.

The growing market trend is companies using AI to improve how they analyze securities and make investment decisions. Therefore, 22% of our survey respondents stated they would invest in some form of AI and ML. Lastly, companies see the need to enhance their employee training initiatives, as cited by 20% of CFOs.

Strategic Goals for Finance Departments

Almost a third of survey respondents highlighted the need to invest in better operational data visibility as one of their top strategic goals for the finance department. A close second is making the department future-ready for increased business disruptions. Given that operational data is the first indicator of a business’s health, the two go hand-in-hand.

When asked about strategic finance goals for 2021, 18% of respondents said they were working to identify opportunities to improve cash flow. For many companies, this translates into reviewing subscription terms and conditions and tightening controls over sales organizations that may have become slightly undisciplined in this area during COVID with the imperative to keep customers, sometimes at all costs. Cost reduction dropped by 87%, with only 8% of respondents pointing to this as an area to improve, as compared to over 60% last year.  

In all of these areas covered in the survey, consistent metrics and benchmarks are key. Analytics won’t provide accurate analysis of the underlying data that isn’t consistent with best practices and standard definitions of operational metrics. In a fast-moving market like SaaS, making sure the entire management team is on the same page about current operating models helps ensure that leadership can move quickly to take advantage of opportunities and avoid problems.