|By Joel York||
|May 13, 2014 09:00 AM EDT||
Becoming a Metrics-driven SaaS Business is no easy task. It takes time, commitment and plenty of customers. However, the financial rewards of moving beyond standard SaaS financial metrics to SaaS customer success metrics and ultimately to sophisticated predictive analytics are significant. Each step toward SaaS metrics greatness builds upon the last. The stages of development can be classified into a natural progression of increasing SaaS business understanding from financial stability to operational measurability to revenue predictability outlined at the very beginning of this series. These stages define a SaaS Metrics Maturity Model that provides a SaaS metrics roadmap along with benchmarks at each stage of development for SaaS companies that aspire to become a Metrics-driven SaaS Business.
The SaaS Metrics Maturity model provides a SaaS metrics roadmap
along with benchmarks at each stage of development
for SaaS companies that aspire to become a Metrics-driven SaaS Business.
This is the fourth and final post in a series inspired by my ongoing collaboration with Bluenose Analytics that explores the new Metrics-driven SaaS Business based on emerging best practices in SaaS customer success metrics. The last two posts discussed the potential uses of SaaS customer success metrics for reducing churn and accelerating customer acquisition. This final post defines The SaaS Metrics Maturity Model, a path for SaaS companies to follow on their way to becoming a Metrics-driven SaaS business.
SaaS Metrics Maturity Model Stage 1:
SaaS Financial Metrics Mastery
The first step along the path to becoming a Metrics-driven SaaS Business occurs when a SaaS business achieves a stable SaaS business model that allows management to monitor the key SaaS financial metrics, including recurring revenue, customer acquisition cost, churn, growth and cost of service. Financial plans and targets are produced using these now standard financial metrics. In addition to the basic financial metrics, more advance metrics such as the customer lifetime value, churn cohorts and the various SaaS magic numbers may also be calculated.
The stage one SaaS business has a solid understanding of SaaS economics grounded in SaaS financial metrics. As the use of SaaS metrics becomes the company standard, they are pushed out into departmental plans. Sales is compensated on recurring revenue and avoids discounts based on total contract value. Marketing makes demand generation plans around revenue, upsell and acquisition cost targets. Customer success focuses on churn reduction. And, executive compensation is based on non-GAAP SaaS financial goals.
SaaS Metrics Maturity Model Stage 2:
Reactive Customer Success with Customer Success Metrics
At stage 2, The Metrics-driven SaaS Business gets serious about customer success and discovers the panacea of information available from product usage data complemented by customer demographics, transaction history, engagement tracking and primary customer research such as surveys and focus groups. It starts to delve into statistical methods and descriptive models to better understand the root causes of churn, upsell, trial conversion, purchase and onboarding. These models produce customer success KPIs and benchmarks than uncover operational opportunities for improving SaaS customer success.
http://bit.ly/1jaBPuB #saas" title="Tweet it!" target="_blank">Tweet it!
Stage 2 is an important transition stage for the Metrics-driven SaaS business. Most companies enter stage 2 out of churn frustration. The SaaS financial metrics mastered in stage 1 give the perils of churn very high visibility, but they offer no guidance for reducing it. This motivates management to explore new operational metrics and approaches to customer success. The need for account-level financial information and product usage data within the SaaS customer success organization becomes obvious, but CRM systems, marketing systems, accounting systems and the product itself often don’t provide easy access. Stage 2 is a struggle.
SaaS Metrics Maturity Model Stage 3:
Proactive SaaS Customer Success with Predictive Analytics
In stage 3, the perseverance required to slug through stage 2 really begins to pay off. The SaaS customer success metrics discovered in Stage 2 become standard KPIs that are used to construct predictive analytics. These predictive models help The Metrics-driven SaaS Business get out in front of churn and acquisition in a systematic way. Health indexes and alerts are incorporated into the daily routines of customer success reps and sales reps to increase revenue and reduce operational costs. Predictive models are plugged directly into the SaaS product to automate communications that facilitate purchase, use and upsell.
The stage 3 Metrics-driven SaaS business is becoming the master of the SaaS metrics domain, moving from art to science. However, predictive analytics in SaaS is a big data problem that only a few companies could conceivably tackle on their own. It is virtually impossible to succeed in stage 3 without significant investment in new customer success systems, as well as the integration of those systems to the product, CRM and accounting system.
SaaS Metrics Maturity Model Stage 4:
The Recurring Revenue Machine
Finally, the stage 4 Metrics-driven SaaS Business has a complete top-to-bottom understanding of the drivers of SaaS financial success. Financial planning goes beyond simple what-if spreadsheets that have no basis in operational reality. Financial goals are linked directly to operational goals using SaaS customer success metrics and predictive analytics. Targeted churn reductions are tied directly to root causes and operational initiatives with predictable results. Growth plans are based on specific improvement programs with well understood impacts on trial conversion, purchase, churn, and the productivity of sales and custom success reps.
Success in stage 4 requires an integrated management approach, especially between finance and customer success, two departments that have historically had little to do with each other. The finance-customer success partnership is essential to the Metrics-Driven SaaS Business, because it links continuous operational improvement to financial goals through SaaS customer success metrics. The stage 4 Metrics-driven SaaS Business is a well-oiled recurring revenue generating machine.
Information Technology (IT) service providers have historically struggled between the huge capital expenditure and long development cycles of building their own cloud versus the thin margins and limited flexibility of using public retailers such as Amazon Web Services (AWS). The emergence of wholesale cloud, and the technologies that make it possible, is revolutionizing how and by whom enterprise IT is delivered. Wholesale cloud is the game-changing third option between building your own (BYO) c...
May. 22, 2015 09:00 AM EDT Reads: 2,746
Shipping daily, injecting faults, and keeping an extremely high availability "without Ops"? Understand why NoOps does not mean no operations. Agile development methodologies require evolved operations to be successful. In his keynote at DevOps Summit, David Tesar, Microsoft Technical Evangelist on Microsoft Azure and DevOps, will discuss how Microsoft teams who have made huge progress with a DevOps transformation effectively utilize operations staff and how challenges were overcome. Regardless ...
May. 22, 2015 09:00 AM EDT Reads: 1,446
You often hear the two titles of "DevOps" and "Immutable Infrastructure" used independently. In his session at DevOps Summit, John Willis, Technical Evangelist for Docker, will cover the union between the two topics and why this is important. He will cover an overview of Immutable Infrastructure then show how an Immutable Continuous Delivery pipeline can be applied as a best practice for "DevOps." He will end the session with some interesting case study examples.
May. 22, 2015 09:00 AM EDT Reads: 1,724
SYS-CON Media named Andi Mann editor of DevOps Journal. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. DevOps Journal brings valuable information to DevOps professionals who are transforming the way enterprise IT is done. Andi Mann, Vice President, Strategic Solutions, at CA Technologies, is an accomplished digital business executive with extensive global expertise as a strategist, technologist, innovator, marketer, communicator, and thought lea...
May. 22, 2015 09:00 AM EDT Reads: 1,457
Enterprises are turning to the hybrid cloud to drive greater scalability and cost-effectiveness. But enterprises should beware as the definition of “policy” varies wildly. Some say it’s the ability to control the resources apps’ use or where the apps run. Others view policy as governing the permissions and delivering security. Policy is all of that and more. In his session at 16th Cloud Expo, Derek Collison, founder and CEO of Apcera, will: Explain what policy is; Show how policy should be arc...
May. 22, 2015 09:00 AM EDT Reads: 1,521
Even though it’s now Microservices Journal, long-time fans of SOA World Magazine can take comfort in the fact that the URL – soa.sys-con.com – remains unchanged. And that’s no mistake, as microservices are really nothing more than a new and improved take on the Service-Oriented Architecture (SOA) best practices we struggled to hammer out over the last decade. Skeptics, however, might say that this change is nothing more than an exercise in buzzword-hopping. SOA is passé, and now that people are ...
May. 22, 2015 09:00 AM EDT Reads: 3,329
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. 8th International Big Data Expo, co-located with 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. As advanced data storage, access and analytics technologies aimed at handling high-volume and/or fast moving data all move center stage, aided by the cloud computing bo...
May. 22, 2015 08:45 AM EDT Reads: 1,428
The 5th International DevOps Summit, co-located with 17th International Cloud Expo – being held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the...
May. 22, 2015 08:30 AM EDT Reads: 3,909
Data-intensive companies that strive to gain insights from data using Big Data analytics tools can gain tremendous competitive advantage by deploying data-centric storage. Organizations generate large volumes of data, the vast majority of which is unstructured. As the volume and velocity of this unstructured data increases, the costs, risks and usability challenges associated with managing the unstructured data (regardless of file type, size or device) increases simultaneously, including end-to-...
May. 22, 2015 08:30 AM EDT Reads: 4,118
Cloud services are the newest tool in the arsenal of IT products in the market today. These cloud services integrate process and tools. In order to use these products effectively, organizations must have a good understanding of themselves and their business requirements. In his session at 15th Cloud Expo, Brian Lewis, Principal Architect at Verizon Cloud, outlined key areas of organizational focus, and how to formalize an actionable plan when migrating applications and internal services to the ...
May. 22, 2015 08:00 AM EDT Reads: 3,483
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding bu...
May. 22, 2015 08:00 AM EDT Reads: 4,169
Most companies hope for rapid growth so it's important to invest in scalable core technologies that won't demand a complete overhaul when a business goes through a growth spurt. Cloud technology enables previously difficult-to-scale solutions like phone, network infrastructure or billing systems to automatically scale based on demand. For example, with a virtual PBX service, a single-user cloud phone service can easily transition into an advanced VoIP system that supports hundreds of phones and ...
May. 22, 2015 07:00 AM EDT Reads: 2,679
Security can create serious friction for DevOps processes. We've come up with an approach to alleviate the friction and provide security value to DevOps teams. In her session at DevOps Summit, Shannon Lietz, Senior Manager of DevSecOps at Intuit, will discuss how DevSecOps got started and how it has evolved. Shannon Lietz has over two decades of experience pursuing next generation security solutions. She is currently the DevSecOps Leader for Intuit where she is responsible for setting and driv...
May. 22, 2015 06:00 AM EDT Reads: 3,788
Since 2008 and for the first time in history, more than half of humans live in urban areas, urging cities to become “smart.” Today, cities can leverage the wide availability of smartphones combined with new technologies such as Beacons or NFC to connect their urban furniture and environment to create citizen-first services that improve transportation, way-finding and information delivery. In her session at @ThingsExpo, Laetitia Gazel-Anthoine, CEO of Connecthings, will focus on successful use c...
May. 22, 2015 06:00 AM EDT Reads: 4,830
The recent trends like cloud computing, social, mobile and Internet of Things are forcing enterprises to modernize in order to compete in the competitive globalized markets. However, enterprises are approaching newer technologies with a more silo-ed way, gaining only sub optimal benefits. The Modern Enterprise model is presented as a newer way to think of enterprise IT, which takes a more holistic approach to embracing modern technologies.
May. 22, 2015 06:00 AM EDT Reads: 5,934
DevOps Summit, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long developmen...
May. 22, 2015 06:00 AM EDT Reads: 2,164
Software-driven innovation is becoming a primary approach to how businesses create and deliver new value to customers. A survey of 400 business and IT executives by the IBM Institute for Business Value showed businesses that are more effective at software delivery are also more profitable than their peers nearly 70 percent of the time (1). DevOps provides a way for businesses to remain competitive, applying lean and agile principles to software development to speed the delivery of software that ...
May. 22, 2015 05:45 AM EDT Reads: 6,371
“Oh, dev is dev and ops is ops, and never the twain shall meet.” With apoloies to Rudyard Kipling and all of his fans, this describes the early state of the two sides of DevOps. Yet the DevOps approach is demanded by cloud computing, as the speed, flexibility, and scalability in today's so-called “Third Platform” must not be hindered by the traditional limitations of software development and deployment. A recent report by Gartner, for example, says that 25% of Global 2000 companies will b...
May. 22, 2015 05:45 AM EDT Reads: 2,691
Big Data is amazing, it's life changing and yes it is changing how we see our world. Big Data, however, can sometimes be too big. Organizations that are not amassing massive amounts of information and feeding into their decision buckets, smaller data that feeds in from customer buying patterns, buying decisions and buying influences can be more useful when used in the right way. In their session at Big Data Expo, Ermanno Bonifazi, CEO & Founder of Solgenia, and Ian Khan, Global Strategic Positi...
May. 22, 2015 05:30 AM EDT Reads: 2,294
JFrog on Thursday announced that it has added Docker support to Bintray, its distribution-as-a-service (DaaS) platform. When combined with JFrog’s Artifactory binary repository management system, organizations can now manage Docker images with an end-to-end solution that supports all technologies. The new version of Bintray allows organizations to create an unlimited number of private Docker repositories, and through the use of fast Akamai content delivery networks (CDNs), it decreases the dow...
May. 22, 2015 05:30 AM EDT Reads: 3,211