Comments on: SaaS Metrics – SaaSoNomics 101

By: SaaS

SaaS — Fri, 17 Jun 2011 04:57:12 +0000

With time the needs and wants of clients change and so the methods of keeping the client has to change. The changing of a CEO or any other officer in a company will make no difference in keeping clients or attracting more. Change often breads excitment and new clients, thus the need and desire for change.

By: 12 Helpful Tips: #7 Using SaaS Metrics | Smart SaaS

12 Helpful Tips: #7 Using SaaS Metrics | Smart SaaS — Wed, 26 Jan 2011 19:13:38 +0000

[...] Michael Dunham of Scio Consulting, Haut SaaS Blog did a great post on SaaS Metrics – SaaSoNomics 101 [...]

By: 12 Tips - Test Everything | Smart SaaS

12 Tips - Test Everything | Smart SaaS — Tue, 10 Aug 2010 17:25:05 +0000

[...] Haut Tech – Michael Dunham at Scio Development [...]

By: Michael Dunham

Michael Dunham — Tue, 01 Jun 2010 15:03:34 +0000

Kirk – In truth there are around 12 metrics a SaaS company should have on their “dashboard” that relate to different stages in the marketing, sales, lifetime cycle. Companies I have worked with find metrics that are key indicators in their market and for the specific application under consideration – that can be different from another company’s findings. A lot depends on usage patterns, number of key users in a line of business, etc and that is certainly what your metrics need to tell you as your application comes to market and over its growth cycle. It isn’t a “one size fits all” choice or fully a “we can grow into it” choice. You need to have the “hooks” for reporting built into your application from day one and you need to think about how your company will use the metrics to change how your product is managed strategically.

We have a workshop that is part of SaaS University in Washington DC, July 20-22 that covers this subject along with other considerations of SaaS product development and operations. http://www.softletter.com/SaaSUniversity/SaaSUniversityConferenceWashingtonDC.aspx and our Charting Your Course to SaaS Workshop on http://www.softletter.com/SaaSUniversity/SaaSUniversityConferenceWashingtonDC/WashingtonDCWorkshopsJuly22nd.aspx

Since I believe it is in your area it might be good option for you and your team to consider. We also address this issue as part of our SaaS Strategy Sessions that are engagements specific to the client and not a general template. http://www.sciodev.com/resources/datasheets/Scio-SaaS-Strategy-Sessions.pdf

let me know if I can be of further help…

By: Kirk Sadler

Kirk Sadler — Tue, 01 Jun 2010 14:23:12 +0000

We are mostly an on-premise osftware company with multiple applications that start in 1981. We have recently begun making the transition to a SaaS delivery model and acquried a couple vendors who started as SaaS.

That said, the post provided some great insights into metrics to manage a SaaS business. Knowing many will be tough to measure can someone suggest the top 5 to measure the first year and the next 5 to measure the second year … bascially a roadmap of what’s important to monitor for financial success.

By: Jim Geisman

Jim Geisman — Tue, 16 Feb 2010 16:29:04 +0000

This is great post, Mike. Indeed, all of these measure are important — some more than others.

But the important thing is not to *monitor* these measures but to *use them* to monitor the financial model. By doing so you can: 1). Document the assumptions critical to your business and cashflow; 2). Focus your spending on “moving the [relevant] needle(s)”

But most if not all of these measure are driven by decisions in areas where we find people are weakest: packaging and pricing. We find it useful to start with a detailed revenue model driven by assumptions about packaging, prices and volumes and then test how these assumptions affect the above measures. Detailed revenue modeling can minimize nasty surprises downstream.

This also points to one of the more subtle advantages of SaaS: You can fine tune the business and watch the response in (nearly) real time.

By: Trianz Blog » Blog Archive » Yield Management for Online Web Service Providers

Thu, 27 Aug 2009 20:21:58 +0000

[...] SaaS Metrics – SaaSoNomics 101 (Michael Dunham): http://blog.sciodev.com/2009/02/10/saas-metrics-saasonomics-101/ [...]

By: Brian Marsden

Brian Marsden — Sat, 07 Mar 2009 05:56:15 +0000

Good article and interesting reader observations. I am seeing some proven models where On-premise apps reach to a cloud app to fill holes for SAP, Oracle and Co. Integration and assocated costs seem to be a key area. Also revenue from labour based services that leverage the data are able to subsidise the technology costs.

By: Steve O'Neill

Steve O'Neill — Fri, 27 Feb 2009 22:25:32 +0000

This is well written, and very interesting. When I ran the Hosting Services department at a leading Learning Management company, our core product was enterprise software hosting, and we started evolving into semi-SaaS, and SaaS products. Knowning that there is a huge difference in these hosting models, I was surprised how much similarity there was in the metrics. For example, even in the enterprise hosting business (a recurring revenue model business), we routinely monitored such things as CMRR, Retention Rate, Average Deal Size, and 10 Largest Customers %. We struggled trying to achieve meaningful metrics for Cost to Maintain, Cost to Acquire, and Customer Lifetime Value Ratio, simply because of the difficulty of calculating these. Where the company stumbled was in taking this approach to the next level for SaaS – things like Cost to Acquire, Customer Acquisition Cost Ratio, and Software to Services Ratio.
What this highlights to me, is that while all of this is relevant to SaaS, much of it is relevant to any recurring-revenue model business, including traditional enterprise software hosting. And the delta between the two is very enlightening!
Can’t wait for 102!

By: Steve Reeves

Steve Reeves — Fri, 27 Feb 2009 18:57:09 +0000

We could have some really interesting discussions regarding enterprise software and SaaS

I spent 25 years selling the first and now two years getting a SaaS started.

Single instance SaaS isn’t going to get much traction in the enterprise market any time soon. Salesforce has done OK but SAP would laugh at anybody bragging about 50,000 users.

So they managed to get this far because CRM is a non-core activity for most of the enterprises. SaaS has been a really cheap way of them getting some visibility over the sales force. Cost has been the main enabler because so many of the big CRM implementations have been disastrous.

So the enterprise attitude toward non-core systems enabled salesforce to push out very limited capability software and win business with a different sales model – mostly dominating paid search.

As you rightly point out this approach will only take the company so far. If they want to get to the really big money they’ll have to spend a lot more on marketing/sales/support and then spend multiples of that on the software. They pretty much have nowhere to go, unless they rebuild the software up to SAP/Oracle standards and then adopt the traditional marketing/sales model.

We don’t want to be in the enterprise market – to be honest we could never afford to take on SAP/Oracle/Microsoft so it isn’t an issue.

Our view is we have to solve the cost of sales issue and we’ll do that by reducing the customers cost of adoption, and doing it for people who don’t have armies of IT support guys that need to be kept busy.

Building software that people will want to use at eye wateringly low cost, and finding ways of marketing it for free is a model already proven in the social networking arena.

Of course finding ways to make money doing it is another challenge but that’s where the fun is.

BTW I enjoyed reading the perspective of somebody who genuinely does understand the challenges of SaaS in the cloud.

There aren’t many around.

Steve