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Webinar3 of 3 in a Series: Subscription & Entitlement Management Best Practices for Your SaaS Offerings

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  • 1. Making the Most (Money) with Your SaaS Offering Webinar Series Webinar # 3 Subscription and Entitlement Management Best Practices for Your SaaS Offerings
  • 2. Agenda • Business Challenges for “Pure-Play” SaaS Providers • Best Practices Summary • Illustrative Scenario and Use Cases • Flexera Software’s Entitlement Management Solution • More to Come…2 © 2011 Flexera Software, Inc. | Company Confidential
  • 3. 5 “Pure-Play” SaaS Provider Business Challenges1. Leaving money on the table because of a “one size fits all” approach to offerings2. Transitioning to tiered offerings requires tracking and enforcing customer entitlements3. Homegrown entitlement management systems and spreadsheets fail to deliver revenue opportunity from tiered offerings4. Tiered offerings require on-going tweaks. Homegrown backoffices cannot keep up and get in the way of revenues.5. Credential sharing abuse – user-based license model vulnerability3 © 2011 Flexera Software, Inc. | Company Confidential
  • 4. 1 – Leaving Money on the Table Because of a “OneSize Fits All” Approach to Offerings EXAMPLEIf all customers paid the same price, theywould all pay $5 for a total of $25 revenue If customers paid different prices,but the provider loses revenues provider would make $35 revenue: • $10 revenue from 1 customer paying $10 provider is missing 5 provider is getting only • $20 revenue 4 customers paying $5 $5 from 1 customer thatcustomers that are willing • $5 revenue from 5 customers paying $1 to pay $1 is willing to pay $10 10 Customers 5 1 Price $1 $5 $10 In this example, “one size fits all” pricing/packaging misses 40% of revenues 4 © 2011 Flexera Software, Inc. | Company Confidential
  • 5. 1 – 56% of SaaS ISVs Miss Revenues Due to “OneSize Fits All” Packaging and Pricing What is your estimate of revenues you are leaving on the table because of “one size fits all” pricing/packaging? 56%Source: Flexera Software online poll of SaaS ISVs, April 20115 © 2011 Flexera Software, Inc. | Company Confidential
  • 6. BEST PRACTICE 1: Package and Price Offerings toMatch What Customers Want to Buy Tiered packaging approach also helps to fund R&D by having customers that value premium features pay extra for them Note: The companies mentioned illustrate the trend but may not be Flexera Software customers6 © 2011 Flexera Software, Inc. | Company Confidential
  • 7. 2 – Transitioning to Tiered Packages RequiresTracking and Enforcing Customer Entitlements EXAMPLE A SaaS CRM Application In this example, a tiered packaging Features (5 tiers) approach will require the SaaS ISV Leads to track and enforce 30 possible offerings based on entitlements Marketing content • 5 features • X 3 License Models Opportunities • X 2 Metrics Support Incidents Reports Trial # Users Annual Subscription # GB Documents Stored Day Pass Metrics (2) License Model (3)7 © 2011 Flexera Software, Inc. | Company Confidential
  • 8. 3 – 38% of SaaS ISVs Use Spreadsheets orHomegrown Tools to Track Entitlements Which approach best describes how you keep track of customer entitlements? 38% of ISVs use spreadsheets and 38% homegrown tools to track entitlements CRM systems cannot cope with complex entitlements though they are used by 46% of respondentsSource: Flexera Software online poll of SaaS ISVs, April 20118 © 2011 Flexera Software, Inc. | Company Confidential
  • 9. 3 – Homegrown Backoffices and Spreadsheets Fail toDeliver Revenue Opportunity from Tiered Offerings EXAMPLEFor one SaaS product line, 12% of customerswere using more than what they had purchased~$1.7M per year in missed revenues • Leaving entitlements in spreadsheets and homegrown systems leaves a lot of money on the table • “True-up” conversations are almost always painful and rarely recover the full revenue potential Source: Analysis of Flexera Software SaaS product line9 © 2011 Flexera Software, Inc. | Company Confidential
  • 10. 4 – Tiered Offerings Require On-Going Tweaks How do you price your SaaS offering? • No silver bullet with respect to pricing model • SaaS providers will need to evolve pricing / packaging approachesSource: Softletter SaaS Report 2010, http://www.softletter.com/Research/SoftletterSaaSReport.aspx10 © 2011 Flexera Software, Inc. | Company Confidential
  • 11. 4 – Homegrown Backoffice Systems Cannot Keep Upand Get in the Way of RevenuesCosts of a homegrown back-office for managing entitlements • SaaS ISVs should expect to spend 0.5-0.1.5% of revenues to build an • Though critical for revenue entitlement management backoffice growth, building systems to track • For a SaaS ISV with $10M in and enforce entitlements is not a revenues, this translates to core competence for SaaS ISVs $50K-$150K • Takes resources and focus away • Opportunity cost: Resources pulled from feature releases away from feature releases • Inflexible to changing • On-going costs are about 20% of the pricing/packaging needs initial costs which also comes at the expense of feature releases Source: Flexera Software analysis of customers11 © 2011 Flexera Software, Inc. | Company Confidential
  • 12. BEST PRACTICE 2: Invest in a Best-of-BreedEntitlement Management System Provision Users Entitle Customers Verify Entitlement Set up Service Bundles Subscription and Entitlement Gather Usage Management Renew Customers Bill Customer Up-sell Users De-provision Users12 © 2011 Flexera Software, Inc. | Company Confidential
  • 13. 5 – User-Based License Models are Vulnerable toCredential Sharing Abuse • In this example, the SaaS offering is priced based on named user • Customer purchases 1 SaaS Services credential but 3 users share it Machine Machine Machine ID: A ID: B ID: C Some providers are losing 40-60% of potential users to credential sharing13 © 2011 Flexera Software, Inc. | Company Confidential
  • 14. BEST PRACTICE 3: Prevent Revenue Leakage Dueto Credential Sharing Abuse SaaS Services Machine Identity + Credentials Machine ID: Machine ID: Machine ID: A B C14 © 2011 Flexera Software, Inc. | Company Confidential
  • 15. Business Challenges and Best Practices BUSINESS CHALLENGES BEST PRACTICES SaaS providers are leaving money on the table Package and price offerings to because of a “one sizes fit all” approach to match what customers want to buy packaging offerings WITHOUT involving engineering Transitioning to tiered packages requires tracking and enforcing customer entitlements. Homegrown backoffice systems and spreadsheets Invest in a best of breed fail to deliver revenue opportunity from tiered entitlement management system offerings Reducing number of hardware variations (SKUs) to meet diverse Tiered offerings require on-going tweaks. needs Homegrown backoffices cannot keep up and get in the way of revenues. SaaS providers are losing 40-60% of potential users to credential sharing Prevent credential sharing abuse15 © 2011 Flexera Software, Inc. | Company Confidential
  • 16. Scenario “Best Fit” “Best Fit” “Best Fit” Service Bundles License Models PriceSaaSuite- aCRM Marketingapplication Package Annual $ • Leads Subscription UPSELL • Content Marketing Annual Package with $ $ Subscription Reports • Leads Day Pass $ • Content Features: • Reports • Leads • Marketing content • Opportunities Sales Package Annual • Opportunities Subscription $ $ $ • Support Incidents • Reports Metrics: • # GB documents Support Package Annual • Support Incidents Subscription $ stored16 © 2011 Flexera Software, Inc. | Company Confidential
  • 17. Use Cases in the Entitlement Lifecycle Tom - Marketing Package SOLD TO: ACME Corp Jan - Sales Package • 10 users on Marketing Package • 10 users on Sales Package • 10 users on Support Package • 100 GB Storage Tom access SaaSuite from his Provision Users home machine – allow since it Entitle Customers is within policy Set up service bundles • Features Verify Entitlement • License models • Usage policies Set up Service May 2011: Acme is using 50 Bundles Any given user can GB of storage access the SaaSuite Subscription and from up to Entitlement Gather Usage TWO machines Management (e.g. an office machine Renew and a home machine) Customers May 2011: Bill Acme for 50 GB of storage Bill Customer Up-sell Users De-provision Users De-provision Jan - Sales Package Upsell Tom to Marketing Package with Reports17 © 2011 Flexera Software, Inc. | Company Confidential
  • 18. Flexera Software Solution for SaaS Providers 1 2 Login Check user’s entitlement • User ID/Password • Service bundle • Machine Identity • Entitlement valid dates • License policy (e.g. login within allowed number of machines) SaaS Application4 User • Login allowed/denied based on policies Billing data: Account, 3 Product Package or • Application configured to service bundle purchased Features, Hours used 5 Billing System
  • 19. Flexera Software Solution Capabilities • Define service bundles based on features • Define license models (e.g. concurrent use, annual/expiring, trials etc) • Define license usage policies (e.g 1 user on 5 machines) • Create entitlements for service bundles • Provision SaaS users based on entitlements • Automate subscription renewals, upsells and cross-sells • Track and report usage against entitlements • Customer insights on products and versions19 © 2011 Flexera Software, Inc. | Company Confidential
  • 20. Next Steps • Visit and subscribe to our blog: http://blogs.flexerasoftware.com/ecm/ • Contact us: http://www.flexerasoftware.com/company/contact.htm20 © 2011 Flexera Software, Inc. | Company Confidential
  • 21. Q&A21 © 2011 Flexera Software, Inc. | Company Confidential
  • 22. Marriott San Jose ● October 24-26, 2011 SoftSummit offers a comprehensive look at the entire software and device product lifecycle— providing you with strategies and the know-how to adapt your business to thrive in today’s fast- changing market.22 © 2011 Flexera Software, Inc. | Company Confidential
  • 23. Thanks for Attending the “Subscription and Entitlement Management Best Practices for Your SaaS Offerings” Webinar Bashyam Anant Director, Product Management Flexera Software 408-642-3912 banant@flexerasoftware.com23 © 2011 Flexera Software, Inc. | Company Confidential

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