The Three Things EVERY Aspiring SaaS Company Should Know!

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This informative slide deck was the foundation of a webcast with ServiceSource and leading analyst firm IDC exploring the opportunities and challenges for companies making the transition to a SaaS or cloud-based business, including:

- The top 3 keys to success for software and hardware vendors to effectively manage the customer lifecycle and pave a shorter path to profitability
- Managing financial expectations in the marketplace
- Examples of companies that have successfully made the SaaS transition
- How usage and consumption insights are now the foundation for customer success driving successful SaaS businesses

Here is the link to the webinar!
http://corporate.servicesource.com/LP=279

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The Three Things EVERY Aspiring SaaS Company Should Know!

  1. 1. 3 Things Every Aspiring SaaS Company Should Know Ashley Stirrup, SVP of Product & Solution Marketing – ServiceSource Guest Speaker: Amy Konary, Research VP – IDC Research
  2. 2. 1 Agenda 1 1 2 3 4 5 What’s happening in the SaaS market? What does it take to build a SaaS business? What are the economic realities? The 3 things every aspirational SaaS company must know. Who has successfully made the transition to a SaaS business? Q & A
  3. 3. SaaS Market Snapshot Amy Konary Research VP, Software Licensing and Provisioning
  4. 4. © IDC Visit us at IDC.com and follow us on Twitter: @IDC 3
  5. 5. $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 2012 2013 2014 2015 2016 2017 Software Revenue $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 2012 2013 2014 2015 2016 2017 SaaS/PaaS Revenue Packaged Software Revenue $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 2012 2013 2014 2015 2016 2017 SaaS/PaaS Revenue Packaged Software Revenue Revenue from companies with No SaaS/PaaS 5.9% Growth CAGR (2012-2017) 4 XaaS Drives Revenue Growth How Does Cloud in the Portfolio Impact Revenue? Source: IDC, 2014 2012-2017 CAGR 19.8%   8.1%   91.9%   83.5%   16.5%   9.1%   -­‐9.4%   3.9%   22.1%  
  6. 6. Key Stats: Importance of Cloud Traditional IT Dominates, but Public Cloud Drives New Growth 34% of replacement apps spend (replacing capability) was on SaaS $1 for every $6 spent on software was for SaaS delivered software 91% of new apps spend (new capability) was on SaaS 84% of net new commercial apps will be developed specifically for cloud in 2014 31%+ of companies will source greater than 50% of total IT spend from the Public Cloud by 2016* >80% of Global 2000 will still have >70% of IT onsite in 2016 Source: IDC, 2014 © IDC Visit us at IDC.com and follow us on Twitter: @IDC 5 $1 for every $5 spent on apps was for SaaS delivered apps
  7. 7. Key Questions for SaaS ISVs 6 Develop Rebuild? Architecture Runtime Environment Services Single-stack or Composite? How Is It Built? Operate Ops Responsibilities Hosting Solution Hardware Location Patch and App Maintenance How Is It Run? Market Customer type Business Model Monetization Strategy Ongoing Support Marketplace How Is It Consumed? Target customer: Who will be the buyer? How will they access? Business Model: How will you make money? Manage costs? Monetization Strategy: Metrics? Terms? Ongoing Support: How do you grow accounts and keep customers? Marketplace: Who sells it? Who promotes it? How do you reinforce value?
  8. 8. 7 7 Monetization Strategy •  Move beyond “Wild West” •  From user pricing to usage pricing •  Process and structure, but with flexibility
  9. 9. 88 3 Things you must know Small changes in retention, upsell and cross-sell can have a huge impact Usage data can help you optimize how and when you reach out to customers Roles and responsibilities are critical to getting the right outcomes 1. 2. 3.
  10. 10. 99 Accelerate time to profitability On-boarding Adoption Training Upsell Cross-sell Customer lifetime value Time Initial Sale
  11. 11. 1010 SaaS economicsRevenue
  12. 12. 1111 Best-in-class Customer Lifecycle Management Acquire Onboard Adopt Achieve Customer Success Intelligent Engagement Upsell Cross-sell Renew Proactive Retain Advocacy Grow Nurture
  13. 13. 12 Roles and responsibilities Customer Success Manager •  On-boarding •  Adoption •  Retention Renewal Sales Rep •  Renewals •  Up-selling •  Cross-selling
  14. 14. 1313 Customer coverage models Customer Success Manager Renewal Sales Rep Marketing Automation System Customers
  15. 15. 1414 End user strategies Customer Success Nurturing and advocacy Feature training & adoption High usage of key features Not using the mobile app
  16. 16. 1515 Maximize Customer Lifetime Value Initial Sale Renewals Up-Sells Cross-Sells Usage Charges TIME 90%+ of revenue is captured after initial sale CLV ($)
  17. 17. 1616 Customer usage informs which growth levers to pull when Initial Sale Renewals Up-Sells Cross-Sells Usage Charges Before Sale CLV How best to drive conversion? Did the customer get good value from the product or service? What is time to value? Is usage meeting expectations? Is the service underpriced compared to usage? What is the next best offer based on value derived? What are the right plans? TIME
  18. 18. 1717 Customer Lifecycle Management GrowRetainAdopt Increase adoption & retention Grow incremental revenue Predictive analytics for subscription businesses *Based on internal studies, companies who worked with ServiceSource increased retention by 15 points 20% increase in sales productivity 15pt Increase in customer retention* Selling Services Customer Success Renewal management, workflow and analytics
  19. 19. 1818 Who has successfully made the transition?
  20. 20. 1919 3 Things you must know Small changes in retention, upsell and cross-sell can have a huge impact Usage data can help you optimize how and when you reach out to customers Roles and responsibilities are critical to getting the right outcomes 1. 2. 3.
  21. 21. 20 ServiceSource Confidential Information Thank you! Q & A

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