Joe Longo, VP Consulting, MetricStream Chad Wolf, SVP Global Services, KANA Software Rick Moreau, Director Field Enablement, Changepoint The webcast panel discusses: - The Need for KPIs - Paradigm Shift: Impact of SaaS on PS Orgs - PS Challenges in Adapting to SaaS - The Shifting Metrics Landscape - PSVillage Benchmark: Real-world Metrics - Benchmark Results - Future Directions

1. Webinar Key Performance
Indicators for PS
Organizations in a SaaS or
On-Premise World

2. Our Webcast Panel
Joe Longo
Vice President Consulting, MetricStream
Chad Wolf
Senior Vice President Global Services, KANA Software
Rick Moreau
Director Field Enablement, Changepoint

3. Contents
• Introduction
• The Need for KPIs
• Paradigm Shift: Impact of SaaS on PS Orgs
• PS Challenges in Adapting to SaaS
• The Shifting Metrics Landscape
• PSVillage Benchmark: Real-world Metrics
• Benchmark Results
• Future Directions
• Conclusion

4. Polling Question #1
Question
Are you using a PSA solution in your
services business?
Answer
Yes, we currently have a PSA
solution in place
No, our organization does not use a
PSA solution
Don’t know.

5. The Need for KPIs
• Metrics convert an art into a science
• Without KPI’s, the PSO is subject to external measures of
success, e.g., ‘customer satisfaction’
• All PS groups will measure the basics:
– revenue, profitability, revenue/head, utilization, etc.
• The greater the maturity of the organization, the more refined
are the KPI’s:
– “blended target utilization”, “cost of services sold”, “gross
margin”, “cost of sales”, etc.

6. SaaS & On-Premise Defined
• SaaS
– Synonyms: “Cloud”, “ASP”, “On-demand”
– SaaS is independent of license models
– “Per-seat”, “Perpetual”, “Annual Renewal”
– SaaS implementation characteristics
– “Multi-tenant”, “User-configurable”, “Scalable”
• On-Premise
– Typically installed at the customer site using customer IT assets.
– ‘Hosted’ has service characteristics of On-Premise, with
additional IT services bundled-in: using the provider’s IT assets.

7. Polling Question #2
Question
What is your delivery model?
Answer
SaaS
On-premise
Blended (SaaS + On-premise)
Don’t know

8. Paradigm Shift: Impact of SaaS on PS Orgs
• Customer perception of SaaS models:
– “You won’t need any Professional Services”
– “If you do need Professional Services, it’s included in the cost, or
just free”
– “Any new functionality you get, everyone gets, so I never have
to pay for it”
• Associated business impacts:
– Pricing models have to be adjusted
–
…. Organizations have to adapt
–
… Operations have to absorb these changes
• These changes are reflected in the Business Model
– Therefore, KPI’s have changed

9. SaaS Permeates the Business
• Operational Impacts:
– How to fund services with perceived low cost or no cost to
customers
– Roles of PM, SM, BA are blending into a single “Account
Manager”
– PS software innovation is being de-emphasized
• Personnel Impacts:
– VP of PS has morphed into VP of Customer Success, Chief
Services Officer, etc.
• Still performs essentially the same tasks
– PS ‘consulting skills’ are de-emphasized
• Less opportunity to become a ‘trusted advisor’, to ‘walk the hallways’

10. PS Challenges in Adapting to SaaS
• For a New Company: Evolution
– Build from the ground-up, develop appropriate methodology, align
roles, hire appropriately, determine KPIs as you grow
• For the Traditional PS: painful adaptation
– Who moves to the new role; who stays behind
– Is SaaS team of equal importance?
– Do you share resources across SaaS and traditional teams?
– How does the methodology adapt?
– Two sets of KPIs maintained
– How to deal with precipitous revenue drop?
• … and why doesn’t this presentation answer these questions?
– Best Practices are evolving
– Answers are sensitive to the company Business Model.

11. Shifting KPI Landscape: Summary
KPI
Utilization
Costs per Head
Revenue per Head
Speed of Adoption
Gross Margin
Cost of Sales
Solution Footprint
Customer Utilization
Customer Stickiness
Traditional
SaaS
• Revenue per Head
Revenue may not be broken-out
therefore can’t be easily track.
• Speed of Adoption
Traditional PS looks at “Acceptance”.
SaaS needs “Adoption”
• Gross Margin
Like revenue, may not be tracked in
detail
• Solution Footprint
How much of the functionality is used?
• Customer Utilization
How pervasive is it in the business?
Need to get to a critical mass to
become strategic
• Customer Stickiness
3+ years needed to be break-even

12. Chad Wolf
Senior Vice President,
Global Services
KANA Software

13. KANA Software has an Evolving Business Model
• KANA is a market leader in customer service serving Global
1000 companies
• Market demands causing disruption in enterprise software
• Hence, our strategic growth is leading to a hybrid business
model
– Customers now requesting options from KANA
• We now offer a wide range of hosted solutions
– Multi-tenant SaaS
– Fully outsourced Managed Services

14. What’s Different Thus Far?
• PS Sales model
– Minimize vs. tailored
• Resourcing model goes global (24x7)
• Gross margin uplift after ‘x’ customers
– Fixed cost vs. variable cost
• Utilization is now a Productive Utilization vs. billable
Utilization
• Key measures are Quality of Service and Renewals vs. Realized
Bill Rate and Margin

15. The PSVillage Benchmark: Real-world Results
• What is the Benchmark?
– Conducted in 2011 and still collecting results
– Over 150 participating companies & increasing
• Completed by services executives with P&L responsibility
– Six major categories, containing over 100 data points
• Extracting the Results
– Constantly updated with new data
– Interactive web-based tool delivers analytics
– Multiple filters allows laser focused reports

16. The PSVillage Benchmark: Real-world Results
• Our Results were filtered:
– “SaaS” & “On-Premise (Commercial Licensing)”

17. Six High Level Data Domains
• Demographics
• Financial Operations
• Management
• Sales Support
• PS Operations
• Delivery

18. Delivery : Average Salaries
Average salaries for Senior Consultants remain about the same across the two
deployment models.
SaaS
On-Premise

19. Operations: Utilization Models
SaaS utilization model: 55% use 1920 or higher, vs 47% of the On-premise respondents.
Significance: SaaS teams utilize a model in which 100% utilization is a higher number of
actual hours than On-premise team.
SaaS
On-Premise

20. Operations: Target Utilization
SaaS utilization targets hover in the mid-range of the scale.
On-premises push the upper end.
Why? SaaS teams often perform multiple roles, such as support, testing, training, etc.
SaaS
Blended Target Utilization
40 - 50%
7%
51 - 65%
30%
66 - 75%
41%
76 - 90%
22%
> 90%
0%
On-Premise
Blended Target Utilization
40 - 50%
11%
51 - 65%
21%
66 - 75%
26%
76 - 90%
42%
> 90%
0%

21. Operations: Fixed Cost projects
A majority of SaaS projects tend to be fixed price. On-premises projects shun them.
Reason: greater control for SaaS environments allows greater predictability, but this also
reflects in the company business model where services are typically bundled.
SaaS
Fixed Cost Projects
Target
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
<10%
Respondents
4%
48%
7%
4%
4%
0%
0%
0%
7%
0%
26%
On-Premise
Fixed Cost Projects
Target
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
<10%
Respondents
0%
5%
0%
0%
0%
16%
5%
0%
26%
0%
48%

22. Financial: PS Operating Income Margin
SaaS margins are below traditional PS organizations. with only 19% reporting over 20%
margins while 43% of On-premise groups report margins greater than 20%
Reason: Traditional PS teams live & die by income and margins. SaaS groups live & die
by customer traction and stickiness
SaaS
Operating Income Margin
Target
>30%
26-30%
21-25%
15-20%
14%
13%
12%
11%
10%
7-9%
<7%
Respondents
4%
4%
11%
44%
0%
0%
0%
0%
15%
4%
18%
On-premises
Operating Income Margin
Target
Respondents
>30%
26-30%
21-25%
15-20%
14%
13%
12%
11%
10%
7-9%
<7%
11%
11%
21%
21%
0%
0%
10%
0%
16%
5%
5%

23. Operations: KB, PSA, PMO
Apart from the PMO, SaaS organizations appear better equipped for the automation
and knowledge transfer.
Possible reasons: SaaS groups are later generations and not encumbered with margins.
Do you have a Project Management Office (PMO)?
SaaS
26%
On-Premises
26%
Have you implemented a knowledgebase for services
delivery?
SaaS
81%
On-Premises
68%
Have you implemented an automated system to
manage your professional services operations?
SaaS
78%
On-Premises
68%

24. Conclusion & Future Directions
• PS groups will continue to evolve.
• We’ll see more of:
– “Customer Success Group”
– “Customer Advocacy Group”
– “Customer Evangelist”
• …. and less of
– “Customer Consulting Group”
– “Product Consultants”
– “Solution Architects”
• Employers are looking for SaaS savvy staff
• If you don’t have it, get it soon.

25. Other Considerations
• Converting an app to SaaS
– Could quite possibly put you out of business
• PS Organizational Structure
– Shared resources & responsibilities
– Single Account Manager
– Less consultative, more service-oriented
– No longer the necessary evil
– Career growth into R&D vs Sales / Marketing

26. Changepoint - A Market Leader
• Market Leader in PSA with specific focus on Technology
Services organizations
• Scalable from small to extremely large customers
• Available On-premise or SaaS
• Highly-configurable, integrated solution
• Real time visibility into key performance metrics via Executive
Reporting and Dashboards
• Strong Customer and Analyst validation

28. Thank You
Joe Longo
joelongo@mac.com
Chad Wolf
cwolf@kana.com
Rick Moreau
rick.moreau@changepoint.com
Learn more about Changepoint
Website
www.changepoint.com
Blog
www.changepoint-blog.net