Five steps for transforming your software company into a healthy SaaS business

Goals of a healthy SaaS business

A healthy SaaS business should enjoy an expanding revenue stream based capturing new customers, as does any business. But more important than ever, the healthy SaaS business requires strong renewal rates and customer expansion by maintaining a strong recurring revenue stream. Getting here requires a new approach to thinking that is nothing short of a transformation. For a traditional software provider, this transformation doesn’t have to occur overnight, since the existing revenue stream can buoy financial results. But over time, the business will need to adjust to ensure a strong SaaS business. Below are 5 steps to help guide this transformation.

1. Understand the Financial Implications and Business Metrics

With SaaS, the business performance metrics used to gauge financial performance will be different than metrics used for a business built upon selling on-premises software (with either a perpetual or a subscription license model). These are the questions to ask as you move toward this transition:

What are the costs involved in moving to SaaS?

How will it impact revenue streams?

What metrics are necessary to evaluate your SaaS success and business growth?

No longer will the financial focus be solely on a model with high-up front sales costs and a high up-front and revenue recognition model. You must consider bookings that add recurring revenue; how to minimise churn to ensure high customer retention (renewal rates) and recurring revenue streams; growth in deferred revenue (contractually committed, but not yet recognised); and cash flow vs. revenue recognition as sales and marketing costs that are typically incurred ahead of a sale that recognises revenue in a recurring fashion. – Read more

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Five steps for transforming your software company into a healthy SaaS business

Table of Contents

Table of Contents

Cloud Computing: Benefits, Disadvantages & Types of Cloud Computing Services

6 Important Benefits of Private Cloud

How To Choose The Best Cloud Server

How To Prepare Your Organization For Digital Transformation?

Best Software

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