By Tim McCormick
Eighty-four percent of new software today is delivered as a service (SaaS). Yet, as we turn the corner toward 2019, many businesses remain ill-prepared for the unique challenges and opportunities that come with moving to a subscription model and managing a SaaS business.
The most noticeable pitfalls lie in the way SaaS businesses manage the order-to-cash-to-renewal process and capture, share and use financial metrics. Often, they take the same processes and principles used to run a traditional business and transfer them to the SaaS business, which simply doesn’t work long-term. In a traditional business, a company sells a product or service and the customer pays for it one time. Thus, the revenue is earned at that moment. SaaS customers pay as they go. In this case, revenue is recognized differently and businesses must continue to earn the trust of the customer, deliver a positive experience and build a long-term relationship in order to continue receiving payment.
Among the pitfalls we most often see are:
Relying on Spreadsheets and Disconnected Systems
Quickly trying to move to a subscription model or get a new SaaS business off the ground, many SaaS businesses use spreadsheets, disconnected systems and manual processes to manage their recurring revenue business.