e.g. Cost Per Click for food tech SaaS
sorry, I don’t understand your question
Hey Adrian, there’s a very vast range or things you can look at, some examples:
1/ CAPEX and OPEX over a range of time and the pre-existing system landscape - typically this is very diluted, so you have to be thorough to keep the internal IT guys honest - and you can use this to establish comparative metrics between a SaaS and a locally run solution. When you are at the stage to introduce an actual SaaS, those cost metrics are excellent to be in the contract with your SaaS vendor
2/ When you already have a SaaS in place for a while:
2a/ check for how quick the organisation can react to changes imposed by competitors in pricing, products etc. - you can again compare this to historic data from the old system. The time of gap to the competition vs. decline in sales is a directly useful metric to trace if your SaaS is good or not
2b/ in function of the industry, check the number of operations the marketing/sales/innovation can perform per time period on the catalogue/the product offer—> this is a metric to see if the SaaS actually accelerated innovation in your operation or not
There’s heaps more ...
We have a data analysts who do this for us.
It can be such a big area of work that it will require the dedicated focus of a business analyst especially in a big complex environment.
Organisations are in business to add value and ultimately make a profit – the performance of their portfolio is there constantly under the microscope to help them make the right decisions in their industry.
As an agile coach I keep abreast of critical areas of interest through research on the internet and attending webinars and MeetUps - so I can engage and contribute to quality interactions – Some resources I have found very informative include the links shared below.
The SaaS industry is growing year on year for the flexibility it provides for business – projected to be a $143 billion industry by 2022 – some organisation have sprung up to make Trends and metrics in the Industry their business.
Openviewpartners for example, last year talked about an increase in flexible working as a trend for 2020 – But no one could have imagined the scale at which that happened as a result of COVID -19.
With Metrics - there are several measures and tools to achieve this. It is paramount you have a goal for what it is you want to measure and why? You need to decide on a few key metrics that will enhance your strategy and decision making process.
The usual CAPEX and OPEX will still be relevant for SaaS as a business - in addition Some of the key Financial metrics for the sector include:
• Customer Acquisition Cost (CAC)
• Monthly Recurring Revenue (MRR)
• Average Revenue per Account (ARPA)
• Annual Recurring Revenue or Annual Run Rate (ARR)
• Average Sale Price (ASP)
• Customer Churn Rate
• Lifetime Value (LTV)
Some online resources I have found useful include:
Financial Modelling question - what resources do you use to find trends and metrics for SaaS business by industry?
I agree with the points above that the questions could be framed in a better way to help us understand what you seek to model and then the different metrics that can be used.
as a different perspective , you may wish to look at the consumption versus revenue for function provided. Consumption on the SaaS can include bandwidth, CPU, diskspace, memory utilisation, longevity of processing cycles, security and compound analysis (depending of the complexity of the problem). This should be augmented with any third party costs for services used, e.g. stripe cost per transaction.
This provides an operational finance model based on costs. This can be modelled against predicted usage and usage patterns. please note that Support services and governance services also need to flex as part of the operational cost model.
once developed it is straightforward to then layer on the value model for use of SaaS services for the different industry and usage patterns.
these points are the primitives that typically underpin the “cost per click metrics, usage metrics, from accounting metrics. They also help you quantify the Value add against your cloud hosting provider for their charges.
For me this is core for scaling (and potentially) reducing services based on demand.
Im sure we can all help you if you could share a little more information.
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