SAAS GROWTH: GETTING FROM $20M TO $200M

This article appeared in full on OPEX on September 20th, 2018

In the past 20 years, companies have fundamentally changed the way they consume business systems. Data management could slow a company or enable growth. Efforts in reporting and analysis took time and were reliant on centralized IT departments. This dependency on began to wane in companies outside the Fortune 2000 as easy-to-use business systems could now be distributed from everything from sales to marketing.

A $20M SaaS company that wants to grow their Annual Recurring Revenue ARR 10x needs to be mature in its systems, processes, data and reporting. These companies run of numerous SaaS services to run their day-to-day sales, marketing, and employee needs. It is when these departments are no longer siloed to we see insight and coordination into budgets.

Business Operations Managers – the New IT Department

Business operations managers now support their functional area AND reporting. This can lead to siloed operations, think Salesforce admin split between Sales for SalesOps or Marketing for marketing activities. With business operations managers taking the role of a new IT, this can slow down cross-functional processes and require management involvement for simple tasks.

Best-in-Class SaaS Business Operations

Investment in system management is what gets you your Return on Investment. Integrated systems lead to faster analytics that show where to allocate resources. Best in class $20M SaaS companies have…

Integrated their Customer Relationship Management CRM and financial apps together and with their SaaS platform
Compiled key SaaS metrics, benchmarking them to identify areas of strength and weakness in their operations

Expert Advice from OpFocus CEO, David Carnes

David Carnes, founder and CEO of OpFocus, speaks about the issues in data management that SaaS companies face getting from $20M to $200M. From integrating systems to building strategies that support rapid growth. I asked David what is the most important think SaaS companies need to do to grow revenue 10x.

David:

Most companies have a mess on the operations side, let’s be frank. SaaS companies focus on Sales and Marketing.The primary focus of any SaaS company is Sales/Marketing and product. And that’s good. But it leaves operations behind and that can really mess up growth.

To get from A to Z, to grow 10X, most companies have a financial plan, but they don’t have an operational road map that fully supports the financial plan. Take, for example, the company that plans to grow revenue after the initial growth stage by developing partners and a channel. Doing business with and through a channel requires a number of changes to the CRM, marketing and billing systems, not to mention financial reporting and calculation of the metrics associated with the revenue coming from channel. Many of these changes get implemented piecemeal, until it gets too big and the integration and/or reporting from the systems is slowing everything down. Then some management attention is thrown at the problem, but figuring out the fix can take forever if this issue wasn’t on anyone’s radar screen to solve in a given timeframe.

Operations should not be forgotten. Operations is key to growth across the Customer Relationship Management CRM, marketing and billing systems. If this isn’t part of a growth roadmap, the needed changes to adjust metrics and financial reporting slows everything. Without this foresight new geographical focuses, products, or markets need new systems with implementation time and training that the organization will hopefully adopt.

The same problems and issues come up whether the growth plan calls for channels, or maybe the plan calls for improving retention rates, or shifting the sales organization to a vertical focus from a purely geographic focus, or by adding new products and new markets.

All these growth activities require changes to the systems, data and reporting – and often require that additional new services be added to the mix. Then, new processes need to be implemented to make all this happen, but it has to be done in a way that the organization doesn’t revolt and reject the new systems and processes.

What SaaS companies need to do next

To get started, all business systems, processes and reporting must be documented. Find what is broken and determine what needs to be fixed. This will be the basis of building your 10x revenue operations roadmap.

SaaS companies using their own services need to be wary of internal silos, keeping consistent metrics, and investing in sophisticated analytics rather than last minute Microsoft Excel Reports. Don’t just plan for budget. Plan for operational processes and roadmaps for financial plans, business operations that report without silos, and invest in BI tools. Focusing on internal operations, systems and processes are what delivers insight into company performance, agility, improvement, and growth.

Common Traits in Successful SaaS Companies

A successful SaaS company will realize early on that governance, process, and policy of the business operation function is not siloed within the organization. Another is an investment in a Business Intelligence BI tool, which help support reporting across systems and departments.

Summary

Challenges

SaaS companies, maybe because of the nature of their own business, are particularly prone to using myriad SaaS business services internally.
Management of these systems tends to be silo’ed in functional departments and integration is limited.
Common definitions of key metrics are not consistent across functional groups.
Most companies don’t invest early enough in more sophisticated analytics to enable them to grow faster, but rather depend on band aid type efforts in Excel on a regular basis to cobble together reports.

Solutions

Similar to the budget process, companies should have a parallel operational planning process, with a road map tracking to the financial plan, and supporting both high level company objectives and individual departmental needs.
Put in place a business operations function that runs across departments to own systems, data and reporting across the business.
Invest earlier rather than later in a BI tool which supports reporting across systems and departments.

The sooner a company focuses on maturing its internal operations, systems and processes, the faster they will grow (all other things being equal). This allows senior management to have the reporting and a common framework to look at the company’s performance and operations, leading to faster decisions, faster problem solving and continual improvement.

Learn about how OpFocus can help take your SaaS company from $20M to $200M with our strategic SaaS services.