SaaS businesses usually do NOT do sculpting. Their operations should.

This is the first post in “the SaaS Workbench”, a blog I’ve decided to open. What’s the SaaS Workbench? Just like all workbenches, it’s a play where you try to build things, or pull them apart to see what they are made of. My focus will be on the latter – trying to understand the underlying metrics or performance indicators at the foundation of the SaaS world. SaaS isn’t just transforming how software is sold or used; it is also transforming how we look at business metrics, measuring the financial performance and pipeline of a business (see article by David Cowan of BVP) and how we’re performing that measuring.

I love metrics. Don’t you?  Metrics are cool, they are numbers hidden in your business, waiting to be discovered. All you need to do is carve them out, brush off the dust and – there you have it, shining like a gem.. but many times, there are plenty of “gems” to be found. Which one is yours? Which one matters most? Moreover, your own, significant metric may be hiding really well amongst other, important-looking, metrics. It may be covered by other, interesting-but-less-important measurements and may require persistent digging, in the right direction.

So here we’ve touched the first 2 challenges come to mind when talking about metrics – separating the wheat from the chaff on the one hand, and directing your work to excavate the one measure to use, on the other hand. As Hans Hofmann, a painter, aptly said: The ability to simplify means to eliminate the unnecessary so that the necessary may speak“.

I am passionate about metrics because they tell a story. Well, they tell many stories. One, concise and well-displayed measurement can distill a message. Funny-enough, the same set of numbers can tell other stories; sometimes, opposing ones. Here comes our next challenge, summed up by one of my favorite quotes by the economist and author, Ronald Coase: “If you torture the data long enough, it will confess“.

 

What’s in this Blog?

This Blog is about SaaS and beyond (by beyond I refer to businesses that rely on recurring revenues). We’ll talk about performance monitoring challenges SaaS companies are facing and the solutions they design and deploy. We’ll examine the leading indicators they use as well as the ongoing performance monitoring parameters they measure their organization by. We’ll ask about flaws and benefits in the various measuring methods and we’ll seek the most effective ones.

By ‘we’, I do not refer to the royal one. In coming weeks, I intend to host a variety of companies and present their case-studies. We’ll discuss performance monitoring methods. We’ll review the chaff, the wheat and the selection process. We’ll examine ways to avoid torturing your data, so it will confess of its own free will.

If you wish to share your experience, or if you have any thoughts on useful topics I should cover, please contact me at eran@lead2sell.com

Coming soon: ‘Leading Indicators – Handle with Care’.

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Filed under KPI, SaaS Operations