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November 23, 2016

KPMG Papers Help Companies Navigate SaaS Business Models

There have been revolutionary changes in technology. The cloud is a new way of doing business. And whether businesses are recent cloud converts or were born in the cloud, KPMG has the expertise to help them set priorities to maximize their profits and be well-positioned for the future, says Prasadh Cadambi, a partner at the consulting firm.

The SaaS (News - Alert) marketplace includes pure SaaS solution providers such as Salesforce and NetSuite; on-premises software providers, including Adobe, Intuit, and Oracle; and integrated technology and product companies, including Cisco, IBM (News - Alert), HP as well as GE and Siemens, says Cadambi, who met with me last week at TMC Editors’ Day in Santa Clara, Calif.

Cadambi and fellow KPMG partner Satya Easwaran recently published a paper titled “Transforming Your SaaS Business: A Strategic Guide for Optimizing Business Performance” that provides a strategic framework for increasing growth, profitability, and sustainability for SaaS businesses. In it, the KPMG partners present strategic drivers along with key metrics used to assess performance at each stage in the business lifecycle — launch, scale/optimization, and stabilization. Priority areas on which cloud businesses should include billing models, customer segmentation, finance operations and processes, pricing and profitability, product architecture, regulatory compliance, and sales force management, according to KPMG.

For example, says Cadambi, if you’re an on-premises software company moving to the cloud, you need to move spending from capex to cloud products. Also, he adds, your sales and marketing channels and conversations need to change.

Businesses in the cloud arena also should ensure their architectures are flexible and scalable both so they can grow and so they can integrate with others in the event of a merger or acquisition, he says. Cloud companies also need to set business strategies for how they will manage growth and profitability, and how they will measure sales efficiency so their spending the right amount to get bookings, he adds.

They should also know what kind of churn to expect and how to keep churn under control. And they should use the continuous feedback loop the cloud provides so they can make appropriate offers to customers in the future. 

Edited by Alicia Young

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