Moving to SaaS isn’t easy. But move you must. And if you make the transition, you’ll care about new things:
Different metrics will matter:
Moz began by looking at traffic and churn, but today measures the number of net customers added (“net adds”) and the time it takes to pay back the cost of customer acquisition (“customer payback.”) These numbers aren’t closely scrutinized in a licensing model; in SaaS they’re front and center.
New economic models become the norm.
An on-demand business needs to move as much of its unpredictable future to on-demand services. The cloud computing adage, “own the base, rent the spike” holds true here—any components you invest in up front are ultimately a “customer loan” that has to be recouped across future client revenue.
You’re judged differently.
As an ISV, run-rate and pipeline, which predict license revenues and bookings, are key; support revenue is a sidenote. In a SaaS business, renewal, churn, and the residual lifetime value of a customer matter far more, and release dates aren’t discussed as much—because if you’re doing it right, you’re releasing something every day.
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