SaaS offerings create substantial advantages for customers compared to traditional software delivery driving the strong growth in global spending on SaaS applications. Total global spending on SaaS applications is expected to grow strongly with an average growth rate of 15% in the period 2019-2022. Gartner expects SaaS to be 45% of total application software spending. Offering SaaS also provides substantial financial benefits for the software companies which translates into significantly higher valuation of software companies with a SaaS business model.
Formulating and executing a SaaS business model transformation basically consists of answering three questions, the Why, What and How:
There are different SaaS business models which can be distinguished. These models address different customer pain points and the customer experience strategy needs to be adapted accordingly. To optimize the enterprise value of a SaaS business model, it is paramount to understand the key value drivers of a particular business model and its levers to pull. Choices made have ramifications for the different operating model elements such as in product development (e.g. from waterfall to agile with continuous release cycles), and change in financial reporting.
To successfully transform towards a SaaS business model a company should decide on the appropriate implementation speed and whether to make or buy elements of the operating model. Should the entire organisation transform to the new business model, or is it better to set up a greenfield organisation? Should capabilities be developed in-house or acquired in the market? The choices drive the product and technology roadmap and the M&A strategy of the organisation and eventually the success of the transformation.
If you want to know more about how to execute a successful SaaS business model transformation, please dowload the whitepaper as pdf here.
Please do not hesitate to contact us in case you want discuss how JBR can support you in your journey towards a successful business model transformation, help acquire or finance digital capabilities as well as advise you on optimizing the value creation of your business.