In those reports, IDC stated that 鈥溌槎乖� Business ByDesign is easy to navigate, with over 500 standardised reports, dozens of prebuilt KPIs and real-time analytics.鈥� They also wrote: 鈥淩eferences noted this is one of the best technology companies communicating their future direction and road map.鈥�

With SMEs accounting for about 80 percent of its customer base, 麻豆原创 understands their need to optimise and simplify IT processes. 麻豆原创 Business One is 麻豆原创鈥檚 flagship small business software to streamline and add intelligence to business processes, including financials, without burdening an IT team. 麻豆原创 Business ByDesign is a single cloud ERP solution for bringing intelligence and automation to fast-growing, midmarket businesses. It enables nimble management of financials, logistics, procurement, shipping and human resources. In the IDC reports, both solutions were recognised for driving digital transformation and customer service.

At the recent聽, 麻豆原创 announced 12 months of free access for partners to test and demo systems on 麻豆原创 Business ByDesign and 麻豆原创 S/4HANA Cloud to help partners accelerate their customers鈥� journey to recovery.

鈥溌槎乖� believes that the most successful business outcomes should always drive software strategy, not the other way around,鈥� said Subhomoy Sengupta, global head, go-to-market, SME solutions, 麻豆原创 SE. 鈥淥ur role in that is delivering intelligent solutions that meet our SME customers鈥� specific needs for agility and flexibility to achieve those outcomes. Our intelligent solutions further enable SMEs to grow into market leaders who are driving innovation, disrupting entire industries and delivering unique experiences, even in times of uncertainty.鈥�

聽MarketScape provides detailed quantitative and qualitative assessments in a variety of technology markets based on several criteria that impact a vendor鈥檚 market success. Each IDC MarketScape issue is informed by IDC鈥檚 global research assets and rigorous scoring methodology.

Visit the聽麻豆原创 News Centre. Follow 麻豆原创 on Twitter at聽.

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Thankfully the cloud is widely accepted and understood as essentially a network of computer servers that allows users to access their data through the internet. My employer, uses cloud computing to store and process information so rather than our customers needing to install software on a single machine or hard drive, they can access it through their web browser or mobile application.

Whilst I believe the cloud is now largely understood by the broader business community, I suspect the understanding on how to value and benchmark SaaS Companies is relatively unknown.

This is quite typical in the tech start up sector where valuations or share prices may be grossly over or under inflated. It鈥檚 not uncommon to see volatility of listed company share prices as investors struggle to value these companies who commonly report year on year net losses whilst revenue and customer growth exceed expectations. This is often due to the fact these SaaS companies have a truck load of venture capital funds at their disposal and invest these funds for growth (people, product and marketing).

As a chartered accountant I thought I had a solid grasp on financial metrics and whilst the traditional metrics such as revenue, cash flow, profitability, liquidity still hold true, the introduction of the SaaS business model has introduced some new metrics that I had not heard of 10 years ago.

Below I will explain six metrics that should be considered when assessing the performance of a SaaS company:

Customer Acquisition Cost (CAC) – are the costs incurred to secure a new customer. These costs include upfront investment in sales and marketing.

Average Revenue Per Customer (ARPC) 鈥� this is calculated by dividing Monthly or Annual Recurring Revenue (A or MRR) by customer numbers at the end of period. To grow revenue, 麻豆原创 Concur can either add more customers or increase Average revenue per Customer (ARPC). By adding new , ARPC can be increased as more value is provided to our customers.

CAC Months – represent the number of months of ARPC required to recover the cost of acquiring each new customer.

Churn 鈥� Simply this is the % rate which customers cancel their recurring revenue subscriptions. Perhaps a better measurement of this metric is Monthly Recurring Revenue (鈥淢RR鈥�) Churn, this measures churn through revenue rather than the number of customers. MRR churn is the amount of MRR attached to customers that leave the company in the previous 12 months.

Lifetime value (LTV) – is a key measure of the value a customer represents to a SaaS company over the customers lifetime. LTV is calculated by dividing ARPC over the monthly churn rate to get the total revenue expected from a customer, then multiplied by the gross margin percentage to get total gross margin expected per customer.

There are multiple ways to improve LTV, such as enhancing products and services to existing subscribers to increase ARPC, improving efficiencies in costs, and investing in retaining customers. LTV of a customer can indicate potential future margins, whether the SaaS company is acquiring the right customers, and provides a strong signal to investors as to what they should expect as the company scales.

LTV/CAC – The LTV of the customer divided by the cost of acquisition per customer. The metric gives the gross margin of a customer鈥檚 lifetime as a multiple of the cost of acquisition. A LTV/CAC ratio of 1 would mean margins over the lifetime just cover the cost to acquire the customer.

Just like technology, the metrics and methods of valuing companies in the digital age are evolving, so keep these above indicators in mind when investing your hard-earn’t cash in that next SaaS Unicorn! Recurring Revenue is powerful just like compound interest.

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