Success With SaaS

Photo by Agnieszka When enterprise software companies embark on selling SaaS, they typically run into compensation challenges, especially when existing license customers express interest in SaaS. First and foremost, the compensation setting should align with the SaaS strategy. Make sure to have buy-in at the senior leadership level if SaaS is the future business model for the company (a complete shift to Cloud/Subscription like Adobe) or a delivery option while continuing on the license software path. To achieve the former, you will need to lean into SaaS by encouraging sales reps to position SaaS offerings, while the latter requires minimal change to ensure sales reps don’t shy away from must have SaaS opportunities. Unlike a license sale where revenue is recognized immediately, SaaS revenue recognition is over the duration of the contract creating a multi-year EBITDA impact. Either way, you need to have a position before embarking on sales compensation; otherwise, you will not ...

Establishing SaaS at an enterprise software company that sells license products is challenging. To succeed, you need to understand what is different about SaaS. I found that to be successful an enterprise software company has to develop expertise for: SaaS Sales: The sales process, contractual commitments, and buyers are different. SaaS is a value sale that consists of both product functionality and services. Because services have an underlying cost, the pricing and discounting process will have to ensure profitability and frequently will be more rigorous than with a license sale. As in the ubiquitous Salesforce.com marketing, the sales rep has to be knowledgeable on the value proposition of SaaS and be comfortable negotiating service contracts with SLA’s and operational commitments vs. a more straightforward license contract without them. Negotiation can become tricky with existing customers because license contracts require revision and frequently customer procurement will ha...