As global volatility reaches a new high, CFOs’ jobs certainly aren’t getting any easier. But the finance teams at software as a service (SaaS) companies have a particularly tough job, because a traditional P&L statement doesn’t tell the whole story of what’s going on at your company.
Because we’re a SaaS company ourselves, we have a unique appreciation for these companies’ needs. We listen to our own internal finance team to understand what the product needs to do. And, as a result, we’re really good at serving our SaaS clients—all 300-plus of them.
Using our own planning process as an example, here are four ways Adaptive Insights can help SaaS finance organizations power through pain points and become fast, agile, strategic partners to the business.
Banish unpredictability once and for all
The bane of a SaaS company’s existence is unpredictability around bookings. To accurately predict top-line performance, it’s critical to mash those lumps into one smooth and predictable line. This is where powerful FP&A software really comes into play. At Adaptive Insights, we set up our own top-line planning with what we call a Bookings Cube. We named it as such because while it resembles a standard Excel sheet, there’s extra dimensionality to the data—it’s 3-D instead of the flat sheet. You can pivot back and forth among any of the dimensions, whether it’s sales rep seniority, geographic region, or channel. We track all those factors, because at the end of the quarter, we want to know who was short and who was over when it came to bookings. Was it North America or international? Direct or indirect? Knowing those answers is critical to properly predicting revenue.
Sync effortlessly with sales operations
We all know Salesforce is a tremendous tool, but it’s static: It only offers the current picture of what’s going on in the sales organization. And static data leads to static planning, better known as enemy No. 1 of the modern, strategic finance function. To create a robust, strategic plan, FP&A team members need to know a richly layered story of how the context has changed over time: “What did we say at the beginning of the quarter?” Those estimates need to be considered so that the finance team can note if something has changed and adjust the plan accordingly. At Adaptive Insights, we have tools that make it easy to import Salesforce or other information. You can pull in whatever data you need and then play with it to test various scenarios.
Keep track of KPIs
Aggregating KPIs used to mean that each department sent a few slides to the finance team, who slapped everything together into a giant, unwieldy deck. The CFO would then present it to the executive committee, who would inevitably ask where specific figures came from—and often stump the finance team. Now, Adaptive Insights has built a convenient place to create a KPI laundry list that’s much easier to keep straight. We chart everything from headcount and demand generation to new bookings and annual recurring revenue. We also compare the current KPIs to the original plan from months prior. Because every department sees the data, they can discuss any questions before the big meeting, so the meeting with the executive team is an efficient, painless presentation of a single source of truth.
Realistically capture sales productivity
Sales staffing, productivity, and turnover can dramatically affect bookings. Because it frequently takes a new employee several months to make back his or her own salary, let alone start earning money for the company, Adaptive Insights imports our HR personnel sheet and factors in each sales employee’s start date. That data drives productivity assumptions that are far more nuanced, agile, and accurate. Any SaaS finance team can use its personnel data and work backward to determine how to build a sales team based on revenue targets, or check forecast bookings against the number of reps to determine quotas.
Our CFO Indicator Q4 2016 report reveals that while 85% of CFOs say their teams have direct access to the financial and operational data needed to generate accurate reports, it is the non-value-added tasks—like data gathering, verifying accuracy, and formatting reports—that take time away from the strategic analysis desired by top management and other stakeholders. Most CFOs also cite data integration as the biggest technology hurdle to gaining actionable reporting information, given the increasing need to report on both financial and operational data typically housed in disparate, unconnected systems. Read our other CFO Indicator reports here.