Agile development is all about capacity – how many stories can you get through the chicklet engine in a given period, do you push or pull it, and what is your burn-down rate. And whether we are talking application development, infrastructure, database management, etc., sometimes all we need is additional capacity. Cheap capacity. Because that IT budget is not getting any larger for traditional IT due to the rapid diverting of business dollars to digital innovation.
One way to handle this is by augmenting your staff with cheaper offshore or nearshore resources. While completely outsourcing a function is still challenging and is fraught with risk, adding additional capacity with cheap offshore/nearshore resources is a good way to prop up your teams that are struggling with keeping up with demand.
But what if your demands change over time and where you once needed help with software development, now your infrastructure team is struggling? In comes SaaS, Staffing-as-a-Service. Instead of having to go back to the CEO or CFO and ask (fight) for additional funds, wouldn’t it be easier if you could simply switch out your offshore developers for infrastructure or DBA resources as needed for no additional costs? This is Staffing-as-a-Service.
We are probably all getting tired of hearing about “-as-a-Service” acronyms, but Staffing-as-a-Service is no different than SaaS at it’s core. SaaS is popular because you can scale up and down on demand and you sometimes uncover amazing customer experiences. You should expect nothing less from your outsourcing provider and have it written into your contracts. We have been able to uncover a couple of companies who do this well, back it up with a contract, and provide those amazing customer experiences. You should be able to find them as well if you search in the right places, wink – wink!
In traditional (legacy) software sales, companies make large up-front investments in software and then pay a smaller support cost throughout the life-cycle of the product. From an Independent Software Vendor’s (ISV) perspective, this puts the focus on the sales process and very little focus on customer satisfaction, since once the investment is made, a customer is stuck with whatever decision they made and have very few options to get out of a poor product or weak support. This also places an enormous amount of pressure on a sales organization for new customer acquisition and takes time and focus away from servicing existing customers. Software-as-a-Service subscriptions create predictable revenues for ISVs and better experiences for the customer.
Why SaaS Puts the Focus on the Customer
Software-as-a-Service is a completely different model than legacy on-premise software sales since companies are no longer making large up-front investments in software. Instead, they are paying a monthly or annual subscription for the use of the software. While some SaaS products, such as accounting, ERP, or financial reporting products, are fairly complex to deploy, most are easy to get into and easy to get out of and switch to other products. This means that ISVs need to put the focus on customer satisfaction and to ensure that their customers are receiving value for their monthly or annual subscription.
The Metrics that Matter
SaaS companies need to focus relentlessly on the metrics that matter.
MRR/ARR – Monthly or Annual Recurring Revenue is the lifeblood of a SaaS organization since sales revenues are spread out evenly over the subscription period. Recurring revenue is predictable and should be growing if customer Churn can be kept low.
LTV – Lifetime Value of the Customer. The most important factor that positively impacts this number is the length of time a SaaS company can retain customers. The way to do this is to make sure their expectations are being met and they are perceiving high value for the software.
CAC – Customer Acquisition Costs. Stated simply, CAC is the total sales and marketing costs divided by the total new customers in the same period.
Churn – Churn is the percentage of customers lost over a period.
In a SaaS model, having a high churn rate and low LTV are business killers. This is why setting proper customer expectations and proactively nurturing the customer relationship is so important for SaaS companies. If ISVs do this effectively, they win from an increase in MRR/ARR, and the customers win by having the use of great software that is meeting their needs and expectations.
- Optiv is a market-leading provider of Cyber Security solutions, reporting $947.3 million in revenue for 2015, and $97.5 million in EBITDA
- KKR (NYSE KKR) is a global investment firm which invests across multiple industries
- Enterprise Value: $1.8 – $1.9 Billion
- EV/LTM EBITDA: 11-13x
Optiv Security, a market-leading provider of end-to-end cyber security solutions, and KKR, a leading global investment firm, today announced the signing of a definitive agreement under which KKR will acquire a majority stake in Optiv. The company is being acquired from a group of private investors, including a private equity fund managed by Blackstone (NYSE: BX), which will maintain a minority interest in Optiv along with Optiv management. Other selling shareholders include Investcorp and Sverica. Financial terms of the transaction are not being disclosed.
Click HERE for the entire press release.
Why we like OneNeck
OneNeck isn’t just in the data center/collocation business. They manage and host complex full-stack ERP systems to include SAP and Dynamics AX. They are a CRN Triple Crown winner by being listed on the CRN Solution Provider 500, Fast Growth 150, and the Tech Elite 250.
Company Name: OneNeck
Status: Private – Subsidiary of TDS
Last Year’s Revenue: $287M
Number of Employees: 550
Headquarters: Scottsdale, AZ
Regions of Operations: US
CEO: Phil LaForge
At OneNeck® IT Solutions, our commitment is to be an expert provider of hybrid IT solutions tailored for mid-market and enterprise companies and to provide high-touch customer service. Through a single point of accountability, OneNeck offers end-to-end, enterprise-class IT solutions, including cloud and hosting solutions, managed services, ERP application management, professional services, IT hardware and top tier data centers.
Solutions or Services
- Cloud & Hosting Services
- Managed Services
- ERP Application Hosting and Management
- Top Tier Data Centers
Mid Market & Enterprise
5301 N Pima Road
Scottdale, AZ 85250
Why we like SoftwareOne
There aren’t too many Fortune 500 companies growing at 40% YOY since 2006. That is reason enough to like SoftwareOne. But what is really impressive is their 81% employee satisfaction score. Rock On SoftwareOne!
Company Name: SoftwareOne
Last Year’s Revenue: $5.5B
Number of Employees: 3000+
Headquarters: Stans, Switzerland
Regions of Operations: International
CEO: Patrick Winter
Privately owned since 1985, SoftwareONE is redefining the technology solutions landscape as the thought leaders in Software Portfolio Management (SPM) services. By combining our commercial, technology, compliance and governance expertise into a balanced SPM service offering, we support our customers by ensuring their IT investments are cost-effectively roadmapped towards their unique business needs. Globally headquartered in Stans, Switzerland with a local footprint in 82 countries, our 3,000 certified technology consultants help our customers optimize their software spend through our elite sales designations and deep-rooted relationships with top publishers such as Microsoft, Adobe, IBM, VMware, Oracle, Citrix, Symantec, McAfee, and many more. To learn more about SoftwareONE, visit us at http://www.softwareone.com .
Solutions or Services
- Software Portfolio Management
- Software Procurement Services
- Software Asset Management and Compliance
- PyraCloud – Global software procurement, reporting, and license agreement management
20875 Crossroads Circle
Waukesha, WI 53186 4093
Company Name: CACI International Inc.
Last Year’s Revenue: 3.744B (2016)
Prior Year’s Revenue: 3.313B
Number of Employees: 19,900
Headquarters: Arlington, VA
Regions of Operations: International
CACI provides information solutions and services in support of national security missions and government transformation for Intelligence, Defense, and Federal Civilian customers. A Fortune magazine World’s Most Admired Company in the IT Services industry, CACI is a member of the Fortune 1000 Largest Companies, the Russell 2000 Index, and the S&P SmallCap600 Index. CACI’s sustained commitment to ethics and integrity defines its corporate culture and drives its success. With approximately 20,000 employees worldwide, CACI provides dynamic career opportunities for military veterans and industry professionals to support the nation’s most critical missions. Join us!
Our information solutions and services help our customers:
- Safeguard our national security
- Support critical decision-making to counter global threats
- Keep our Armed Forces informed, equipped, and mission-ready
- Transform government to enhance the quality of services to our citizens
- Modernize government to more efficiently meet national challenges
Solutions or Services
- Business Systems
- Command and Control (c2)
- Cyber Security
- Enterprise IT
- Intelligence Systems and Support
- Intelligence Services
- Investigation and Litigation Support
- Logistics and Materials Readiness
- Surveillance and Reconnaissance
CACI International Inc
1100 North Glebe Road
Arlington, VA 22201
November 7th, 2016
Buyer: Insight Enterprises (NASDAQ:NSIT)
Seller: Datalink (Nasdaq:DTLK)
Deal Size: $258M
Enterprise Value: $196M
Press Release: http://nsit.client.shareholder.com/releasedetail.cfm?ReleaseID=997867