Fall event highlight - Sage Intacct's SaaS industry customers reveal subscription business lessons - and results
- Subscription business models are all the rage. But transitioning to subscriptions brings a slew of new challenges. Here's an illustrated review of a memorable keynote, packed with use cases, and lessons for change.
The conversation happens way too often. "How was the ___ show, Jon?"
Pretty good, but I can't figure out why they don't put more customers in front of us.
It can go wrong in other ways, too - some vendors put customers in front of us, but they're not even live yet. Use cases lose sizzle when they can't speak to quantifiable results.
One vendor that doesn't have that problem is Sage Intacct. They seem to enjoy watching me scramble around with a boatload of customers on my 1:1 schedule. In his recent state of Sage Intacct analysis, Brian Sommer linked to all of them.
Another cloud ERP letdown: when vendors talk up their vertical plays, but again, have no customers to testify to the functionality - and point out improvements needed. At Sage Intacct Advantage 2019, Sage Intacct knocked down all of these problems with a stellar software industry keynote. (Sidenote: nifty event structure to have a short main keynote, followed by the vertical keynote of your choice).
What made the keynote stellar - a word I rarely use? Sage Intacct's David Appel, Head, Sage Intacct Software and SaaS vertical, brought a virtual parade of customers on stage with him. Each one came with one of Appel's terrific customer results slides, which I'll show you in a sec.
I pay attention to what Sage Intacct is up to in the SaaS industry. Why? Because SaaS customers are pushing Sage Intacct into the forefront of subscription management functionality in ERP. And as Appel has written for diginomica, subscription functionality has relevance across industries - or as he put is, it's flipped the cloud.
Nasuni - tackling subscription growth, SaaS scale, and compliance
Companies are grappling with the grand(iose) idea of "servitization," and how they might bring service and subscription streams into their business model - without screwing up on the regulation/compliance side. So how do you get to results? Check this slide from Nasuni, a cloud-native file services platform, displayed during Appel's keynote:
Most slides are dreary, but this one gets it done. You've got the issues, the before, the action, and the results, including:
- reduced order-to-invoice to 15 minutes - 1 percent as long.
- analysis to increase gross margin by + 10 percent
- became ASC-606 compliant, reducing churn and increased ACV
During the keynote, Tom Effler, Accounting Manager with Nasuni, shared how they confronted a classic dilemma: their business was growing faster than their accounting software ("Quickbooks wasn't scaling with us.") But after they went live on Intacct, Effler was honest: they still had some pain points. One thing that was missing: lack of integration with Salesforce. As Effler said to attendees:
We had minimal sync with Salesforce, so our data accuracy was very low... It was really challenging to see the full picture of a customer account. So sales would go in and say we don't even know what this customer has, what they are they subscribing to, what services we need to provide for them.
They tackled those issues, integrating Intacct with Salesforce, automating the conversion of a PO to a booking, reducing manual entry and "margin for error." Effler told attendees Sage Intacct's latest contracts and subscription billing functionality had a big impact, including ASC-606 compliance. Result:
Sales could look at the complete picture of the customer account... They could go in and say, "Okay, this customer is using 20 terabytes of data, but we're going to upsell them another 30 terabytes," and they see all that one viewpoint. So our expansions increased, our services margins increased, because they could see customers that were having issues more easily. I think that was the biggest impact for us, or from my perspective was just consistent data across different teams within the organization.
Code42 - "Now with ASC 606, things have changed dramatically for us"
Time for another slide - this one's from Code42, insider threat detection software that alerts to incidents of data loss.
Grant Christianson, Controller of Code42 Software, shared a similar story - Quickbooks wasn't going to grow with them. Six years ago, they made a move: "Sage Intact was the solution of choice for us."
Code42's business needs have evolved. Sage Intacct has expanded also, particularly around subscriptions and revenue recognition. Christianson said being able to do revenue scheduling by customer and contract was the key: "We could really get down to see individual customer-level detail." Now, he says, Sage Intacct's Contracts and Subscription Billing helps them keep up with compliance, including ASC-606, which subscription businesses can't afford to ignore.
Now with ASC-606, things have changed dramatically for us, because we still sell subscriptions. Folks have some on-prem subscriptions and some clouds, in fact different revenue recognition. So contracts helped us with that. And it's quite a journey for us.
Here's one of the burning questions in finance transformation: can vendors live up to the promise of helping finance leaders be more strategic? Otherwise, streamlining and automating processes hits the wall at headcount reduction. Christianson spoke to that: their AR team and revenue team can now close their books in three to four business days. For the rest of their seven-day monthly close, they shift gears:
They spend the rest of the month-end close, analyzing the numbers to see if something's off in one customer versus another each month. I like that. So they can really do more analytical work day to day.
Acquia - "Success is creating the most efficient process possible"
The final customer slide comes from Acquia:
Acquia, which bills itself as the "leading Drupal enterprise cloud platform," or, now, "an open source digital experience company," has been in the news a lot lately (they acquired CDP vendor AgilOne). Acquia also made news via Sage Intacct Advantage 2019, winning the software industry customer success award.
The story we heard from Emily Drahzal, Financial Systems and Operations Manager at Acquia, hit on similar success lessons. Such as? Clean up manual processes pertaining to revenue recognition, in this case, from Excel to Sage Intacct. As Drahzal told us:
I'm going to echo a lot of the other companies. We were running everything off of Excel spreadsheets for revenue recognition. It was thousands of lines long, and there were scary, scary formula errors that I found in there.
They solved that issue a few years ago with Sage Intacct. Next up? ASC-606 compliance, also via Sage Intacct:
We've overcome those hurdles. And now we're able to devote more time and more effort to actually meeting the profits as soon as possible with revenue operations.
Drahzal moved from the core finance team to lead up a new "revenue operations role." Appel asked Drahzal her to share tips:
It's a mix of a lot of different things for me. It's understanding every single aspect of the business, or at least for the revenue cycle, and the sales cash cycle... And understanding exactly what needs to come out of that cycle, from a reporting perspective - that's a really important output.
Success for me, really, is creating the most efficient process possible, and getting the most information out of the system that I can.
Once again, Salesforce integration proved crucial:
If the sales guys don't go crazy and everything's standard, we have maybe a couple buttons to press in Salesforce and it's ready to invoice in Intacct. So, it's like a minute process if it's a standard order.
Drahzal's story is a reminder: once you get rid of those finance/sales data silos and manual chores, you can get things done.
We're able to really forecast our revenue to a scary degree.
I didn't get into all the results covered in the slides, but when Acquia talks about moving from 80 to 800 people, while cutting order to billing time down in half, which reduces AR balances by 33 percent, and boosts operational cash by 10 percent, you get the idea: operational efficiency is contagious. Granted, your business model, culture, and technology must all be in step, but it's always good to see how it's done. Results doesn't mean your project is perfect, but they are sign posts in a good direction.
Cool stories with quantifiable benefits? Sounds like a pretty good way to close out my content year.