GUIDE

The Product Manager’s

Ultimate Guide to Successful
SaaS Implementation
GUIDE

Software companies are moving to software-as-a-

service (SaaS) faster than ever before. SaaS provides
a better customer experience and represents
how buyers want to buy today. However, software
companies should not underestimate the long tail
of their on-premises solutions that still deliver
a good share of the overall revenue.
LIFESTYLE IMAGE FPO

In this world of hybridized software models, subscription INSIGHT

public cloud services, including SaaS and platform-as-a-service
(PaaS), are growing much more rapidly than subscription
on-premises deployments. As forecasted by IDC, subscription “52% of software vendors offer
revenue from public cloud services will grow from $240.9 both public cloud and on-premise
in 2020 to $570.1 billion in 2025, far surpassing subscription software (hybrid.)”
revenue from on-premises software ($117.1 billion in 2020 –IDC2
growing to $244.5 billion in 2025).1

With the swift shift to SaaS comes the need for effective management of all offerings—whether a
software supplier or intelligent device company is adding its first SaaS product, expanding its SaaS
applications, building SaaS application platforms that communicate back to on-premises applications,
or looking for more effective and efficient ways to manage multiple software deployment models. Not
only do these objectives depend on effective entitlement management, they require clarity into how the
software is being used. Gathering accurate usage data is a top priority for software product managers.
Today, 70% of suppliers collect usage data, up from 60% in 2020; the number of software suppliers
collecting usage data is expected to grow to a total of 79% by 2023.3 This growing trend helps deliver
insights required to manage SaaS offerings and improve the overall experience for users. Usage data
is not only important for SaaS, but it’s especially valuable when transitioning on-prem apps to SaaS to
define how to do it best and align pricing and value.
SaaS implementation is most
INSIGHT
successful when product managers
and operations teams take a
Room for improvement: Only 30% of survey respondents
comprehensive look at their software
say that pricing and value are “totally aligned”
offerings. The ultimate goal is to
—Revenera Monetization Monitor: Software Monetization
Models and Strategies 2021
ensure that customers have an
excellent overall experience.

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HEAR MORE
This requires delivering self service capabilities
so that customers can manage entitlements/use
“Companies that want to be prepared for
rights across the organization, get transparency
the future, should look at their software
into usage data, and support channel partner business holistically and not think in silos
relationships for effective delivery of SaaS offerings. of SaaS vs on-premises.”
This guide looks at the technical considerations —Nicole Segerer, Revenera
to support those initiatives.

HOW TO
HEAR MORE

Understand Entitlements Hear more about

the entitlement management
There’s much more to SaaS than just authenticating a user and logging that user and SaaS ecosystem.
into an application, including many things that support software monetization.
Efficient entitlement management requires clarity into the varied information that an
entitlement holds. This then facilitates the successful operation of a SaaS business,
with flexible and hybrid monetization models, new packaging and pricing models,
and streamlined processes for provisioning and fulfillment across product offerings. DEFINITION

A software supplier typically has multiple systems in its quote-to-cash process:

enterprise resource planning (ERP), customer relationship management (CRM), Software Entitlement
billing, and business intelligence (BI). Information from these systems (such as the A software entitlement is the
order) feeds into the entitlement system to show what the end customer bought right to use software. A software
and the terms of what the customer bought (e.g, duration, monetization model, entitlement is typically purchased
volume, and other terms). The entitlement system enforces or fulfills that order so for the use of particular software,
that the software application (SaaS or on-premises) can deliver appropriate access. and enables software vendors to
manage software usage, monitor
As users interact with the software, the entitlement system maintains important license compliance and maintain
insights of how the software is consumed. This provides the software supplier with product data.
an audit trail of information that can easily be extracted from the supplier’s analytics
or entitlement system to demonstrate how end-customers enter the application and
consume licenses. This information, which eventually needs to go into the billing
system, is maintained by the entitlement system.

An entitlement may change over time for two main reasons. First, if there is a new order of products or services. The second
reason for changed entitlements is when an end customer moves around and needs to change what they have rights to in order
to support the work they’re doing within their organization. In either case, self-service capabilities in an entitlement system
streamlines these changes.

As software vendors transition to SaaS, they’re able to offer a single way to interact with an entitlement system, whether those
entitlements are for new SaaS applications or for other applications, such as desktop and mobile applications. These user-based
applications facilitate great flexibility, allowing the user to communicate with an entitlement system and see exactly
what entitlement use rights they have, no matter where they’re accessing the applications.

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HOW TO

Support the Entire Quote to Cash Process

Multiple back office systems need to work together in order to monetize SaaS. Looking at it from a business process perspective,
evaluate and support the entire quote to cash (revenue recognition) process.

QUOTE TO CASH: BUSINESS PROCESS AND SYSTEMS

Systems commonly used include:

A CRM system, or the configure, price, quote (CPQ) functionality of a CRM system, is always involved. This holds the amount
for the quote and the stock-keeping units (SKUs) for the products and services that the customer intends to purchase.

The moment that this order closes and a prospect becomes a customer is when licensing and entitlement management kicks in.
The SKUs move from being line items on a customer quote to being active entitlements, identifying the rights associated with the
software (including the number of users or amount of usage, as determined by the monetization model). When it gets pinged by
the end application, entitlement management makes this information available. The system knows what the customers have the
rights to use. Customers can then start doing self-services to set up their users and use rights, based on what was purchased.

The accounting system then kicks in for billing. A relatively easy model is a flat-fee subscription, in which the customer pays
the same amount ($10 per month, $100 per year or $1 million per year, for example) in each billing cycle. With SaaS models,
the flat fee subscription frequently also has a usage-based component, which is very often updated on a monthly basis. Whether
it is using a prepaid or postpaid model, the software supplier needs to identify actual usage, which is captured in the entitlement
management system in order to be pushed to the finance system. These steps ensure that software producers track what
customers owe, then invoice appropriately.

Usage management and compliance management track usage and compliance, supporting the enforcement strategy of the
software supplier. This can also support the overall lifecycle by tracking movement from trial or freemium to paid usage. It offers
a compliance component to protect from overuse, comparing entitled usage to actual usage, supporting resolution strategies
(i.e., moving the customer to a higher usage tier or changing the contract).

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HOW TO

Deploy a Central Monetization Strategy

As companies move to SaaS as part of an overall digitization trend, many INSIGHT
seek to align back office systems. Managing products in silos—with
different processes for different product lines—increases complexity and
When processes are different
operational overhead (e.g., for reconciliation of what customers own),
creating potential issues, including for revenue recognition. per product line, overhead may
grow and it may create issues with revenue
These silos make it difficult to answer a CEO’s question of “How is our recognition. Instead, streamline and align
software business doing?” Product managers must be able to report up, processes across areas, including product
demonstrating increasing revenue, greater customer satisfaction and management, orders, operations,
higher product adoption levels. Being able to report on these metrics and and finance.
trends requires a single system of record.

Instead of relying on a siloed approach, get a complete view of what customers own. Running a central entitlement management
back-office can help suppliers strengthen their SaaS offerings and their digital transformation initiatives, overall.

A central monetization strategy is useful for systems that span multiple products. It can manage entitlements directly
communicating with SaaS applications, serve licenses to on-premises applications and interact with local license servers that
can be used in air-gapped environments. Integrate fulfillment technologies into your entitlement system. All the systems that your
customer interacts with, paired with those customers’ entitlements, can provide the data required for the software supplier’s
intelligence reporting. This provides useful, accurate data for customers and channel partners, as well.

CENTRAL MONETIZATION STRATEGY AND SYSTEMS ACROSS PRODUCTS

Having one single source of truth is a huge advantage for all parties SEE HOW
involved. Modern software companies are focused on annual recurring
revenue (ARR), customer churn, profitability and how usage of software
Make the move:
is increasing or decreasing. Reporting on these metrics consistently
Help senior staff understand the business
across product lines can help address common business challenges,
case for SaaS. Learn more in The CFO’s
including how to accelerate recurring revenue, make roadmap and
pricing decisions, shorten time to value for new products, and stop Ultimate Guide to Successfully Transitioning
revenue leakage. This allows SaaS companies, looking for competitive to SaaS.
differentiation, to monetize valuable features, changing packaging, pricing READ THE GUIDE
and functionality much more frequently than was common in the past.

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HOW TO

Bring Agility Beyond Homegrown Solutions

Different software suppliers have different approaches to SaaS licensing. To give users access to the system and enforce use
rights, it is possible to rely on a homegrown approach by hard coding the logic and functionality within the SaaS application itself.

Yet the limitations of this approach become clear when a supplier expands the SaaS offering and needs to accommodate the
features and capabilities of new products and packaging. The SaaS product supplier/publisher needs to remain focused on its
core competencies and not be weighed down by the resources required to build modern entitlement and licensing. When in-
house teams try to handle the entitlement and licensing, though, those efforts often tax the limited engineering resources and
hamper product managers’ teams to be agile and innovative. Homegrown solutions often delay the time to market and prevent
suppliers from implementing the monetization models they need. Furthermore, any in-house development of entitlements/
licensing is a valuable software feature for the core product that is not developed.

More efficiently, a centralized entitlement management system (illustrated below in the gray box) that manages usage rights can
communicate with the SaaS application to determine what users own and have rights to. The SaaS application then accesses this
entitlement management system, which handles fulfillment of and provides access to products and services coming from
an order system.

SAAS LICENSING EXAMPLE

SEE HOW
This structure enables users to self-service different packages and
products. The end-customer administrator can match users in their
enterprise with different capabilities within the SaaS application Ikon Science made it easier for customers to take
(e.g., allocating a particular amount of monthly usage), with those advantage of its solutions by relying on Revenera’s
use rights being maintained by the entitlement system itself licensing and entitlement management technology.
(not within the SaaS application).
READ THE CASE STUDY

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GUIDE

Additional Resources
As your organization takes steps toward SaaS implementation,
please turn to additional resources available from Revenera:

COMPANION GUIDE:
The CFO’s Ultimate Guide to Successfully Transitioning to SaaS:
This guide helps chief financial officer (CFOs) and senior finance
staff understand the financial implications of and how to make
the transition to SaaS.

WEBINARS:
Path to SaaS Monetization for Product Managers, Product
Operations and Finance Leaders: In three on-demand webinars,
analysts and experts from Revenera take a cross-functional
approach to understanding the market drivers, organizational
impacts, and business processes critical to the successful
adoption of SaaS and subscription models. These sessions provide
the strategies you need to drive your SaaS monetization efforts
forward.

• Part I: SaaS Monetization Trends and Forecast 2022

• Part II: Plotting Your Course to SaaS: Technical Considerations

for Product Packaging and Customer Entitlements

• Part III: What Technology CFOs Should Know When Adopting

SaaS and Subscription

RESEARCH:
Revenera Monetization Monitor:
Software Monetization Models and Strategies 2021

Revenera Monetization Monitor: Software Usage Analytics 2021

Revenera Monetization Monitor: Software Compliance and Piracy

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Monetize What Matters

Software suppliers face increased pressure to make sure that they’re continuously improving software and delivering value
to their customers. The pressure to secure recurring revenue streams continues at a steady pace, too. Transitioning to
SaaS delivery, monetized through a subscription model, helps suppliers achieve the goals that matter to them and to their
customers.

Software and IoT suppliers worldwide protect and monetize their SaaS, mobile, on-premises, and embedded applications with
Revenera’s Software and IoT Monetization solutions. It helps them drive more revenue from their software while protecting
their IP. They protect their applications and devices, manage compliance, understand their customers’ needs, and drive
recurring revenue.

Contact Revenera to learn more about monetization solutions for entitlement management, software licensing, software
delivery and updates, usage intelligence, and renewals and customer growth.

SEE MORE
FOOTNOTES
1. T
 homason, Mark. IDC Market Forecast: Worldwide Software Business
Once Upon a Time, Model (Subscription and License) Forecast, 2021–2025, July 2021,
IDC #US47143021e.

The Software World 2. IDC Software Tracker Forecast 2H20 Release, May 2021.

Was Flat
3. R
 evenera Monetization Monitor: Software Usage Analytics 2021 Report.
https://info.revenera.com/SWM-WP-Monetization-Monitor-2021Rpt2

Revenera provides the enabling technology to take products to market fast, unlock the value of your IP and accelerate revenue
growth—from the edge to the cloud. www.revenera.com

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