• Zabe Siddique

5 Reasons Why SaaS Companies Need Unified, Cloud ERP

Suffice to say Software as a service (SaaS) companies have some unique technology and accounting requirements. Demand for these offerings is high on both the B2C and B2B fronts, with public cloud services and infrastructure spending expected to reach nearly $500 billion by 2023—up from $229 billion in 2019, according to IDC.

The sector’s key growth drivers include the expansion of the remote workforce; companies increasingly offloading IT infrastructure and maintenance; and the low barriers to entry associated with cloud software investments (e.g., startup costs, infrastructure requirements, etc.).

“The global coronavirus pandemic-imposed hardships on numerous businesses during 2020. However, the crisis created new marketplace opportunities for SaaS providers,” digital marketing agency Linchpin SEO points out. For example, the outbreak forced many US companies to utilize remote office workers and relied on SaaS providers to help them stay fully functional.

5 Reasons SaaS Companies Need ERP

Using a business model that provides products via the cloud and then licenses their usage to customers via a subscription plan, SaaS companies typically offer one or more products via subscriptions that can vary according to their customer bases and products. They charge customers on a month-to-month or other recurring frequency. These predictable revenue streams must be managed properly—a task that’s difficult to orchestrate using disparate business systems, spreadsheets and manual approaches.

Knowing this, NetSuite Cloud Enterprise Resource Planning (ERP), provides the foundation that SaaS companies need in order to scale with hyper-growth. NetSuite helps SaaS companies streamline their back-office functions and manage complex financial processes like revenue recognition, forecasting, procurement, specialized pricing models, recurring/subscription-based revenue streams and order management.

Here are five more reasons SaaS companies need a unified, cloud ERP to run their expanding operations:

1) What used to work well probably doesn’t anymore. The processes and systems that worked well when your business was a startup, or focused on a single product set, or selling in a single geography, will inevitably break down as the company grows. “It's tempting to augment with spreadsheets and standalone applications to meet incremental needs as they arise,” NetSuite points out. “But as growth continues, these unintegrated processes and ad hoc applications begin to hinder productivity.”

2) Fragmented business systems, siloed data and manual processes stifle growth. Modern technology companies require a foundation that enables flexibility, agility and visibility. Cloud computing is the accepted business architecture of today and tomorrow. “You are free to focus on innovation rather than the burden of maintaining hardware and software,” NetSuite states.

3) All companies need better and more reliable business metrics. Having a central database of information also helps SaaS companies improve their analytics and reporting. Since an ERP records and stores all the data users input, for example, it’s also an excellent business intelligence tool that generates reports faster (e.g., reports that could take days of research and compilation without an ERP takes just minutes with one). With NetSuite, SaaS firms have access to important business metrics anytime, anywhere.

4) Complex revenue recognition scenarios are common in the SaaS world. Leveraging NetSuite’s revenue recognition capabilities, SaaS companies can easily automate their revenue scheduling, allocation and reporting processes. They can also create specific recognition rules for each product or service that they offer, and then easily link those rules to individual line items in customer contracts. NetSuite helps companies recognize revenue based on predefined schedules or milestones in compliance with ASC 606, IFRS 15 and other standards.

5) SaaS companies can’t afford to operate in silos. ERP also unifies many of the systems that may currently be fragmented—from product development to accounts payable, and all links in between. “By unifying systems, you help your staff utilize their time more efficiently,” SelectHub points out. “With ERP, users don’t have to hunt down a piece of information across multiple systems. With the central database, information is much easier to retrieve.” ERP also helps eliminate the need for users to be trained on several systems—yet another benefit of having a single, unified data repository to rely on and work from.

With the right ERP and implementation partner, SaaS companies can automate their most tedious tasks, eliminate redundant processes like data entry and easily manage complex calculations like recurring revenue. “This frees up your team members’ time to do more thoughtful work, increasing your ROI when it comes to labor,” SelectHub adds. “From this, ERP increases your organization’s productivity, efficiency and profitability.”

CEBA Solutions is a long-time Oracle NetSuite Solution Partner that can help your company select, implement and optimize its ERP system and other solutions. We’ll provide as much—or, as little—guidance as you require throughout the process, post go-live and throughout the life of your ERP.

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