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Which SaaS businesses actually use SaaS? ScaleVP did a survey

Which SaaS businesses actually use SaaS? ScaleVP did a survey

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Trey Ratcliff

Cloud services can really scale a start-up. So, which SaaS firms are actually using them?

Sharon-Wienbar_2847Do SaaS companies eat their own dog food – and use SaaS themselves? They should, if they truly believe in their own credo that cloud-based services can scale businesses rapidly. Sharon Wienbar, partner at ScaleVP, did some research…

Here’s the news: SaaS companies are buying a lot SaaS.SaaS businesses

And so they should. After all, automation is hallmark of a repeatable, scalable process.

The evidence suggests CFOs are buying into this idea. Longitude Research recently studied CFO priorities and found that “nearly three-quarters of finance executives believe new technologies such as the cloud, mobile technology and social media will change how finance is structured and run.”

This is gratifying for ScaleVP. We have portfolio companies with commanding market share in the surveyed high growth companies, and we see some exciting new investment opportunities too.

So we did our own research. We asked CFOs in private companies about the SaaS they use. And this is what we discovered:

Financials

Large SaaS businesses (with over $20m run rate) use NetSuite while smaller SaaS businesses use Intacct or QuickBooks. Most of the companies start out on Quickbooks, but graduate to NetSuite at about the $10m revenue run rate.

Longitude found this trend toward SaaS even in very large US corporations, revealing that 24 per cent have already adopted a cloud-based system in some part of their organization for core financials, while 45 per cent are are planning to. Meanwhile, some of the largest companies run on WorkDay or are evaluating it.

When it comes to billing, most companies use their existing financial package – generally NetSuite – but Zuora and custom-built software are also common. These integrations have been lengthy and difficult, which has led the companies to default to NetSuite more often than we expected.

For expense management, large SaaS businesses make extensive use of Concur for expense management. I guess the CFOs want to keep track of who is drinking all the Odwallas. Seriously, with the extreme levels of growth in scaling businesses, being able to keep track of expenses is critical.

Finally, planning. Visibility is a big attraction of the SaaS business model, and we see common use of enterprise performance management tools such as Adaptive Planning, HostAnalytics and AnaPlan.

HR

Despite the intense war for talent, HR software is in limited use in private SaaS companies.

This finding surprised us. Only about one-third of the companies use a dedicated HR solution from a provider like SuccessFactors. Most rely on a combination of Excel and software that comes with their payroll provider. And in that department, ADP dominates. Keeping track of stock options is a thankless but important chore, so many CFOs are evaluating EquityEdge.

Recruiting software has some traction, with JobVite being the most frequently used package. Companies also rely on LinkedIn for recruiting.

Of course, some SaaS firms are very committed to cloud services. App testing specialist Applause is one. Its CFO Chris Malone says: “Since we are hiring scores of talented employees each month, using resources like LinkedIn, Jobvite, Brainshark & Salesforce.com to source, assess, hire and onboard talent has been vital to our success.”

Sales and marketing

In this area, there is essentially just one SaaS-based CRM system, and that’s SalesForce.

The solution has 100 per cent market share among the companies we surveyed. Perhaps SaaS vendors intentionally split their business between SalesForce and NetSuite, but SalesForce’s rich partner ecosystem also helps (as well as their rabid M&A appetite.)

SalesForce’s $35B market cap is enriched by their pricing; the CRM software is reliably the most expensive line item in a CFO’s software budget, often by an order of magnitude.

DocuSign is also nearly ubiquitous in private SaaS companies. Most sales teams integrate digital signatures in their closing process. As Axcient CFO John Finegan explains: “We integrated DocuSign’s digital signatures and CongaMerge with our Salesforce.com process to automate and accelerate the quote-to-cash cycle as we scale. We can generate a custom contract, get it digitally signed, then keep the information in Salesforce, all automatically.”

No more waiting by the fax machine at 11:59pm on the 90th day of the quarter, or chasing down a prospect who lost the contract.

Collaboration

This is another space where a ScaleVP portfolio company has commanding market share. Box is widely used, especially in companies that have standardized on a single sharing platform. Enterprise management and control is their secret sauce.

That said, collaboration takes place across a huge variety of modalities and vendors: email, IM, chat, SMS, VOIP. Interestingly, larger SaaS businesses tend to use Google Apps and smaller SaaS businesses tend to use Outlook. That surprised us.

GoToMeeting and Webex evenly split the market for web conferencing in the surveyed companies, but Skype rules for video collaboration. Jira and ZenDesk split the market for IT helpdesk.

VOIP phone systems had over half of market share. Meanwhile mobile-only phones combined with RingCentral’s virtual PBX is an emerging standard in the smaller companies we surveyed, perhaps a portent of a broader mobile-only trend in bigger companies.

Up and Comers

When ScaleVP invests or hires, we like to ask interviewees “what else should I know?”

In that vein, we quizzed the CFOs for their favorite software we hadn’t asked about. Some of the hot companies our CFOs love include: Bill.com (another ScaleVP star), ClearSlide, Cloud9, gainsight, GoodData, HalogenHR, InsightSquared, SaaSOptics, SmartSheet and Sococo.

They can expect our calls.

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