Killer KPIs to Drive Your Services Business

Here’s a look at which Key Performance Indicators are the “gotta measures” for building the bottom line of your services organization.

By Jeanne Urich, Adexta Strategy Consulting

As the technology market has matured, there has been a dramatic shift in overall revenue and margin contribution derived from Services. According to a recent Association of Support Professionals survey of the Top 100 publicly traded software companies, Services (PS and maintenance) now represent from 50 to 80% of overall revenue. Service margins have also dramatically improved, propelled primarily by healthy support margins (exceeding 80%), Service margin contribution is now 45 to 80% of total Service revenue. Seemingly overnight, Services have become quite respectable sources of revenue and margin.

With the growing contribution and significance of Services to the bottom line, it’s never been more important for software companies to effectively monitor, measure, and manage their Services businesses.

Running a Professional Services business is very complex – and it’s a game which must be won with “singles and doubles”, not homeruns; so it is imperative to know which KPI’s are “essential”, what the right targets are for each KPI and how improvement of specific KPIs can improve the bottom line.

Looking for Promising SaaS Startups

The SIIA OnDemand conference takes place in San Jose from November 7-9, 2007. The organizers are looking for several early-stage, on-demand software vendors to present their businesses to the more than 400 industry executives, analysts and press members who will be in attendance. Click here to find out more and submit an application. The deadline for entry is Aug. 31.

Software Gets SaaS-y

This week, three SandHill.com Blog posts describe evidence of the strength of the SaaS model.

Guy Smith of Silicon Strategies points to statistics about enterprise adoption and Microsoft’s participation in the model.
Christopher W. Cabrera of Xactly says NetSuite’s IPO will be the SaaS tipping point.
Jeff Kaplan of THINKstrategies says Callidus’ recent move onto Salesforce.com’s AppExchange network bridges the gap between on-premise and on-demand software.

Publish Your Perspective!

The SandHill.com Blog wants your opinions. Send your thoughts on the enterprise software industry to editor@sandhill.com and we’ll publish them in our blog.

Focus on the Customer: Merrill Lynch

Merrill Lynch has combined operations with IT in a single unit. Diane Schueneman, the head of the company’s Global Infrastructure Solutions, explains how she is changing both to focus on the customer in this article from The McKinsey Quarterly.

News Update: Moving On Up

Vendors move up the value chain; plus, evidence of SaaS success, HP's big deals, and the threat of "Summer Solstice" and "Pinch." Read these stories and more software news of the week in the latest SandHill.com Software News Summary.

Poll: Services’ Impact?

In the next three years, how will the impact of services revenues on software vendor performance evolve?
Take our Pulse Poll >>

Last week, readers gave their opinions as to whether Microsoft posed an on-demand CRM market share threat to Salesforce.com.
Give us your opinion and see the results >>

More at SandHill.com:

How Microsoft bought China.
Read the most important enterprise software industry news of the week >>

Achieve3000 receives $9 million from Insight Venture Partners.
Monitor the latest software venture capital deals >>

RH Donnelley buys Business.com.
Size up last week's software M&A deals >>

Art Technology Group names Drew Reynolds as SVP of corporate development.
See who’s made it to the top in our list of recent software executive appointments.

Send us your feedback on this newsletter and the SandHill.com site.

Parting Thought

"The penalty of success is to be bored by people who used to snub you."
– Nancy Astor

Courtesy of Malcolm Kusher, The Kushner Group