We know many of our readers are already deeply immersed in the SaaS world, but not everyone has implemented this revenue model in their own business. The last few years witnessed the emergence of many hybrid business models that combine aspects of pure transaction-based offerings with some subscription components. Some moved completely to SaaS, while others are still imagining how best to monetize their products and services.
The answer may simply be to “SaaS-ify” part of your offering. This SaaS world brings with it many questions on how to operationalize the business model and whether it’s even possible for a business to change effectively. Let’s explore how high-growth logistics company Dispatch added SaaS to their mix and why it was relatively easy for them to do so. Dispatch recently launched delivery management software Dispatch Connect. This move expanded the Dispatch business and enabled them to serve new markets. The strategic decision turned in to action because their flexible finance stack has the ability to grow and adapt even as they plan on expanding the pricing tiers offered with Dispatch Connect.
Why adding SaaS to your business is appealing
Why are SaaS business models so appealing, and if your business is largely transaction-based, how do you go about adding this additional model?
1- New business models can mean new streams of revenue
Adding a new business model allows you to repackage products and services to serve new customers and generate new revenue streams. This is a smart strategy for long-term strategic growth. In fact, thoughtful pricing changes can significantly increase ARR for growth-minded businesses.
2- Multiple pricing models allow you to adapt to how customers want to buy
Allowing customers to buy what, when, and how they want is a key factor for success in the modern performance economy. For Dispatch, by adding subscriptions for Dispatch Connect in addition to their existing transaction-based marketplace, they were able to better serve fleet owners looking to manage their fleet using Dispatch software.
“...Ordway really helped to partner with us to figure out what the best solution would be for our customers, as well as set us up for the future,” said Abby Allen, Product Manager at Dispatch. “We launched with a single tier, but we're already set up and feeling well-equipped to go live with a second paid tier later this year and we're really excited to continue to partner with Ordway on that.”
3- SaaS adds predictability in your revenue (a plus for investors/valuations)
We’re proud that the Ordway billing and revenue automation platform is flexible enough to manage any billing scenario or business model. Because Dispatch was already an Ordway customer, it was easy for the team to rely on Ordway’s SaaS subscription management capabilities. It was a simple configuration effort to make sure Ordway’s revenue output from both their marketplace and SaaS businesses aligned with their NetSuite general ledger, seamlessly adapting to this change in Dispatch’s business model and creating additional value for the business.
Considerations on how to implement a SaaS business model
Implementing a new business model is not an overnight process, but with the right resources in place to support billing and revenue recognition infrastructure, the process becomes a lot simpler. These three strategies will be critical in the implementation process:
- Ensure your finance stack is flexible enough to absorb complexity and digital transformation initiatives
- Automate manual workflows to increase efficiency in the sales-to-finance process
- Ensure data is accurate and in real-time across your internal systems (CRM to General Ledger)
Because Dispatch was relying on Ordway’s RESTful API, implementing a new revenue model was quick and seamless. A Dispatch engineer was able to connect Dispatch internal systems to Ordway’s SaaS subscription management framework and go-live with subscription billing in one engineering sprint. This speed ultimately allowed the team to meet an ambitious go-to-market for the Dispatch Connect product. And now, Ordway handles both subscription and marketplace billing for Dispatch’s growing product mix, while their team focuses on higher-order business priorities.
As you grow your own business, consider adding a SaaS revenue model- and along the way, be sure to ask if your tech is empowering your growth or slowing you down.
Interested in learning more about how Ordway can help you eliminate manual workarounds and scale your business? Send us a note, we want to help!