Research On Innovation And Evaluation Of SaaS Business Models

With the explosive growth of information technology and the rapid development of big data, DT era has already arrived. According to IDC’s forecast, the big data market of China will increase to$ 617 million in 2016, and keep expanding in five years with the CAGRof 51.4%. SaaS (Software-as-a-Service) is the innovation of traditional software industry as a data-driven business model,coming with tremendous value increment for the community and businesses. This paper mainly researches on building Innovation Framework and Assessment System of SaaS business model. And then this paper selects a global leading enterprise of SaaS industry for case analysis,as well as to provide some theoretical and practical reference for domestic SaaS enterprises.First, this paper concludes main market characteristics of the SaaS business model based on empirical data. Capital market improves its tolerance of SaaS enterprises’weak profitability and attaches importance to revenue growth. Compared to traditional software companies, SaaS business model becomes the main reason for rapid growth of revenue.Then, this paper constructs evaluation system of SaaS business model from three dimensions of profitability,cash flow and growth. The principle of profitability is that LTV (customer’lifetime value) should be three times more than CAC(cost of access to customer). And the principle of cash flow is that SaaS enterprises need to get back the cash flow of CAC within one year.And the principle of growth is that the sum of revenue growth and profit growth shoulfd be greater than 40%.Finally, this paper choose Salesforce, one of the most representative SaaS enterprises, to explain practicability of the evaluation system above. Derived from profitability analysis, we acquire that Salesforce’cost of sales is on a high level because of customer expansion, but its gross margin which is more than 75% is significantly higher than traditional software company’s.Derived from cash flow analysis, the company’net cash flow from operating remains positive owing to deferred revenue, and net cash flow from investing remanins negative due to lots of investment projects, and cash flow from financing is affected by external financing and repurchase of shares; Derived from growth analysis, the rate of company’s subscription revenue growth as 50% is far higher than the traditional as 25%.The sum of the income growth and net profit growth meets the "40%" laws. And then the paper gives the value of Salesforce by market approach (sales ratio).