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ServiceSource Gives Technology Company CFOs Ways to Examine Maintenance and Support Revenue as a Key Profitability Driver in 2009
In a time of deferred purchasing for new technology, maintenance and support performance are under spotlight to generate maximum revenue
10 March 2009, San Francisco, CA: ServiceSource, a San Francisco, CA-based Service Performance Management leader for the high-tech industry, revealed that maintenance and support revenue show signs of resiliency in recessionary times. Providing the only complete, end-to-end maintenance and service revenue solution in the technology industry with over $3B in revenue under management, ServiceSource has seen increases in client renewal rates across several measures both quarter over quarter and year over year. The benchmarks indicate specific ways CFOs can take a closer look at how to capture additional maintenance and support revenue. (Complete industry benchmarks are reported in the Service Performance Management Report at http://www.servicesource.com/pdf/SSI-Q308.pdf)
"Our economic environment is putting pressure on CFOs to drill down on all revenue opportunities. While there are clear metrics to assess how the product side of the business is doing, there is less clarity on the maintenance and renewals side of the business. And, we've seen that this is a critical and predictable annuity stream that can account for up to 50% of our client's revenue," said Mike Smerklo, Chairman and CEO, ServiceSource.
"While technology customers are deferring the purchase of new products and looking for ways to save money and squeeze more life out of their existing assets, having a comprehensive set of metrics on the maintenance side of the business will allow tech companies to understand where additional revenue opportunities are, whether by product line, customer segment, or channel partners," added Smerklo.
In a recent analyst call with JMP Securities investors, Mr. Smerklo recommended specific ways CFOs can examine the health of their maintenance and support revenue, including:
- What are the renewal rates by customer segment
- What are the renewal rates in quarter, by contract and dollars
- How are renewal rates in enterprise customers versus SMB
- Why have customers not renewed, and where did they go
- How much attrition is there in the renewal rates
- What parts of the channel are performing well
- What are the direct versus channel renewal rates
- How is the reporting on maintenance in terms of bookings versus renewals and discounting
"With this intelligence in hand, CFOs can help drive maximum revenue from all sides of the business and will empower value-based selling instead of the avoidable discounting strategies to support growth both now and beyond the current season of difficulty," Smerklo concluded.
A recording and transcript of the JMP Securities call can be downloaded at: http://www.servicesource.com/company/servicesource_jmp_3-02-09.php
About ServiceSource
ServiceSource is the service revenue performance company. We partner with technology, healthcare, and life sciences companies to maximize maintenance, support, and subscription revenue while optimizing customer loyalty. We increase contract renewal rates for clients on average by 10–25 percentage points — and in some cases by up to 40 points. These dramatic results are achieved via a purpose-built service revenue solution, including a suite of cloud applications and managed services built on a proprietary technology platform, which combines the industry's most robust data management engine and a unique service revenue master, leveraging our deep knowledgebase of benchmarks and best practices. Our solution delivers proven results through a 100% pay-for-performance business model that enables a success–driven, shared–risk partnership. Headquartered in San Francisco, ServiceSource has $5 billion in service revenue under management.
For more information on ServiceSource, visit www.servicesource.com or call: 415.901.6030.