2021 saw a SaaS market cap of $145.5 billion. Unsurprisingly, more and more software companies are opting for the SaaS model, and even relatively young enterprises like Shopify are seeing incredible success. For software businesses seeking to capitalize on the SaaS model, it’s important to go in mindful of the risks as well as the rewards by tracking the top Key Risk Indicators.
From a business perspective, risk describes any choice or decision in operations that expose an enterprise to losses or decreased profits. Technology or IT risk refers to the potential for any tech-related failures to disrupt business operations.
For organizations offering software services via a proprietary platform, risk can arise in service quality and availability. Risk in these areas can affect your business impact and returns. Knowing where these risks come from can help you shore up your services and protect your ROI long-term.
Key risk indicators (KRIs) are important metrics used to track areas in your software services that can expose you to risk. They differ from Key Performance Indicators (KPIs), which are often used to measure productivity over time to spot trends and areas for improvement. KRIs are often overlooked, but they’re powerful tools for improving business performance.
From time to time, software development projects may go over budget. In isolated cases, this isn’t a cause for alarm. Left unchecked, however, runaway projects can chip away at your ROI by increasing spending past projections. Tracking the number of projects exceeding budget can help to identify areas for improving your strategic planning and development efforts.
Like projects exceeding budgets, a trend of delayed projects can indicate that your development and strategic planning are not adequately aligned. Timing is an important factor in business success, either to gain a competitive edge or to satisfy customer needs. That’s why missed deadlines may be more costly than you think.
At least 70% of companies in the US are using SaaS for their software needs. This is great for the SaaS market, but it also makes it a target for bad actors seeking access to employee data. Tracking the number of security incidents logged is necessary for evaluating where security risks exist. Knowing where your vulnerabilities are can help improve your cybersecurity measures, and potentially save your company millions.
As with any service or product, it’s always a good idea to track issues or requests for assistance from customers. Tracking the number of requests for support, questions, complaints, or suggestions can help to identify areas of service for maintenance or improvement. Failure to track these can undermine your ability to address customer needs and increase the risk of churn.
Related to support requests, this refers to the average time to resolution. Time to Response is a common metric for measuring response to requests or complaints, but more important is how long it takes for issues to be resolved. The time between an issue being flagged and the time it’s resolved is time that your service is unavailable to a customer. Keeping this to a minimum is key to customer success.
Uptime generally refers to the amount of time that services are available for use. It can be calculated as a percentage of hours per year or as a percentage of total peak business hours per year. Better availability tends to increase maintenance and operations costs, but it also tends to increase customer satisfaction, which can be great for business.
Downtime describes the hours when services are unavailable for use. Planned downtime is often necessary for system updates, maintenance efforts, or the rollout of new features. Unplanned downtime however can result from system failures or server outages. This can end up feeding your churn rates.
Failures generally are often a cause of unplanned downtime and support request tickets. If your services are failing often, it can indicate areas of your platform that need to be addressed. Platform-wide failures that occur regularly can also affect availability, interrupting customer operations that depend on your services. This is bad for your customers and for business.
Tracking key risk indicators in your SaaS products is only effective if you have a strong risk management strategy as well. This can mean allocating resources to improve service availability or improving overall quality by optimizing your development process. Whatever the case, the right metrics are necessary to see where and how you can improve your SaaS products. Learn more about getting started in SaaS with our article here.