Scaling SaaS finance from PLG to enterprise motion

Um, we do ask, our legal team asks that we share this forward-looking statement. Again, um, things in this presentation might be shared, uh, in terms of forward-looking aspects of our product. Um, we, uh, again, read through this. This is something our legal team always ask us to share. Um, there might be things referenced in this presentation that are not necessarily, um, available at this time, but again, take a moment, read this through. Um, and like we said, introduce yourself in the chat tab, just familiarize yourself with, um, this whole webinar experience. There are some resources linked in the docs tab that you’ll see. I think that’ll be on the right-hand side of your screen. Uh, there’s also a

Q&A tab, so if you have any questions for, um, myself or Sid throughout this, you can use that Q&A tab. Um, we will try to reserve a few moments at the end if we have any questions, um, and there’s also a talk to an expert button, so if at any point you want us to follow up on anything that we went through throughout this presentation, um, drop us a line in that talk to an expert. And last, we are recording this session, so you can view this about an hour after we wrap here, and you can use the exact same link that you used to log on to the webinar to view the recording. So, uh, quick introductions. My name’s Catherine. I’m on our product marketing team here at Zuora. I’ve been specifically looking after all of our solutions

for, um, SaaS finance teams, and I’m really happy to be joined here with, um, the head of finance from Asana, Sid. Sid, would you like to give a s- quick introduction? We’re so lucky to have you this morning. (laughs) Yeah. Sure, Catherine. Thank you. Uh, good morning, good afternoon, everyone. I’m Sid Sanghavi. I head the finance or the fintech team at Asana. Uh, I’ve been at Asana for a little over four years, and, uh, uh, really spent my adult life on finance transformation. So, uh, very glad to join everyone, and, uh, uh, Catherine, thanks for having me. Absolutely. So, a quick, um, round of agenda items that we have today. Uh, again, we have about 30 minutes with you folks this morning, um, so we’ll just do an overview of the balance of priorities that finance teams are facing as they’re

shifting from a PLG to an enterprise sales motion. Um, we have a handful of challenges that have really bubbled to the surface with companies that we’ve spoken with, and Sid’ll add a little bit of color to those as well. And, uh, again, getting Sid from Asana’s experience with, with Zuora and just some final thoughts around, um, really key aspects that finance teams, um, are having to- to grapple with as they’re making sort of this shift. Um, at the very end, we do have a very brief demo, um, with a Q&A to follow that, uh, so hang around t- to the end and we’ll get our hands into some live product, um, and try to wrap up with some Q&A if time allows.

All right. Jumping right in. So, when it comes to, uh, graduating or shifting focus from a PLG motion that, you know, got your business to where it’s at, um, shifting to that enterprise sales motion requires this sort of balance. You don’t wanna neglect all of the aspects, uh, that selling through PLG got you to this point. You know, there’s this- the whole self-service motion, there’s landing fast, offering different promos, having, you know, the scale to do all the transactions that’s coming through, uh, you know, a web storefront, being able to accept all the different payment methods, um, kind of hit this high growth, fast growth way of selling through PLG, but shifting to enterprises requires a whole different set of not only growth goals, but also all of the operational investments that

surround that. So, as you’re shifting to selling to enterprise, you’re thinking about increasing your ASP, your average selling price. You’re thinking about adding, you know, assisted sales motions. Are sales reps gonna quote for this? How are you gonna handle the, you know, order process of- of accepting these- these larger, more complex enterprise deals? That also- also means your contracts are getting quite a bit more complex, you’re thinking about offering things like ramps or- or complex discounting structure, or maybe even account hierarchy structures, a whole host of different ways that your customers are gonna actually be paying you and you’re gonna collect from your pay- from your customers. Um, and last, all of the ways that, uh, an enterprise account interacts with you is quite

different. There’s a host of different, you know, contract changes, contract amendments that are gonna happen over the course of their life cycle, and that can make things like revenue recognition even more complicated. So, it’s not about abandoning one for the other, but finding the right balance between those two. And with the companies that we’ve worked with, there’s three key challenges that have started to- to bubble to the surface. Um, the first is all around how you think about pricing. So, thinking about, you know, shifting from offering free plans, quick promos, time-based offers, simple monthly subscriptions, um, to being able to expand tho- those- those PLG customers into a bigger enterprise contract, offering

the ramp pricing, offering the, you know, hierarchy account discounts, um, performing price uplifts, trying to bundle together multiple services, thinking about negotiating payment terms. These are all different pricing strategies that sit on completely opposite ends of the entire PLG to- to enterprise spectrum. And, and Sid, I’m curious for you, what- what from- what from this sort of litany of- of pricing strategies stands out? Or is anything like screaming to you that- that came to mind for AsanaNah, sure. I’m like, uh, Cath- Catherine, couple of things, right? One, uh, I- I think you hit on two key things, right? Uh, ramp pricing, uh, typically you have these, uh, once you go onto the, your, uh, your selling to the enterprise or the SLG motion, uh, most of your contracts

are going to be material. Uh, they’re going to be multi-year. Uh, with multi-year comes all the complexities of tiers and, and ramps that you have to provide for. Uh, the other thing, which is, uh, uh, pervasive throughout the market right now, especially for, uh, for SaaS companies, uh, across the globe, uh, is the, really the advent of AI, right? And, and most of your AI offerings are, are, are consumption-based, uh, models. So really now you’re mixing your traditional seat-based or seat-based offerings, uh, along with a consumption-based, uh, offering and really coming up with that back office process to combine invoices, right? Which could be, uh, amalgamation of both a consumption-based, uh, model as well as a traditional seat-based

model. And typically, uh, an enterprise customer is, is gonna request a, either a single invoice or they want multiple invoices. So all that complexity that comes in, uh, especially with the advent of AI com- coming into consumption-based billing or these more complex, uh, contracts, uh, all of them, uh, are gonna require your platform to really be capable of serving your enterprise customers. At the same time, you really don’t want to ignore your, your PLG motion where, uh, which is basically almost like your, your lifeline to, to getting new customers and, and getting a product out on a, on a, uh, on a large scale. That makes sense. And I think something we hear a lot as, um,

as PLG companies mature and as, you know, the, the, the revenue share between the PLG motion and the enterprise motion shift, um, that, that PLG motion almost turns into another form of lead gen for you because you might have, you know, groups of, of customers at an account that you want to, you want to, you know, grab that group of customers, shift them into an enterprise plan that’s not only, you know, beneficial for, um, the business itself, but beneficial for them as a customer ’cause they might be able to get, you know, different features, you might be able to offer special pricing, um, as you’re thinking about that PLG to enterprise shift. Absolutely. Um, the, the next challenge that we see, Sid, is this inability to do all of these mid-term changes.

So this is something, again, kind of strictly unique to as you’re moving into an enterprise motion. Um, when companies are strictly selling through PLG, it, it, it tends to be fairly simple. It ten- tends to be, you know, sign up, this customer’s on auto renew. Maybe, maybe there’s an upgrade or downgrade somewhere along the way, but it’s not gonna happen as frequently as what you see with, with enterprise customers. With enterprise customers, what we see is that they’re constantly wanting to make changes. They’re constantly wanting to, you know, negotiate for an early renewal. You know, what they, what, what can they squeeze out of this contract that’s mutually beneficial? How are… If they’re a fast-growing business, they, they wanna grow with you and add, you know, new licenses, add new seats, add new plans. As you come out with new products, you wanna be able to entice them with, with different upgrade

offers and things like that. And being able to manage all of those changes at the scale you need to grow an enterprise business, um, can be, can be quite a challenge for, for, for finance teams. Sid, does this resonate with you in terms of how Asana’s thinking about, you know, uh, growing their, their enterprise business and, you know, taking these different plans and making these different changes? A- absolutely. I mean, you know, o- one, one key example, I think, I, I think, Catherine, you touched upon this, right? Your, your PLG motion typically is a singular product. Maybe you have some simple add-ons, but the minute you ge- get into your, your enterprise-selling motion, right? This is where all the complexity comes in, right? Uh, you have multi-product. And like, you know, for Asana, for example, uh, we have our core Asana subscription

and we have multiple add-ons that, uh, uh, an enterprise customer could opt in for, uh, which is not, uh, uh, not possible or rather not provided on our lower tiers, right? So there’s a complexity of additional, um, add-on subscriptions, uh, right? These are tr- uh, traditional, at least in the case of Asana, uh, most of them are seat based, but then, uh, we also launched our AI studio product, which is, uh, more of a consumption-based model. So now you’re mixing your tradi- again, your traditional seat-based offering. You are, you are bringing in the complexity of add-ons, and then on top of that you have another product offering which is, uh, where the, the entire billing motion is completely different from your traditional seat base, right? And, and, and obviously with all of that, uh, right? From a finance back office standpoint,

all the complexities that come in are around invoicing. Like your, their, your enterprise customers are gonna typically request, they say, “Hey, I have a multinational customer and I’m based in the US, but my subsidiary is buying in, in Australia. So I want the invoice to be billed centrally to the US entity. However, the provisioning has to happen in Australia.” Or the vice, or vice versa, right? Uh, they want regional invoicing, right? So they have all those nuances around legalese, around, on having localization, right? Whether it is your invoice templates, right? Where, uh, you have to have certain legal, um, uh, language on your invoices, your VAT numbers and, and all the other things that go in, which is very different from your, your PLG motion, right? And then last but not

the least, uh, you touched upon the point of revenue recognition. Uh, look, on the PLG side, it’s pretty straightforward. If you’re seat based, it’s ratable throughout your, uh, your term of your subscription, but the minute you move into your enterprise, uh, or, or the SLG side, that’s where all the complec- uh, complexities come in. Now you have to worry about, uh, uh, standalone pricing or SSP, your allocations, right? Uh, adhering to your 606 standards for, uh, getting all your rev rec, uh, both for your seat base as well as for your consumption-based models to, to adhere to standards, et cetera, right? So all those complexities that come in, uh-… and generally, right, the sales guys get very creative, and it’s the back office that really has to figure things

out and make sure that, that things are humming along, right? So, that’s where really the, the platform comes into play. Yeah. And, and you, you bring up a great point, because the, the two, the two things that we have touched on previously have been, sure, there’s, there’s a pricing element to this, and you need really flexible pricing. There is a flef- flexible way to manage, uh, these, these more complex recurring orders, and the, and all the changes. But it, but it’s really not just those two pillars alone. It, it’s really a cross-quote to revenue, like you said. There’s trickle-down effects across, you know, how are your reps even going to be able to quote for these different amendments? How are they going to make the changes that they need to as their customers tapping, and tapping them, uh, to, to, you know, negotiate contracts, and to, to negotiate better offers?

Uh, the, the ordering and invoicing we’ve, we’ve discussed, and, and your, your point around, well, you might want to align different billing frequencies to different customers. You might want to, you know, do things that are more agreeable to your customers that enterprise businesses are, are demanding the flexibility on, that you just simply, you know, requirements weren’t raised whenever you were just selling to, you know, individuals, or, um- Mm-hmm…. c- consumers on the PLG end. Yeah. I mean, quote- quoting is a prime example. I mean, you know, with the, with the PLG motion, you have no need of sending out complex quotes. Uh, the minute you get into your SLG motion, right, quoting is a big, big component. Like, every customer’s going to expect a quote to be sent out. You, you could have multiple versions of the quotes. Uh, the, the

typical, uh, payment methods that you, that you offer, right, um, mostly on the PLG side, you, you typically can get away with credit cards, or online wallets, et cetera. And the minute you start selling into enterprises, right, there are different payment methods that they, that they actually demand. I mean, there are very, very few enterprises which, which typically would like to pay through credit cards, right? So, now you have to enable your, your application to accept, uh, different payment methods, like, uh, ACH, SEPA, um, wire transfers. It, all, all that stuff, uh, that, that typically you have, none of the complexity that, that really, uh, stay on the PLG side. Right? The other, other key thing is, um, I mean, you know, you typically are billing in arrears, or, or even if you are billing

and, and collecting on demand, you still have the whole collections process, right, which is very different from your PLG motion, right, where your collections process might go through a dunning cycle, with multiple dunning levels, right, which typically you would not have on your PLG side. Uh, and even from a dunning standpoint, you bring in the complexity where maybe you have white-glove customers that you don’t want to send a dunning notice to, and you don’t want to send a collections notice to. So, all those variances and complexities that go in, right, uh, to manage your SLG motions, uh, is gonna require a lot more flexibility, uh, in your application to really account for all these nuances, uh, which, which, of course, as Zuora brings on, uh, beautifully through,

through the end-to-end platform. You’re ex- you’re exactly right, and it, it’s, it’s, it’s about the holistic, you know, view of it all, from, from, from quote, all the way through to revenue. And, and Sid, as we sort of, you know, wrap here in the last, we have about 12 minutes left here, um, ih- ih- one, one question I want to pose to you is, uh, you have some remarks here, but some- something that I think a lot of our, uh, companies that we speak with come up, is how do you, how do you know when you’re ready to make this transition? When is that, when do you feel like that inflection point is? When do you feel like, um, you know, if you’re a finance leader at a PLG company exploring these enterprise motions, when, when is the right time? When is the right time to, to explore a, you know, a consolidated

quote to cash system? Uh, I’ll, I’ll give you Asana’s, uh, example, right? I mean, you know, we, we made a very conscious effort that we wanted to move up market and, and really focus on the, on the large enterprises, right? And, and, and when we looked at our offering, the minute we, we decided to, to move our, make a pivot towards the enterprise, uh, segment, right, this is where certain key things come in, and, and you get the cue that, hey, you really need to pivot and, and get ready for the PLG motion, right? One is, uh, the minute you start becoming a multi-product company. Uh, second, uh, in, in order for you to scale, uh, you might want to bring in services, right, which is gonna add that complexity,

uh, to your, to your billing cycle, but, but really, the services are gonna help you, uh, get better retention, better adoption, right? Uh, the third, uh, key aspect is gonna be, uh, around your, the, the scalability of your own product and your platform, right? The minute you, you, PLG, uh, motions are typically for mid-sized companies, like, you know, if you’re seat-based, you’re talking about a few hundred seats per, per domain. Uh, when you talk about enterprises, you’re talking about hundreds and thousands of seats. So, the minute you start seeing that inflection point, right, where your customer base is, is, is increasing, or, or the, the number of users are increasing, right? Uh, that is one, one big, um, uh,

clue for, for moving away from a pure SLG motion to a p- or, sorry, to a pure, uh, PLG motion to an SLG motion. Right? Uh, and, and the other one is, is as I said, I mean, you know, with, with AI being pervasive everywhere, right, uh, most of the companies are gonna be going on a consumption-based model. And, and for having a, a PLG motion purely on a consumption-based model is very difficult. It, it, you cannot scale, uh, and it’s, it’s very variable. So, typically most organizations are, are gonna have to pivot to a sales-led motion for, especially for their AI offerings. Right? Um, and just to, I mean, you know…From our perspective, when, when we went through a journey, some of the lessons that we learned was, one, uh, make… you know,

uh, the point that you made earlier, Catherine, right? You cannot ignore your PLG motion, uh, just because you want to pivot to a sales-led growth or, or a sales-led motion, right? Your PLG is basically what got you to start offering on a, on a more, uh, uh, scaled basis, right? Uh, and, and, and you really need to make sure that your PLG and your SLG motions are seamlessly integrated, uh, for, uh, ongoing success. Uh, the other thing is, um, uh, make it all… you definitely need to embrace the future, right? Models are shifting every day. Like, about, uh, two years back, uh, most SaaS companies were offering a very traditional seat-based offering. And now every, every SaaS company, uh, which is worth their salt is, is going

into a multimodal kind of a offering, right? So, they have… they have your, uh, your seat-based offering. You have professional services. You… as there are some companies who offer hardware, and they offer services to service the hardware, right? And then, of course, you have AI, which is completely gonna, uh, change the way we consume and, and sell to our, our, our custo- customers, right? And that, again, uh, requires a system that is robust enough to manage both the traditional seat-based model with the consumption-based offering and also one-time services billing, which, which, which all needs to come together if you really want to be successful with your SLG motion, right? And then the, the, uh, the last two things is around pricing

and packaging, right? Ev- I mean, if you just look at AI, uh, in the last 12 months, you have seen the prices drop significantly, and every SaaS company which has an AI offering has to tweak their pricing and packaging because of the, the dynamics of the market and how the pr- pricing and packaging is evolving. So, you really need, uh, uh, an application which is gonna provide you a platform where you can rapidly change these pricing and packaging options. Otherwise, you could be left behind, right? And doing it the old way through spreadsheets… I’m like, I remember the, the days where we used to manage, uh, our pricing and packaging on spreadsheets, and it would, it would take us months to, uh, really get to the, uh, get to market, right? And, and the last thing I would leave you

with is, uh, I’m like, you know, equip your finance, uh, back-office team. They are the ones who really suffer if you do not have your, uh, your stack in place. That, I’ll send over to you, Catherine (laughs) Thanks, Sid. I’m, I’m, I’m hearing a few things. Uh, I’m hearing, one, it can’t be siloed motions. It can’t be siloed motions between your PLG and your SLG, um, because they’re so integrated, because you’re going to, you know, bubble up those groups of customers and use that almost as, like, a lead generation function. It ha- they have to be one and the same. Um, there, there’s this notion of thinking, you know, forward about how you’re going to price and package and, and knowing that’s always gonna change, especially with the rise of things like AI models, um, and, and staying ahead of that and thinking, you know, how, how can you set finance teams

up for success given all this, you know, rapid change, rapid iteration while enabling growth for, you know, this enterprise SLG motion. Um, with that, with the few minutes that we have left, I do want to take everyone through, um, a demo. This is… this… I’m trying to keep it as brief as possible, but wanted to show folks, uh, sort of how Zuora enables some of these processes. Um, so in, in this demo, just quick setup. Uh, this, this demo customer that we have here, um, they are currently on, um, a PLG plan that our fictitious company Cloudstream sells. So today, you know, they’re just paying $50 a month for the basic, you know, Cloudstream platform. And what we want to do is we want to take this customer, and we’re gonna graduate them over to an enterprise plan and show you how Zuora handles that all the

way from, um, order to revenue here. So, we are going to create an order, and this is where we’ll add all of our different aspects of the order. And we actually aren’t even going to, you know, start a new subscription, end a new subscription. We’re going to utilize the exact same subscription that they’re on. And I’ll caveat this that I’m doing this all through the… I’m doing this all through the Zuora, uh, UI, uh, but there’s also options for doing this through either the existing CPQ that you have or Zuora CPQ itself. So, from here, we are going to add some of our products onto here. So, we want to add the Cloudstream platform, and they’re upgrading to the enterprise

one. And you’ll notice the enterprise one is actually on an annual subscription, so different from the monthly one that they were on before. We’ll add another product. Since they’re graduating to this enterprise plan, they also need our compliance add-on, so adding on sort of a separate, you know, package to accompany that platform. And they’ll need some professional services with some white-glove onboarding as well, and that’s actually just a one-time charge that we’re going to add on to the same subscription. So, adding those products, we are also going to review that order. We see we actually still have that pro version on here, so we can take that off just to consolidate. They don’t need that plan anymore.

Activate our plan. And we can now see, if we go all the way down to our orders and subscriptions, the subscription is now updated. Our TCV reflects the total contract for that one-time professional services, our add-on plan, and that Cloudstream enterprise version of the platform, so all consolidated in that single subscription. Um, again, we can review it here. We have a lot more metrics that we can get at a, at a glance. Um, again, having it all in that single subscription gives us this full view of our TCV, our MRR for this particular customerIf we want to see the particular invoice, we can actually see exactly what’s being invoiced based

on this particular customer’s billing preferences. And it has also automatically prorated some of these charges as well. Again, all consolidated in one place, and you’ll notice even the, the one-time services. Since that’s a one-time service that they’re paying professional services for, it’s actually not prorated with the rest of the items on the subscription. It is an annual plan, but they’ve been chosen to bill monthly for this, so we have the monthly charges on their bill, and we said this goes all the way through, not just the order, not just all of the changes that we’ve made consolidated into one place, but this also flows all the way through to revenue as well. So, what you’re looking at here is a revenue dashboard, and this is where we can get a consolidated view of everything, um, that, uh, across booking, billing,

revenue, all the way down to a breakdown of how these sort of slice and dice from each product. But for this, we’ll just drill down into the revenue contract for that specific customer, our demo customer. And we can see how it, how the revenue has been broken down across the contracted value, what’s been booked, what’s been billed, and we can even see the order and, and the different performance obligations that have been satisfied based on the rules that are set up behind the scenes in, in Zuora revenue. So again, a consolidated view of exactly what has been booked, what’s been billed, and the revenue that you can actually recognize on this particular contract, um, and this is all possible because this is all in Zuora. You have your order that’s been booked there, all of the changes that have, have happened over the course of that subscription,

um, as well as the revenue recognition rules that have to go into place, um, over the lifetime of that customer as well, and r- recognizing the different products and services across, across that subscription for them. Again, I breezed through that very, very quick, um, and we are still on time, um, really appreciate folks joining us today. Um, again, reach out if you have any other follow-up questions lingering after we wrap here, and Thank you. Cid, thanks for joining us.