The happy ending of a dot com
FinancialForce continues to impress having just announced a 60 percent jump in subscription revenues year over year. The largest cloud based ERP vendor on the Salesforce platform also just announced hiring industry veteran Joe Fuca as president of worldwide field operations. Finally, it signed its 1,000th customer in the last quarter. Let’s unpack this.
The great thing about being a subscription company is renewals. Once you have a customer and assuming you do everything right, they should renew, which translates into having a much easier time reaching revenue goals. For subscription companies to grow, they need to attract more business but they don’t have to start the year at zero, there’s revenue in contracts or in the bank that hasn’t been officially counted yet so the revenue challenge is in how to generate the incremental number and not, as conventional companies do, everything starting at zero.
But take nothing away from FinancialForce. They still need to make customers happy and keep them engaged. In a way, the sales effort is never over, it’s shouldered by the whole company that’s a key lesson every subscription company needs to embrace. So good for them with both the revenue growth and with landing their 1,000th customer.
These facts put into high relief, the maturation and broad acceptability of software as a service and cloud computing in general. It’s here, it works, there’s abundant proof. It only took 15 years to get here! With subscriptions in general and subscription ERP specifically performing well we can expect a continued rolling conversion of many on-premise ERP systems. Unlike the Manhattan project at the end of the last century when every company had to convert to four digit dates, this conversion is happening in a statelier manner. If you sell conventional ERP on-premise, you could be lulled into believing everything is fine but if you allow yourself that indulgence your frog will likely boil.
So long story short, FinancialForce’s news is on track. The combination of Fuca’s hiring and the company’s momentum should mean we can expect the 2000th customer announcement much faster than the first thousand.
Last point, FinancialForce executives tell me they’re dropping the dot com from their name. Not that long ago it seemed like every company was a dot com with a cocktail napkin business plan. Most didn’t last and the ones with real plans and discipline had much better outcomes. They’re just about all gone at this point and the successful ones like FinancialForce are scrapping the dot com relic of that boom era in favor of a cleaner and leaner aspect. This reminds me of when Apple dropped computer from its name. FinancialForce will have its growing pains but it will be a fun company to watch as cloud computing keeps getting bigger.