Software Business Planning
Independent software vendors (ISV) are undergoing a transition from traditional licensing model to recurring revenue model and the financial impact on this change is considerable for the software vendor. The change in licensing model is part of the overall change of business model for a software vendor and needs to reflect all of the related business model canvas elements.
The process of business modeling for a software vendor from financial perspective ties into business activity planning with elements that impact the overall revenue and cost structure. Any software company requires a considerable investment with an impact on monthly cash flow and return on investment (ROI) of the solution.
There are multiple different scenarios that a software vendor needs to plan its financials when planning a solution for the cloud:
- Mature software company with a need to rewrite existing application to the cloud age
- Mature software company that wants to extend its current on-premise solution with cloud extensions
- A start-up that has a great business idea to build a cloud solution but needs to understand the financial ramifications of the development
- A mature company that wants to create a secondary product line for cloud environment
Each scenario has different financial impact and needs to be modeled to understand how each scenario impacts the bottom-line profitability of the software vendor.
TELLUS has selected Invest for Excel, the award-winning Microsoft Excel-based software solution that enables software vendors to create financial plans based on the outcome of the business planning exercise that the management of the company has decided to execute on. A business plan without solid financial calculations can run a software company into financial trouble and this can be avoided by simulation, scenario building and review of alternative plans.