Most B2B SaaS finance teams live in Excel during their early days. It’s a tool they’re comfortable with, and it can be extremely flexible and powerful.
However, over time the spreadsheet starts to become unwieldy, takes too long to maintain, or can’t deliver answers quickly enough.
So, how do you know when it's the right time to make the switch to dedicated software?
When it comes to FP&A software, finance leaders are often looking for solutions to two different challenges:
- 🔮 Planning - How do we plan for the future with our cross-functional partners?
- 📈 Reporting and analytics - How do we uncover insights from our SaaS metrics so we can strategically guide the business?
We think of these as two separate needs, and it’s likely you won’t solve both of them with the same software at the same time.
Let’s explore each need, including when you’ll want to upgrade from Excel to solve your challenges.
🔮 When should B2B SaaS finance teams invest in financial planning software?
B2B SaaS businesses often look to financial planning software to help them with a few key tasks:
- Getting leaders in different departments to share their spending plans
- Collaborating on headcount planning while maintaining privacy around salaries
- Updating actuals against budgets
- Maintaining a base forecast and multiple scenarios for the future
For financial planning purposes, most companies find it best to continue using a spreadsheet until they reach 1,000+ employees.
Planning software makes it easier to work with multiple departments outside of the Finance team. At 1,000 employees, you’re going to start noticing that cross-functional work is getting more challenging, and that’s when planning software becomes especially helpful.
Before 1,000 employees, you'll likely find that it’s easiest to build your models in Excel because this is exactly the type of work Excel does best!
In fact, if you get planning software too early you might discover that you still do most of your modeling in Excel, but you simply transfer it over to the planning tool to more effectively work cross-functionally.
📈 When should B2B SaaS finance teams invest in reporting and analytics software?
We've found that it's best to make the switch to dedicated software when you reach a certain ARR threshold...
For your reporting and analytics needs, you can likely rely on Excel up until you get to about $5M-$10M in ARR.
You might even be able to wait until you're larger if your ACV is high and your deal volume is low.
Here are three key benefits of switching to dedicated reporting and analytics software once you get to $5M-$10M in ARR:
1. Investors expect you to be data-driven
If you’re fundraising, $5M-$10M in ARR is the stage where investors expect you to have a solid understanding of your metrics.
When an investor asks for a specific cut of your ARR, NRR, or LTV, you need to be able to say, “Here it is, and here’s why it’s trending this way” as opposed to “Let us pull that data and get back to you in a few days.”
“Having incredible command of your business is a huge asset… Because especially at Series B and Series C you are making a bet that the company has developed a money-making machine, and that more dollars make the machine spin faster.”
That’s why it’s incredibly useful to have a reporting tool that allows you to instantly access your metrics and explore them by different attributes. The more deeply you understand your metrics, the more likely you will be to raise funding successfully.
2. Make faster (and better) strategic decisions with your leadership team
Your company leaders need real-time access to your SaaS metrics so they can make the best possible strategic decisions.
Without a dedicated analytics tool, your leadership team is probably looking at top-level metrics in a slide deck once a month. At this stage, you need to be considering strategic questions that go beyond the top level, which means diving deeper than you can do easily in Excel.
When answering strategic questions becomes too time-consuming and difficult, many leaders simply stop asking those questions—and that leaves your company in a very dangerous spot.
In a tough economy, with a renewed focus on growing efficiently, you simply can't wait days or weeks to get your strategic questions answered. You need a tool that can answer your questions instantly.
3. Saving crucial time and resources
Around $5M-$10M in ARR, you’re at the stage where calculating your SaaS metrics requires compiling and analyzing a lot of data.
Your spreadsheets will start to slow down or crash, and you’ll find you’re spending more of your time cleaning up data than getting insights. You might be spending your own scarce time or hiring additional headcount simply to maintain the data and run reports.
Plus, you’ll want to dive deep into your data in ways Excel won’t allow.
Excel will show you how a metric is trending, but it’s difficult and time consuming to drill down into that metric to understand exactly why it’s going up or down. This investigative work can take days or weeks of time that could be saved by using a dedicated tool that gives you instant access to your metrics and allows you to slice them by different attributes.
🤔 In summary: When should a B2B SaaS business switch to dedicated FP&A software?
🔮 Planning Software for FP&A:
- Under 1,000 employees: Use a spreadsheet
- Over 1,000 employees: Use software
📈 Reporting and Analytics Software for FP&A:
- Under $5M-$10M in ARR: Use a spreadsheet
- Over $5M-$10M in ARR: Use software
💯 Subscript can make reporting much easier
When you reach the stage where you’re ready to move away from the spreadsheet for reporting and analytics, Subscript can help.
With Subscript, it’s easy to measure your B2B SaaS metrics in a visually intuitive dashboard. Subscript gives you access to all of your key metrics, including ARR, churn, LTV, and more—and you can slice the data by different attributes with the click of a button. You can quickly find the answers you need, without having to spend hours in Excel.
Interested in seeing how it works? Let us show you around.