Your Business in The Cloud: Metrics Implementation Guide

Your business In
the cloud: Metrics

implementation
guide
kpmg.com
Practice note/Foreword
The challenge for today’s enterprises is to disrupt or be disrupted, as CFO’s look to define the future of finance in this era
of disruptive technological changes they are required to harness the power of data and analytics to integrate strategy,
finance, and business models and define the insights and analytics agenda of an organization. As traditional, historical
analysis becomes fully automated, analytics capabilities will shift from descriptive and diagnostic to predictive and
prescriptive. Most CFOs know they need to take a leadership role in insights and analysis, as companies turn to finance for
answers to critical questions. Which customers, products, and channels are most profitable? How can we accurately
predict forecasts for demand, sales, and profitability? Which new markets should we target? The organizations that
succeed in answering these questions will build trust in advanced analytics and bravely move forward.
Future of finance demands unprecedented speed of change and the growing pressure for accurate insights, this leap of
trust is becoming the new imperative for finance. It means ensuring data quality, integrating processes, adopting emerging
technology, developing new skills and talent, and creating an analytics-based culture that supports business partnering. To
remain relevant, finance organizations must transcend their role as record-keepers and become enterprise-focused
business partners that deliver financial, operational, and strategic insights. And as the speed of disruption increases, finance
also must move quickly.
As expectations for insights and analytics shift from descriptive and diagnostic to predictive and prescriptive, finance must
become not only technology-enabled but also performance-centric. That requires accurate insights through dynamic
forecasting and planning and identifying the right KPIs to measure, based on the internal and external drivers of growth,
profitability, and sustainability. This publication serves as a guide to empower the finance function in becoming the
enterprise provider of data-driven insights in the form of cloud metrics.
Insights and analysis are all about doing new things, not doing the same things for less. So even though reducing cost
remains important, the finance organizations that create new value in the future will also focus on innovation to drive
strategic advantage. Will you be one of them? To become truly performance-centric, the finance leaders of the future will
be the cornerstone of strategy, finance, and analytics. Instead of just reporting performance, they will understand where
the enterprise is going, what questions to ask, and how to answer them with insights and analysis.
We’re pleased to introduce Your business in the cloud: Metrics that matter, and hope you find this publication to be
insightful as you go towards the future of finance!
Ronald Walker
Principal and U.S. Service Network
Lead – Finance Transformation,
KPMG LLP
© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent
Your business in the cloud: 2
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDPPS 896739 Metrics implementation guide
Practice note/Foreword (continued)
In the wake of rapid disruption, it’s safe to say that the influence that the finance function has had on the nature of
business has grown tremendously in recent years. The roles and responsibilities of the CFO have stepped into the
spotlight as a key business partner and a catalyst of advancement across all functions. Influenced by a time of
renewed digital transformation, fueled by advancements in AI, machine learning, and advanced analytics, the
finance function of today is far more than a bookkeeper of the past, but rather a catalyst for valuable insights and
analysis.
This rise in influence, combined with tumultuous market pressures have forced CFOs to seek out a solution in order to
advance the finance function and add value across the enterprise. This publication puts forward our thoughts on how both
the CFO and the finance function assist in this endeavor; by outlining how an organization can operationalize and advance
its analytics from being simply “descriptive” to “prescriptive.”
While many organizations have made great strides in an effort to advance their back office, the potential for finance to
create value by supporting decision-making remains a significant challenge. Nevertheless, this area is where the finance
function can make that difference. What is clear to KPMG is that effective use of financial metrics that generate new
predictive and prescriptive analytics will help an organization answer their strategic questions with confidence.
This publication is our idea of how to make it happen.
John Mulhall
Principal, Financial Transformation and
U.S. MC Business Sponsor,
Microsoft Alliance
The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDPPS 896739
Sector note
The technology industry continues to drive massive economic value as organizations make big investments in AI,
IoT, robotics, and other technologies that have great influence on the way business and consumers engage with
the world. The convergence of these technologies is enabling profound changes that impact enterprises,
consumers, societies, and the environment.
More than ever the leaders of tomorrow need to embrace change in a proactive, effective way, and find a means to capture
that change into meaningful, actionable data. Once it is clear to people throughout an organization that there is value in
data, the quality of the data and its ability to support valuable strategic direction starts to become a reality. It’s important to
remember that disruption and insights evolve together, and as the technology environment changes, so should the insights
and analytics supporting them.
Most executives see the potential that effective analytics can create for an organization, especially when leveraging
advanced techniques like machine learning, AI, and robotics. In fact, in our most recent innovation survey, over 750 global
technology industry leaders ranked these technologies as the top three disruptors that will drive business transformation
over the next three years.1 Nevertheless, what we’re recognizing across the industry is some tempered ambition. There’s
an obvious desire to make better, more informed strategic business decisions, but often a lack of clarity on how to begin
that journey.
This publication bridges those gaps by providing an end-to-end solution for not only operationalizing your insights and
analytics, but for enabling your organization to make profound changes in this environment of technological disruption.
We trust you find this publication insightful, and as always, we welcome your feedback.
Tim Zanni
Global and U.S. Technology Sector Leader, KPMG LLP
Chair of Global and U.S. TMT Line of Business, KPMG LLP
1Source: KPMG International, “Global Technology Innovation

Report," (March,2018)
Executive summary
In this new period of cloud-based technology and progress, disruption, and innovation has been the catalyst spurring its
growth. CFOs looking to address the shifting dynamics are turning more to cloud-based solutions and offerings in an
attempt to align their finance function with their enterprise business strategy. While the benefits of implementing cloud
offerings and operating with an element of cloud functionality are plentiful, executing on cloud transformation can be an
extremely formidable task.
Nevertheless, businesses around the world have quickly recognized the benefits of operating in the cloud, and leveraging
their cloud offerings. By making it an inherent part of their business models, they are able to take advantage of the
flexibility, scalability, and enhanced analytics that cloud computing provides. The combination of the rapid adoption of cloud
offerings and functionalities by organizations spanning all industries has resulted in an increased emphasis on capturing the
growth, profitability, and sustainability surrounding this new business model. Nevertheless, considering the complex nature
of the business, enterprises are naturally struggling to assess their performance in these areas in the form of cloud metrics.
This publication strives to provide an end-to-end solution for each of the fives stages of the implementation process, based
on KPMG’s extensive experience with the implementation of cloud metrics at an enterprise level. We outline a strategic
roadmap for overcoming the complexities associated with capturing the performance of their cloud business and lay out a
framework for the successful implementation of cloud metrics in an organization.
It’s important to remember that the principles covered in this publication have a much broader scope than the cloud metrics
highlighted in the remainder of this document. The five stages outlined through the rest of this publication act as a playbook
not just for the implementation of metrics at
an enterprise level, but an end-to-end solution for operationalizing any metrics that will assist in transforming your business.
We hope that you and your colleagues find our views thought-provoking and useful. We thank you for your interest and
welcome your feedback.
James P. Murphy
Principal, Finance Transformation
KPMG LLP
A call to action for CFOs
The future of finance in an ever-changing landscape
As CFOs and their related functions brought in the most
recent wave of enterprise technology development— of CEOs say they have overlooked
extensive acceptance of ERP and other supplementary the insights provided by data and
67%
financial systems, along with advances in database and analytics models because they
communications technology—they gained new enterprise contradicted their intuition
authority. The finance function has stepped into the
Source: KPMG International, “Growing Pains
spotlight as a key business partner and an agent of 2018 CEO Outlook,” (May 2018)
enterprise-level progress.
This milestone in finance transformation has come at a time With the ever-increasing pace of business and the disruptive
of renewed digital transformation, fueled by advancements landscape that the finance function is now forced to operate
in AI, machine learning, and advanced analytics, which is in, finance teams are faced with increased strain to provide
redefining the roles and potential of the corporate finance even more value at an enterprise level. One of the greatest
function. Thanks in part to these advancements in digital questions CFOs are now forced to confront is how the
transformation, these technologies are reshaping the finance function should enlist these new technologies to
processes that make up the groundwork of enterprise work with business partners and capture enterprise
performance management. performance.
This wave of transformation acts as a call to arms for CFOs, “The confluence of transformative IT trends such as
and encourages them to reconsider their priorities in this multicloud environments, the Internet of Things, and
ever-changing financial landscape. CFOs are, more than artificial intelligence, has transformed the way we use
ever, leaning on advanced analytics and aligning it with their data. We believe that successfully navigating digital
business strategy by moving to recognize how these transformation is essential to all businesses and is
changes will impact not just the finance function, but the enabled by workforce transformation, security
organization as a whole; developing a plan to invest in transformation, and IT infrastructure transformation.”
advanced analytics and how to more effectively capture
—Tom Sweet, EVP & Chief Financial Officer, Dell
enterprise performance.
Technologies Inc.
How can CFOs and other finance leaders begin to answer that call?
Finding the right method of positioning analytics in a way to increase performance—and discovering
the best answers to the numerous tests raised by advanced analytics—will require the effort of
multiple business constituencies and a new level of cooperation and coordination across business
lines and functions. There is no singular approach to fit the needs of every business. Nevertheless,
the consistent theme across functions, companies, and industries is the call to act, and this
publication will act as a guide to ensure that your enterprise will be able to answer that call in
implementing your advanced analytics.
“There is no doubt that the market is quickly shifting towards cloud and SaaS—especially in finance. We are already
experiencing incredible benefits, such as improved speed of deployment, ease of service, global standardization,
stability, and lower cost! Finance is a service center, and we get instant feedback from our internal and external
stakeholders who will always push us to be even more nimble and responsive to their needs. Cloud-based finance
and business tools provide a powerful opportunity for us to do just that, through cheaper, better, and faster
solutions.”
—Lara Sweet, Chief People Officer, Snap Inc.
Background
Business context
Based on the various benefits inherent to the cloud model, it’s easy to see why so many organizations spanning all
industries are introducing cloud as both a primary and secondary monetization model. However, in addition to the value
passed on to the customer, there are a host of benefits surrounding growth, agility predictability, and valuation for
organizations as well. Some of those benefits include:
Advanced growth Agility

— Reduced barriers to sales — All customers on same
releases.
— Shortened sales cycles
— Resources allocated to
— Higher upgrade revenue
legacy release sustaining
— Recurring revenue can be allocated to
increases “stickiness” innovation
— Greater familiarity with — Product release cycles are
customer faster
— Made for mobile applications Reasons
behind
transition
Predictability Valuations
— The cloud annuity stream drives — M&A valuations for cloud
companies is much higher
revenue continuity that isn’t
than on-premise companies
possible for on-premise software
companies — Venture Funding and
Investing in Software is
shifting to cloud, thereby
having greater access to
capital
These benefits that cloud companies are taking advantage of have been paying off as well, and the truth is found in the
numbers. Gartner forecasts cloud revenue to grow from $55 billion in 2018 to an astounding $75 billion by 2020; this is a
staggering 36 percent growth in only a two-year window.
With all of these advantages being recognized on both the business and consumer sides, it’s important to understand
the nuances that drive this incredible growth. The primary focus of this document is to provide guidance on how to
approach this challenge, drawing on real-world experience implementing cloud metrics at an enterprise level.
Cloud metric
deep-dive
Reviewing the metrics that drive business
Deep-dive into the metrics
Traditional vs. subscription metrics
With the astounding growth of the cloud industry, organizations have been focusing their attention on capturing that
performance in the form of growth, profitability, and sustainability cloud metrics. Nevertheless, because of the inherent
complexity of cloud metrics, they must be measured and interpreted correctly in order to be applied effectively. This
section is dedicated to explaining these metrics in detail, and explain how to apply them to the various scenarios found in
cloud organizations.
Traditional vs. subscription metrics
The growth of the cloud industry has redefined the way that organizations seek to capture and measure their performance.
This disruption has forced organizations to seek out greater detail to support their new lines of business, which encourages
them to move away from relying only on traditional metrics. Let’s look at a side-by-side comparison between the traditional
and subscription/cloud metrics that organizations seek to measure, organized by growth, profitability, and sustainability:
Traditional Subscription
Growth — Bookings — Deferred Revenue

— Average Deal size — Recurring Revenue
— Pipeline Growth — Unbilled Deferred Revenue
— Annualized Recurring Revenue
(ARR)
— Monthly Recurring Revenue (MRR)
— Incremental Annualized Recurring
Revenue (iARR) includes Up-sells,
Cross-sells, etc.
— Incremental Monthly Recurring
Revenue (iMRR)
— Total Contract Value (TCV/ACV)
Profitability — Revenue/GM/ASP — Annualized Recurring

— Depreciation, Royalty, Warranty, Expense/Cost (ARE)
Overhead, COGS — Annualized Recurring Margin
— Average Revenue Per Customer
(ARPC)
— Customer Acquisition Costs (CAC)
— CAC Payback Period
Sustainability — Customer Count — Churn (Attrition & Down-sell)

— New vs. Renewal — Renewal Rate
— Average Deal Size — Retention Rate
— Net new customers
— Customer Lifetime Value
The Transforming your SaaS Business whitepaper talked about the three dimensions that provide a lens through which
business drivers can be categorized—growth, profitability, and sustainability. Based on our initial survey, the highlighted
metrics in the document are the “must-have” metrics that are on the top of the minds for the CFOs and most relevant to
gauge business performance.
However, the remainder of this publication we will be focusing on the journey of the following metrics, and how to
implement them at an enterprise level: MRR, iMRR, CAC, CLTV, TCV, and Churn.
Focusing on the step-by-step implementation process of these six crucial metrics will give the reader an outline for
effective implementation. Keep in mind though that the overarching principles for implementation of these metrics will be
consistent with any other metric your enterprise ultimately chooses to report on.
“We understand the importance of investing in advanced metrics and analytics to support our SaaS-based
monetization models. We strongly believe that the insights derived from these investments will allow us to make
more informed, strategic decisions when rolling out and enhancing our future suite of products.”
—Scott Olechowski, Chief Product Officer and Co-Founder, Plex Inc.
“Nutanix has disrupted the legacy, $100B+ IT infrastructure market by delivering hyperconvergence cloud
infrastructure solutions. These new offerings are consumed by customers as software, and often by subscription. This
shift from traditional perpetual-based licensing to a “pay-by-the-drink” cloud business model compels marketing to
intensify its focus on marrying insights from customer usage data with market dynamics. We rely on consumption
metrics such as “land and expand” velocity and capacity utilization to monitor the performance of our SaaS offerings.
And now we are embracing artificial intelligence to make smarter, more effective marketing investment decision to
drive improve pipeline generation yield and conversion.”
—Ben Gibson, Chief Marketing Officer, Nutanix Inc.
“In addition to financial benefits, a cloud-based business model allows for more agility, speed to delivery, and access
to a more rapid innovation. The focus of the CIO and IT organization shifts to the consumption growth and
sophisticated measured usage of your services versus a traditional model where metrics tend to be tied to hard ROI,
asset depreciation, and P&L pressures to monitor capex investments. To reach a “cloud-based consumption tipping
point” requires constant innovation in scalability, security, compliance, and a commitment over the long run, which
can only be achieved through a flexible, SaaS model.”
—Paul Chapman, Chief Information Officer, Box Inc.
Key metric definition and business value
Now, let’s drill down into some of the metrics we’ll be focusing on through the remainder of this document, and get a
better understanding of their business value:
Metric Description Business value Calculation
Monthly Recurring MRR is a point in time snapshot Allows business to focus on MRR = SUM(Paying customers
Revenue (MRR) of the monthly or annual increasing new subscription monthly fee)
recurring revenue stream while being on guard of attrition
Ending MRR = Beginning MRR of existing customers in the
+ Incremental MRR - Churn subscription
Incremental iMRR is the gross monthly or Provides visibility into the iMRR = TCV/Contract term
Monthly Recurring annualized subscription value growth of recurring revenue
Revenue (iMRR) from new or upsell business stream
during the period
Customer CAC represents the sum of all Allows us to predict customer CAC = Total Acquisition
Acquisition Costs one-time costs of all marketing profitability by breaking down Spend/# of Customers Acquired
(CAC) and sales activities and the the costs for acquiring and
physical infrastructure and retaining the customer
systems required to motivate a
customer to purchase
Customer Lifetime This metric is used to assess Allows us to predict customer Customer Revenue
Value (CLTV) the financial value of each profitability in the prospective - Direct Product costs .
customer and helps assess relationship with the customer.
= Gross Margin
success in recurring revenue is CLTV metric measures net
derived from building and present value of all expected - Sales efforts
maintaining profitable customer cash flows associated with the - Cost of Service
relationships customer. - Customer investments .
= Profitability
+/- Customer relationship
(based on historical spend,
propensity to spend, stickiness
due to product engagement,
share of wallet) .
Customer Lifetime Value
Total Committed TCV is the total bookings for a Point in time metric and TCV = [Total Contract Value]
Contract Value particular contract. Any new primarily used for bookings and
(TCV) bookings, upsell or renewal is compensation
considered as TCV
Churn Any down-sell or attrition (lost Allows us to determine if there Churn Rate =
customer) is considered as is overall growth or loss in [ Cancellations]/[Total number
churn. subscription business of customers]) over a given
time period
Subscription scenario review
The subscription business is based on customer relationships, not one-time sales, but these relationships constantly evolve
and get re-evaluated throughout a subscription lifecycle. Hence it’s important to drill down into the metrics at each stage of
the subscription lifecycle:
New subscription example

Let's look at a scenario where customer signs up for a new contract A of $1,200 on January 1 for a one-year subscription
term ending December 31. Customer does not renew the contract at end of term.
Below is a snapshot of how the metrics will get calculated through the subscription lifecycle
In this case, TCV is the contract value (i.e., $1200). iMRR is monthly incremental changes in recurring revenue at the period
of change. The new contract triggers the $100 activity in iMRR. Revenue is recognized ratably over 12-month duration.
MRR (i.e., 1200/12 = $100) is the carrying balance accumulating the impacts from monthly iMRR and monthly churn.
Similarly, ARR is the carrying balance accumulating the impacts from iARR and annualized churn. The $1,200 balance
carries forward to the future beyond Year 1 with the assumption that the customer will continue to renew the contract.
Amended and term end subscription example
As discussed initially, any attrition or down-sell is part of the churn metric. Let’s look at the below scenario:
Jan Year 1: New contract of $1,200 for 1-year subscription term ending Dec Year 1
Apr Year 1: New contract of $1,800 for 2-year subscription term ending Mar Year 3
Jan Year 2: Renewal of first contract but cancellation of second contract (ending Jan Year 2)
TCV: Of the $1,800 contract value, $675 (1800/24 x 9) is recognized as revenue in Year 1, leaving
$1,125 unearned amount to be cancelled with the addition of $1,200 from the renewal event. Revenue drops back to
the first contract value.
MRR balance decreases by $75 to $100. Renewal of first contract does not change MRR or ARR because it is already
part of MRR and ARR.
In Aug Year 2, ARR drops back to $1,200, the ARR balance of the first contract only. The $1,200 Jan Year 2 renewal
does not change ARR or MRR as its original contract value is already part of ARR and MRR.
Monthly churn rate = monthly churn/beginning MRR balance: -43% = -75/175
Annualized churn rate by quarter = quarterly churn/beginning year ARR balance X 4: -14% =
-75/2100 X 4
As new contracts get added or customer cancels contract, the metrics calculation gets complicated. Once we nail down
the transaction type, and corresponding system logic to handle the changes to a subscription (New, Upsell, Downsell,
Cross-sell, Renewal, etc.), it gets easier to implement systematically.
Nevertheless, prior to implementation, it’s important to address the challenges organizations will likely face throughout
the implementation process. Keep in mind that once the following challenges are addressed, and a strategy is
developed to overcome them, your implementation process will occur with greater ease.
Operational
challenges
Navigating barriers for success
Operational challenges
Process
As companies continue to execute on monetizing software offers differently by shifting from perpetual to subscription-
based models (recurring business), the reporting systems are becoming more and more complex to capture the
transactional data and provide holistic visibility and business insights required to measure company performance. Let’s take
a look at some of the operational challenges:
Process gaps
— Planning—Annual and long-term planning processes are time-consuming, duplicative, and do not provide sufficient
actionable guidance on what business wants to measure
— Definition misalignment—Metrics are calculated differently by each business/function and variances to plan cannot
be easily explained. Business groups report using different data sets and assumptions
— Time-consuming—Large data sets take many hours to prepare and even updating simple calculations was time-
consuming and expensive. Finance spends time mainly on data collection rather than forward-looking analyses that
would help steer the business
— Inaccurate and error prone—Manual updates to spreadsheets to track contract-level details are prone to error
— Inconsistent—Inefficient and inaccurate subscription-based forecasts lead to customer issues, increased supply chain
costs and external guidance uncertainties. Multiple and seemingly disparate forecast processes cause executive and
employee confusion and churn, limited insights and ultimately dissatisfaction and mistrust
— Lack of change management: Ensuring that your organization is prepared for the process and result surrounding the
introduction of cloud metrics, these five challenges of change management should be considered:
Lack of standardization of metrics Cloud metric projects take

across the enterprise. Metrics altered much longer than anticipated
based on BU/department needs
Often 18 months or more
Top-down Communication is lacking
Cross-org cooperation
is lacking
Collaboration isn’t
limited to departments
Organizational and cultural within an organization Necessary business
change is often and IT skills are
underestimated not available in-house
Changing mind-sets IT managers lacking business
expertise and vice versa
Data
“Subscription-based services are a lot more complex than product-based models because of the integrated
cross-functional processes supporting them, large data sets derived from them, and misalignment among business
units on how to apply them. Therefore, in order to establish a baseline of consistency, it’s essential to establish clear
requirements across all relevant functions, and to maintain a line of high-quality communication with all stakeholders
including IT and leadership.”
—Steve Sordello, Chief Financial Officer, LinkedIn Corporation
Data
The primary challenge that companies face in a cloud metric implementation effort is the underlying data supporting the
cloud metrics. Challenges surrounding data availability/cleansing, siloed data centers, data governance, and data accuracy,
and a lack of policy standardization are just a few of the many probable roadblocks, but their importance cannot be ignored.
Below are the likely data-related challenges that an organization should consider before implementation.
— Metrics accuracy is contingent upon

business bridging the existing data gaps
through a rigorous data governance
program
— Inconsistent methodology for metrics
calculation is employed across the
enterprise due to a lack of data governance
Policy/
Data Metrics
consideration
availability integrity
s
— Incompleteness of data— need basic — Need standardization of policies across the

transactional data elements captured enterprise to report metrics accurately
systematically to calculate metrics—upsell, (grace period, cancellation policy, end of
down-sell, cross-sell, cancellation, etc. life policy, etc.)
— Real-time reporting— demands of business — For example, Churn can be understated if
are requiring data to be available in real-time customer is allowed to renew at any point
in order to drive action in time after contract expiration
Data
Data availability and cleansing
The effort of cleansing data is an extremely time-consuming, multistaged process, and that effort is multiplied depending
on the size and complexity of your organization.
In a 2018 survey conducted across 24,000 data scientists by Kaggle, a subsidiary of Alphabet, Inc., they discovered that 40
percent of a data scientist’s time is spent cleaning data, whereas, only 11.4% is focused on finding insights and
communicating with stakeholders.
What data scientists spend the most time doing

5.3% • Gathering and cleaning data sets: 39.7%
11.4%
• Visualizing data: 13.6%
9% 39.7% • Model building: 20.9%
• Putting models into production: 9%
• Finding insights and communicating with
20.9% stakeholders: 11.4%
13.6% • Other: 5.3%
Lack of SSOT and standardization

When companies lack a robust SSOT data architecture, teams across the organization may create and store the data they
need in siloed repositories that vary in depth, breadth, and formatting.
Data silos across BUs
and departments
Leading
Reduced confidence in
indicators
decision-making
missing
Support for Challenges Management

decision stemming from relying on
making is instinct
lacking
lack of SSOT
KPIs misaligned
Overwhelmed with business
with data; too
much time spent
Deficient relationship
searching for
between planning,
relevant data
resources, reporting, and
strategy
Data (continued)
Data governance challenges
Like a doctor asking his patient, “where does it hurt?,”
organizations should be asking themselves the same question I can’t trust Why can’t I
when it comes to their data governance program. This self- the data I’m see the data
health exercise is important in assisting organizations with receiving in a way that’s
isolating any pain points in their data delivery systems, and the useful?
method of data consumption by their end users.
Some of most commonly heard challenges from your end
users can be seen in the graphic: Common
data
Real-time reporting Why doesn’t governance Why isn’t this
Data centers at an enterprise level are increasingly developed the data tie challenges data organized
out between in a more
with the intent of online transaction processing, which is a
tools? meaningful
high priority for most companies. With such emphasis on
way?
cloud metrics when it comes to business analytics, and
measuring performance, real-time analytics has jumped to the I feel like I need
top of the priority list. Organizations will need the underlying to sift through
infrastructure, such as the software and hardware reporting irrelevant data
platforms to scale up and meet the customer and enterprise before finding
demands for real-time reporting. what I need
“One of the key business challenges in pricing a product or a commercial deal is the accuracy and relevance of
underlying business, customer, and industry data. Unlike traditional services, the cloud-based services could easily
record a variety of data around contracts, customer behavior, services, and industry…however when it comes to using
the data for commercial analysis purposes, we first have to tie out with other sources that are managed by different
systems or teams such as finance, sales, and industry trends, while at the same time ensuring sensitive data is secure
and meets privacy requirements …The key is not only how much data we have, but how accurate and efficient the
data management and its governance is structured—emerging technologies like artificial intelligence are significantly
enhancing the way forward in terms of how we consume large data sets and derive meaningful commercial and
pricing insights…”
—Paul Hardy, Head of Global Pricing, PayPal Holdings, Inc.
“If we as finance professionals are not embracing the evolving business partner role, we are already behind the
curve. Finance operations should be constantly pushing the envelope to generate business insights from financial
and operational data. We’ve got great data—the challenge is marrying the data with business insights, customer
behavior, and converting it into market opportunity, by identifying customer trends and deriving necessary business
insights such as product offerings, sales strategy, compensation, etc.”
—Jeff Nonnenkamp, Head of Financial Operations, Snap Inc.
People challenges
Market conditions can change without notice, and organizations are required to make timely, effective decisions based on applicable
data from your cloud metrics. Ineffective data can be disastrous when responding to these changing market conditions, and when the
people element is ignored, the impact is multiplied.
Business and IT alignment
Business goals and IT strategy should be tightly aligned before any IT investments are made.
Lack of alignment on the proposed output (visualization)—Dashboard, Performance Summary Scorecard can limit the ability to provide
valuable business insights.
Lack of clarity Limited

on metrics resource/band
definition width for IT
Limited
details on IT fails to
desired meet
output (i.e., business
Dashboard, timelines and
Performance commitments
Summary)
Causes of
Business & IT
Misalignment
Business
Business
does not
lacking
understand
understanding
complex IT
of underlying
architecture/
dependencies
data flow
Release
schedule is
Lack of
not iterative.
communicatio
There is no
n on scope
loopback
changes
process
defined.
“Many organizations are adopting hybrid and multicloud strategies. At the same time, key providers are expanding their solution
offerings and pricing models into consumption-based revenue models. This may bring initial recurring revenue streams but slow
reported revenue growth, affecting valuation by shareholders. The challenge is to communicate clearly with shareholders so that the
cloud business model remains viable during this period and scales rapidly.”
—Keith Jensen, Chief Financial Officer, Fortinet Inc.
“Faster delivery of capabilities for the business is the primary outcome of a cloud-based delivery model. However, in an effort to
transition business operations from an on-prem to a cloud-based model the primary challenges CIOs face is around OPEX vs.
CAPEX prioritization while making investment decisions, the industry is still 50:50 divided between OPEX vs. CAPEX bias. There
is an urgent need to evolve current accounting guidance in this area to enable CIOs to consume more cloud capabilities
regardless of their budget mix constraints. The other revolution we are seeing is around data becoming the currency of business.
We understand the power of data and strive to harness high-quality data-based insights to curate a series of experiences that
provide value to our customers and profitable business growth…”
—Milind Wagle, Chief Information Officer, Equinix Inc.
Implementation
An end-to-end solution
Implementation strategy
End-to-end solution
As you can see, there are a number of operational challenges an organization should plan on addressing prior to undergoing
a metrics implementation program. Based on our experience, the challenges we outlined surrounding processes, data and
people tend to be the largest barriers to overcome, which is why we’ve laid out detailed implementation strategy that
covers end-to-end the steps necessary for a successful execution.
Key activities
1 Stakeholder agreement; requirement definition

Detailed business requirements
development; documentation creation
2 Finalizing solution design; socializing requirements;

Develop solution methodology
examining current data management processes
3 IT architecture and design SW development management; rollout method
4 Establish valid schedule; establish cross-functional

Create an implementation plan
alignment; determine executive R&R
5a Develop foundational data elements; Calculate metrics

Establish data foundation metrics
based on new data foundation
5b Visualizations; layout strategy; content creation;

Develop a metrics dashboard
development tools
6 Test Strategy & Deployment BAT; UAT; post go-live maintenance; issue escalation
Adoption; steering committee involvement; prototype

7 Change management utilization; metrics of success; communication plan; project
scorecard
“For a business to succeed, it is critical all functions within the business are aligned to the overall business strategy.
Finance is a key function within any business and finance teams must ensure they continue to add value to the
business. With finance transformation, finance teams can lead the way in transforming its operations to a more
productive and effective department by utilizing existing on prem solutions and merging (or replacing) these with
best-in-class SaaS offering. With new and better ways of obtaining relevant information from cloud-based systems,
finance teams can provide more insight into the business. To be successful in the era of cloud and finance
transformation, finance teams must ensure they have the right skill-sets, resources, and business process
understanding to help define and track key business metrics and continue to be a trusted adviser to the business.“
—Declan Fitzpatrick, VP Finance, Fortinet Inc.
1. Detailed business requirements and documentation
Stakeholder agreement
Once the operational challenges are identified, discuss the
level of effort required to remediate the pain points identified
and rank the recommended fixes by short-term, near-term,
and long-term based on the level of effort. Identify
accountable team members to drive changes.
It is critical that a financial and organizational (FTE) metrics
baseline—including a robust metrics definition and Agreement
calculation—are signed off by business management.
Providing sample metrics calculation that the business can
agree upon is crucial for getting the agreement.
Meet with CFO/key stakeholders to validate the financial
metrics. Conduct meetings with key stakeholders from [Sales,
Finance, Operations] to validate the output of organizational
baselines. Metrics like ACV or TCV are used for Sales
Compensation purposes. We need to ensure they are
calculated accurately. Furthermore, supporting documentation
for these metrics—data sources, assumptions, definitions, Face-to-face meetings
data manipulations—should be clear and circulated with all
relevant parties.
Remember that requirements should be developed, socialized
and understood across stakeholders, IT, team leads, and the
impacted business units/departments before any further steps
can take place. Doing so will protect your project from scope
creep, and the introduction of unrelated complications that
can detract from the main focus of the requirements. When
developing your requirements, there are a few characteristics Supporting documents
that should be considered:
1 2 3
— Doesn't contradict itself

Consistent
— Uses all terms consistently
— Every statement can be read in exactly one

way
Unambiguous
— Clearly defines confusing terms
— Nontechnical readers should understand

Understandable — Technical notations should be used in an
appendix
2. Solution design: Source vs. derive
Solution design
Depending on the maturity of your system capabilities and
availability of resources (time, budget, resources), we can
decide whether we want to directly source the foundational
data elements or derive the metrics based on the transactions
that flow into the enterprise data warehouse.
Solution option 1:
Using raw elements from source
Data elements (such as contract details—TCV, Term,
PID, Sales Level, Contract ID, and Subscription
Changes) are well defined at source and used for metric
calculations
Pro: Data elements are cleaner, available
with reporting attributes
Con: Business to update key data elements for

contracts for missing details
Overall: Metrics are calculated based on the key

data elements
Solution option 2:
Derivation using ending balance
Subscription changes to be derived using difference of
monthly ending balance
Pro: Quick processing time with accurate
calculation
Con: Ending balance approach, not consistent with

standard practice
Metrics are derived and reported based on

transaction type
Solution option 1 such as calculating the metrics based on

availability of raw data elements in the enterprise data
warehouse is the most straightforward and
accurate way to calculate the metrics but building data
foundation can be time-consuming. Before we get into the
metrics calculation, we need to determine if we have the
necessary foundational data elements available
systematically. For example, you may need
better customer master data management as customer
information is sometimes duplicated or missing. All the data
elements should be available at the lowest granular level so
that we can roll-up the metrics by different dimensions such
as Product, Customer, Geography, etc.
Option 1—Data Enrichment
Contract term is a “must have” data element as all the metrics are derived based on term especially metrics such as
Churn, ARR, Customer Lifetime Value. If not available, we may follow the below data enrichment logic to derive term.
Saas Metrics ERP/SLS

Enrichment Logic ADJ/AR/XAAS Orders Enrichment not
Yes required
Contract Dates Yes Contract Term No Use Contracts Dates

Available? Available? to Enrich Contract
Term
No
Use PID to Term and

No PID to duration Yes Booking Process
Contract Term
Mapping Date to enrich
Available?
Available? Contract Term/
Contract Dates
Yes No Default Contract

Term to Annual
Use Contract Term (12 Months)
and Booking Process
Date of Enrich
Contract Dates
Potential Risks in accuracy of calculation

— Term Enrichment: After all the above steps of enrichment, if term is not available then transaction will be defaulted to
12-month term.
— Customer Enrichment: For transactions that do not get updated with the correct customer, metrics will be calculated
for the "Unknown" customer and Product combination.
— History processing: Any transaction without customer or term, will be defaulted to unknown and 12-month contract,
respectively which may misstate the contract end date and affect the metrics accuracy.
Option 2—Derive
Let’s look into the second solution option i.e., derivation using ending balance approach
1. Changes to contract is calculated as a difference of ending balance for active contracts at two different time periods
2. MRR is calculated for active contracts as of two consecutive time periods—either monthly or quarterly depending on
metrics reporting frequency
3. Difference between MRR (ending balance) at these two time periods is Delta MRR
4. iMRR, Churn, and subscription events are derived using the calculated Delta MRR, table below depicts the
methodology
5. Calculation level used is Customer and Product
Metric Delta MRR

Change event classification criteria Customer & Product MRR criteria
New iMRR Delta MRR > 0 Customer by Product MRR only exists in current period
Upsell iMRR Delta MRR > 0 Customer by Product MRR exist in both periods
Down-sell Churn Delta MRR < 0 Customer by Product MRR exist in both periods
Attrition Churn Delta MRR Customer by Product MRR only exists in last period (current
< 0 (delta period MRR is 0)
MRR =
- Original
MRR)
No change — Delta MRR = 0 Customer by Product MRR exist in both periods
2017 Q3 2018 Q1 Change in

Customer Product Last period Current period MRR Event Metric
Customer 1 Product A 100 Not Found (0) -100 Attrition Churn
Customer 2 Product B 250 250 0 No Change –
Customer 3 Product A 300 250 -50 Down-sell Churn
Customer 4 Product B 400 500 100 Upsell iMRR
Customer 5 Product C Not Found 350 350 New iMRR
As you can see above, this approach does not require as much processing time as option 1. However, metrics cannot be
rolled by different dimensions as the anchor point is fixed - Product and Customer combination. You can always change
your anchor point depending on your business need.
Solution design summary
Keep in mind that selecting either of the solution options is heavily dependent on your organization’s data processing and
reporting capabilities. Below is a summary of our recommended approach to address the common challenges that
organizations face with respect to data availability, policy, and analytics.
Boulder Key gap Recommended approach Long term
Data Availability/Accuracy Missing transactions for Build process to fill in the Work on building strong data
migrated orders of missing data foundation.
acquisition entities.
Establish linkages (e.g.,
Missing contract terms and contract ID) between
dates migrated orders
Missing transaction details Ignore transactions without
for POS data and Acquisition contract term and dates
entities
New, upsell, downsell, and
attrition will be derived
based on changes from last
period to current period at
customer level
Policy/Considerations Several key business policy End of Term (Grace Work with Business
need to be approved period)— Build metrics Operations to get required
assuming certain grace policies impacting metrics
period calculation approved on a
priority basis
Bookings Policy—Leverage
Bookings in absence of
availability of TCV
Analytics View Ability to provide all required The primary reporting lens Provide ability to calculate
reporting lenses—Product, for metrics calculation is automatically at various
Customer, Sales Territory Customer/Product levels
Solution design: Examine data management processes
Examine current business processes
Prior to implementation, have your newly established team begin a review of business processes supporting the cloud
metric reporting functions and plan to improve on them if necessary.
Some of the activities that should be planned if reengineering is required are:
Analyze Identify Quantify Implement
— Performance gaps — Improvement — Estimate improvement — Schedule

opportunities impact for: improvements
— Detailed process
for:
flow charts — Tools enhancement - Cost
- Improvement
— Process optimization — Skills development - Quality
impact
— Root cause analysis — Resource redeployment - Speed
- Cost
— Simulate improved
- Lead time
process
- Rollout
“There’s a recognition that in order to develop a great product, you need to have more than a simple understanding of
your customer; this competitive market demands an intimate appreciation of your customer’s needs, actions, and
experiences via data geared towards product improvement. In Silicon Valley organizations will form analytics teams
dedicated solely to deriving data-driven value for their customers, and make it a point to ensure that the value
proposition is clear up-front. This strategy fosters an environment of active engagement, which allows for that value
to be sustained for longer periods of time.”
—Max Muller, Senior Director, Maps, Apple Inc.
Solution design: Examine data management processes (continued)
Examine current data management processes
Prior to implementation, have your newly-established program team begin a review of business processes supporting the
cloud metric reporting functions – particularly as it pertains to data management - and plan to improve on them if
necessary. Ensuring that the underlying processes not only help support, but maintain a high data quality is critical for
successful metric implementation.
Some of the following key data management principles surrounding your organization’s processes should be assessed for
the following areas:
— Maintenance Processes
- A generic process model should be defined for regular and non-regular maintenance processes, supported by agreed
upon and documented process flows, procedures, work instructions and forms.
- This applies for all processes relevant for data quality maintenance, such as creating, changing, removing/archiving
data elements, both mass- as well as individual data element maintenance.
- Ensure that staff working on master data are trained, and understand the policies and procedures surrounding
changes in data.
— Compliance and quality monitoring –
- Quality indicators for process performance are defined to comply to applicable laws and regulations and other quality
standards. A monitoring process is implemented to monitor and improve quality performance. Quality indicators are
reviewed periodically on validity and completeness.
— Service level management –
- Services provided by your data management organization are formally agreed upon and expressed in service levels
where possible.
- Periodic reporting on service levels is discussed with business users. Service performance below service levels
results in agreed upon process improvements.
— Change management –
- A process is in place to manage changes to the organization, process, data definitions and standards, and IT
landscape for the different master data objects.
- All changes need to be reviewed for impact and approved by the master data owner.
- Approved changes are reflected in all relevant documentation (policies, procedures, work instructions).
Solution design: Examine data management processes (continued)
In the event that there’s deviation from the guiding principles listed above, here is KPMG’s high level approach for
assessing whether re-engineering of your supporting data management processes is required:
Phase I: Understand Phase II: Evaluate Phase III: Develop
Recommend, Design and

As-is understanding
Document
Vision and Mission Process

Re-engineering
Process familiarization
Process design
Objective and strategy
Evaluate Process
Organisation structure
Documentation
Existing processes
External environment KPIs and MIS reports
Existence and Effectiveness

Redundancies/ Roles and Controls and
scalability of and
Bottlenecks responsibilities checks
processes efficiencies
People
Process
Information Technology
“Subscription-based services are a lot more complex than product-based models because of the integrated cross-
functional processes supporting them, large data sets derived from them, and misalignment among business units on
how to apply them. Therefore, in order to establish a baseline of consistency, it’s essential to establish clear
requirements across all relevant functions, and to maintain a line of high-quality communication with all stakeholders,
including IT and leadership.”
– Steve Sordello, Chief Financial Officer, LinkedIn Corporation
“Nutanix has disrupted the legacy, $100B+ IT infrastructure market by delivering hyperconvergence cloud infrastructure
solutions. These new offerings are consumed by customers as software and often by subscription. This shift from
traditional, perpetual-based licensing to a ‘pay-by-the-drink’ cloud business model compels marketing to intensify its
focus on marrying insights from customer usage data with market dynamics. We rely on consumption metrics such as
‘land and expand’ velocity and capacity utilization to monitor the performance of our SaaS offerings. And now we are
embracing artificial intelligence to make smarter, more effective marketing investment decisions to improve pipeline
generation yield and conversion.”
– Ben Gibson, Chief Marketing Officer, Nutanix Inc.
3. IT architecture and design
Determine your software development management approach
While this may not be a decision typically found in the boardroom, the software development method that’s selected will
have a tremendous impact on your cloud metric implementation strategy. The size and complexity of your organization will
be a strong indicator of whether you use the waterfall or agile methodologies, and it’s important to take the time to
understand risks and trade-offs of using one over the other.
Characteristic Waterfall approach Agile approach
Timelines Phased Iterative and incremental
Release schedule Working metrics in final phase Working metrics in every build
Team organization Different teams involved in Same teams throughout development

different phases
Validation schedule Verification completed at final Validations completed

stage throughout development
cycle
Planning method Predictive planning Adaptive planning
Visibility Less visibility—artifacts, Greater visibility due to working

prototypes software
Change flexibility Less flexible to requirement Changes to requirements are

changes. Accepted only at embraced
certain stages.
IT architecture and design (continued)
Selecting your software rolloutoptions
Being proactive with analyzing and evaluating the best cloud metric implementation strategy that meets your business needs, and is
within your risk tolerance is critical for successful delivery.
With that in mind, the three most common implementation strategies are the following:
— Parallel run—End users will use the old cloud metrics and their sourcing method, alongside the new metrics introduced
— Phased approach—The cutover and adoption of the new metrics occurs in phases, over a select period of time, where eventually all
end users will be migrated over to the new metrics
— Big bang—The complete metric implementation will occur in one instance, and all legacy methods of sourcing metrics will be cut
out.
Prior to selecting your implementation strategy, it’s critical to understand the pros and cons, and how/where they can be used:
Parallel run
Advantages Disadvantages
End users have ability to familiarize themselves with new Highly expensive due to maintenance of multiple systems
metrics, while still using the old ones (if any)
Lowest risk Executive support might be lacking due to the amount of staff
resources required to maintain both
Fallback is available if new metrics are unacceptable
Big Bang
Implementation period is shorter Details can get lost in rush to fully cut over
Lower costs due to shortened implementation period Issues during and post-implementation tend to be larger in scale
due to rushed environment, and can impact more teams at once
Cutover and adoption occurs in one day Teams will have less time to learn metrics, and how to source them
Fallback plans are much costlier to implement
3. Architectural tenets for developing cloud metrics

Designing an IT architecture that delivers high performance, flexibility, and adaptability is a critical element in ensuring that organizations
are successful in the development of their cloud metrics. Here are some architectural tenets that KPMG abides by to increase the
chances of successful implementation:
— Scalability and high performance – All design decisions must ensure that your organization can deliver consistently high performance
as your reporting systems scale upward
— Economies of scale – All design decisions must explicitly deliver greater economies of scale as an organization’s systems grow
— Complete functionality – All design decisions must ensure that an organization’s architecture can support an organization’s full range
of reporting functionalities on a single services-oriented architecture
— Centralized consistency with distributed governance and self-service – All design decisions must support the goal of a consistent
single version of the truth throughout the enterprise using a single shared metadata
— Incremental growth – All design decisions must ensure that organizations can incrementally grow their reporting infrastructure from
small to large, from departmental scope to enterprise scope, from isolated islands to consolidated applications, and from reporting
dashboards to ad hoc analysis
4. Create implementation plan
Phased approach
Users have more time to familiarize Duration for implementation is long

themselves with the metrics
Any issues with a particular phase will impact only a Not ideal if budget is tight, or quick turnaround is required
smaller group
Adoption rate is slow and steady, yet thorough due to Teams can lose focus, and sense of urgency with
additional time extended delivery schedule
IT burden is lowest
Project team can learn from earlier phases to

improve on delivery in later phases
Cross-functional team planning and alignment

A typical engagement model for cloud metrics implementation project comprises of cross-functional stakeholders, and it’s
important to ensure that all teams are aligned prior to implementation.
Execs
Guidance & Escalation

Steering Committee
CFO Staff/Business Transformation Office
Operational Council
Finance BU Operations IT Sales Services ...
Program Governance & Data Steward
Project Execution Teams

Policy
PMO
Decisions
Plan, Manage
Cross-functional IT Teams
Operationalize
Create implementation plan (continued)
The roles and responsibilities of the project team are explained below:
Operational Council — Program management office —

— Review and approve roadmap, prioritization, — Setup and drive Ops Council and Executive Steering
funding, and resource allocation Committee meetings by involving necessary
stakeholders periodically
— Periodically review progress to ensure goals
and timelines are achieved — Coordinates business priorities across groups;
Interact with Operations on all subscription-related
— Approve priority changes, scope
initiatives
changes, and business definition conflict
resolution — Create roadmap with IT to ensure delivery of
program priorities
— Track and support program execution
Data Steward and Program Governance — Program Execution Team —

(Developer QA, IT architect)
— Responsible for metric definition and supports data
accuracy questions — Accountable for program delivery
— Be accountable for integrity and quality of data — Ensures sound architecture is implemented
from business perspective
— Provides feasibility, cost estimates, inputs to
— Responsible for establishing requirements that create achievable roadmap
meets customer needs
— Partner with PMO, Data Stewards,
— Participate in data validation and questions SMEs to ensure delivery
Develop a valid schedule

It’s important to develop a realistic timeline for implementation; it’s not simply a matter of throwing darts in order to derive
dates. The timeline must capture scope, resource commitments, and consider timelines of all involved parties.
Furthermore, while developing this timeline, it’s important to plan for factors such as budget, unforeseen issues, quality
assurance, communication, and risk management. Below is a sample high-level cloud implementation timeline:
Plan Deliver Close
Month 17–18
Month 1 Month 2–5 Month 6 Month 7–9 Month 10–11 Month 1–15 Month 15–16 Change
Initiate Design Plan Foundation Calculate Dashboard Testing Management
Requirements IT architecture Create Data foundation Derive/calculate Plan design and Business Communications,
finalized, and and implementation established metrics develop metrics validations & trainings,
expectations conceptual plan dashboard go-live activities workshops
are aligned designs are
completed
Manage Budget—Scope—Issues—Quality—Communication—Manage Risk
Create implementation plan (continued)
Senior management R&R
Ensure that from the beginning of the planning phase that management understands their roles and responsibilities. This
will of course require coaching, education, and diligent follow-up. Alignment with senior management on both the business
and IT side will allow for quick and clear escalation of issues, when they undoubtedly arise.
5a. Foundational data elements

With your implementation plan in alignment with all involved parties, and the IT architecture design finalized, the
foundational data elements need to be put in place. Depending on the metrics your organization chooses to report on will
determine the data elements required.
Below are some of the foundational data elements needed for a metrics calculation:
Type Data Elements Purpose of Elements
Customer Details Customer ID  Serve as calculation lens

End Customer Name
Subscription Start/End Date  For determining posting of iMRR when contract

Contract Number starts and churn or renewal upon contract
Subscription Changes (New, expiration and determining grace period end date
Contract Details Upsell, Down-sell, Attrition,  Data foundation transactional details for
Renewal) determining iMRR and Churn
Subscription Status  To determine if subscription is Active for
Grace Period determining Churn and Renewal
Cost Breakdown CoGS, OpEx, CapEx  For determining CAC
Key Reporting Product ID  Data foundation transactional details

Attributes Sales Level  Data foundation transactional details
Unit Price
Metrics Quantity  To derive subscription metrics
Total Contract Value/Bookings
5b. Develop a metrics dashboard
Once you’ve overcome your operational challenges and laid down a framework to ensure proper implementation of the
data behind your cloud metrics at an enterprise level, the next step is to put that data to work via data visualizations that
matter and also drives action. Our recommendation is to visualize this data in the form of a dashboard.
Actionable reports with a clearly defined purpose
An actionable dashboard should assist your team with prioritize their efforts, and help enhance the metrics that are critical
to their company. Unfortunately, this means more than highlighting the metrics that your company values the most. The
method of presenting the data supporting your dashboard should help tell the story you want to be told to your end users.
With this in mind, organization is absolutely critical to ensure this.
Develop a metrics dashboard (continued)
Based on our experience, cloud metrics dashboards can be categorized into three possible buckets:
Operational Analytical Strategic
Operational Dashboards that Analytical Dashboards Strategic Dashboards primarily

measure goal progression, with the fundamental geared towards executive
business process and KPIs in purpose of analyzing leadership that emphasize the
real-time (if possible). trends and observations. company’s KPIs. These
dashboards can also be broken
out by department to provide
added insight.
Once you’ve established the purpose behind your dashboard, you can align the direction of your team’s thought process
right from the beginning. It’s highly suggested that you build a dashboard that passes the “Five-second test:” the end user
analyzing the dashboard.
“From the time we founded Plex, our priorities have been twofold—growing the business and developing a viable
product that is a leader in the market. As a SaaS-based organization, we’ve come to understand how critical it is to
leverage the insights that SaaS metrics provide when designing a product that will excel in the marketplace.”
—Scott Olechowski, Chief Product Officer and Co-Founder, Plex Inc.
Ensuring your dashboard makes an impact
The elements and rules behind of an impactful cloud metrics dashboard are not universal.
A cloud metrics dashboard can vary by industry, business unit, and level within an organization. Nevertheless, despite those
differences there are some crucial guidelines to ensure that your organization can develop dashboards that are impactful
and encourage meaningful action.
1. Benchmark and segment 2. Isolation of crucial metrics

A metric should be never be reported on a dashboard by It’s absolutely critical to identify and understand which few
itself. It’s critical to understand that metrics supporting metrics drive the business. A helpful exercise to help you
impactful dashboards require context, as this is the singular determine this is the following: if business turns south,
way of gleaning insights from your data. Simply put, your what are the first metrics you’ll turn to for answers? This
dashboard should provide more insights than questions. answer will help to ensure that your dashboard will have
the capacity to allow for strategic, valuable decision
There are a number of methods by which context can be
making.
expressed in a cloud metrics dashboard. For example,
utilization of benchmarks (internal or external), goals, or
even prior period performance can provide the context
necessary to make your dashboard impactful. Conversely,
the lack of context will make it extremely difficult to add
value to the dashboard.
Generally, this means that your dashboard should be

limited to no more than 10 metrics. Keep in mind that
goals and context will need to be associated with these
metrics in order for them to be truly actionable.
3. Supplementing metrics with insights Visualizations
Providing a section for insights allows for the analysis that It’s important to leverage visualizations in your cloud
the analyst spent in developing the dashboard to climb up dashboard in order to plainly communicate data for simple
to the highest point. understanding, and encourage action. Some best practices
to focus on are:
As illustrated below, the “Key Trends & Insights” section
provides context to the accompanying dashboard — Limited Design: Essentially, if the component of the
visualizations. design feature (i.e., a metric header, fancy border, or
icon) doesn’t assist the end user in discerning the
Without this analytical insight, it would be far more difficult
dashboard data, it’s more a distraction than a value-
to reach an informed conclusion.
add. The green in the MRR chart below naturally
catches your attention, and highlights the growth in
new MRR, MRR at the end of the month, and total
revenue.
Some items that can be included in this section of the

dashboard are:
— Root causes for some of the hits and misses
— What were the recent hidden shifts in business
strategy
— Were there any additional offers released by
the company
— What we should do next
— In what way can we reverse negative trends
— Are there any new opportunities on the horizon
4. Regularly update your dashboard
Contrary to the trend of many cloud metric dashboards,
they are not permanent affairs, and require constant
iteration to ensure that as many relevant insights can be
gathered. As businesses evolve, so do their priorities,
management, business models, and competition. With that
in mind, dashboards should also evolve to keep up to
reflect the changes, trends, and performance of the
business.
Color used in a meaningful way: Colors should assist
end users with identifying meaningful information upon first
glance, highlighting abnormal data points.
Nevertheless, it’s also important to ensure that no
“conflicting” colors are displayed on your dashboard as
well. The simple case of using green for “good” and red for
“bad” might be appropriate when analyzing sales figures,
but can have the inverse consequence when reviewing
inventory levels (when low levels are preferable).
To summarize, the combination of effective visualizations

— Bar charts: The effective use of bar charts can be with data displayed in an actionable manner will allow your
powerful tools to provide the context you need in cloud metrics dashboard to drive value-added analysis by
order to generate actionable insights. Bar charts are your teams without any confusion or questioning.
helpful for measuring trends over time, whether goals Tools to consider when developing your dashboard
are being met, and for comparison against other
segments and regions of your business. Conversely, In light of the suggestions reviewing the “why” and
pie charts, while able to segment specific parts of a “how” of developing an impactful, actionable cloud
metric, can only do so at one point in time, and thus metrics dashboard, it’s important to select the appropriate
provide very limited context. tool to put the above principles into effect for end-user
consumption. Some tools that KPMG have utilized in prior
engagements include Microstrategy, Tableau, and
Adaptive Discovery.
6. Test strategy and deployment
Once the metrics are available systematically, business teams need to validate and sign off on the metrics calculation, and
ensure that the numbers make sense/are accurate, and are in line with the requirements.
A typical test plan for metrics implementation program comprises of the following activities:
Prepare
Prepare
Assess Test Data & Testing Deployment
Test Plan
Environment
— Review — Based on the — Prepare test data — System — Code

business metrics based upon agreed Integration Deployment
requirements requirement, upon test Testing Activities
— Get approval of develop test scenarios. For e.g., — Regression — Change
the parties scenarios. For ensure Testing Management—
example calculate transactional data Communication,
— involved in — Provide user-
churn metric for elements Demos
testing training on the
Business Unit A for (cancellation date,
changes — Post-go live
Product ABC subscription status,
implemented business
— Determine test etc.) for churn
— Conduct validation and
period for metrics metric calculation
Business/User sign-off
calculation are available in test
environment Acceptance — Production
— Ensure alignment Testing support
between QA and — Ensure stage setup
(BAT/UAT)
BA on the test is complete for
scenarios business validation
Change management
Change management considerations 1. Your dashboard wasn’t developed in a method that is
consistently actionable with systematic, real-time data.
The introduction of new cloud metrics supported by
This is typically the case with dashboards sourced by
enhanced technologies, workflows, and processes
manual inputs such as documents and reports.
requires an enterprise-wide mind-set that embraces
change. Focusing on leading practices surrounding 2. The metrics, and your dashboard showcasing these
process improvement, sustainability, and adoption metrics haven’t been adopted as a crucial element of
increases the probability of engagement success. business operations. The various business units of
your organization are aware of its existence and
Creating a culture emphasizing data
leadership may have already signed off on it.
After applying the principles above to both operationalize Nevertheless, they continue to rely on their individual
your cloud metrics and display it on a dashboard with resources for their strategic decisions.
actionable data, you now face arguable the greatest
challenge yet: getting others to use it. The typical undoing
for the majority of cloud metric dashboards is simply their
lack of use. This can occur for multiple reasons, which
include the following:
7. Change management
Cloud metric adoption strategies Business IT
Companies nowadays really need to reevaluate their What percentage of your What percentage of
processes for not only engaging, but adopting end users for department has access to business users your
the cloud metrics implemented in their company. self-service BI tools company has access to self
service BI tools?
In a survey conducted in by Logi Analytics in 2017, they Average 47%
found that from both a business and IT perspective, only Average 53%
21 percent and 28 percent of those with access to self-
service BI tools used them when needed. Under the
assumption that the findings above are accurate, it’s
alarming that only roughly half of organizations are utilizing Of those business users Of those business users
these tools in both business and IT. who have access, what who have access, what
percentage uses the self- percentage uses the self-
Our experience has shown that three principals have
service BI tools when service BI tools when
historically been viewed as primary indicators of effective
needed? needed?
user adoption, and certainly need to addressed:
Average 45% Average 52%
— Is understanding of the metrics and the supporting
dashboard intuitive for the user?
— Is the dashboard more productive than prior method Of those business users Of those business users
of reporting your cloud metrics? (under the who have access, what who have access, what
assumption that you had metrics to report on) percentage uses the self- percentage uses the self-
— Will the end-user be able to definitively answer the service BI tools when service BI tools when
question of “What’s in it for me?” needed? needed?
Average 45% Average 52%
Focus on ease of use

Organize your metrics and data in a way (i.e., in a dashboard) that naturally assists the end user in guiding them to the
content that they are seeking out. Nothing turns users away more than an overly complex framework that raises more
questions than answers.
Cultivate an environment for user engagement
A critical component of fostering user engagement is understanding the needs of your end users in a constantly
changing work business environment. Make sure you are keeping pace with this change by identifying and connecting
with analysts, technical-leaning resources, and data subject matter professionals in the business to better anticipate
what your end users need and then execute on.
Monitor and measure
It’s extremely important to have a strong knowledge of the health of your cloud metrics environment. Are there
recurring errors? Is your dashboard performance slower than previous dashboards? Are there fewer logins? Do they
provide audit trails?
“Cloud metrics are not only for the Finance function, but the organization as a whole. Finance should act as the
business partner of leadership to enhance top-down communication of metrics. It should also ensure that the
company assigns a specific team to prepare and execute change management of cloud metrics (e.g., training and
communication) so that all functions align on their definitions and usage.”
—Steve Sordello, Chief Financial Officer, LinkedIn Corporation
Wrapping it all up
Critical success factors and how KPMG can help

Summary
Critical success factors
In a nutshell, cloud metrics help to accurately guide business performance and drive success for subscription-based
business models.
The key benefits realized through the subscription metrics program are:
— Ability to identify growth opportunities and trends in the subscription business
— Define standard and consistent set of metrics across enterprise to manage and drive business
— Availability of metrics through reporting platforms thereby eliminating manual process inefficiencies
— Improve forecast accuracy by predicting revenue growth (expand), churn and renewal opportunities
Standardization Growth Automation Predictive

Analytics
Let's look at some of the factors that are critical for the implementation of a cloud metrics program.
An agreed-upon set of metrics and
The Program Team has clear joint
definitions across the enterprise that
objectives, incentives, and
will be used to determine financial
accountabilities in place for delivery of
outcomes; regular operational checks
an integrated cloud metrics program
to drive integrated and sustainable
benefits
Joint KPIs
Accountability
There is a strong process and data Clearly defined business policy on

governance structure in place to grace period, cancellation, contract
monitor the data integrity and modification, Sales Compensation,
consistency to drive meaningful New versus Renewal, etc. that can
business insights impact the metrics program
Strong Policy &
Governance Controls
Metrics calculation supported by A dedicated change management team

underlying documentation of— System with a clear approach
Logic: Data Sources (Manual vs. to engage and motivate the
Automated), Transaction Types, organization throughout the cloud
Assumption, Definition, and Data metrics program
Manipulations
Clear Change
Traceability Management
How KPMG can help?
KPMG’s experience implementing cloud metrics
Cloud as a business model is quickly evolving and finance organizations, more than ever, are recognizing they must
maneuver an unparalleled time of innovation.
Organizations that understand the need to capture the core elements of their cloud business, as well as the associated
challenges and risks, are better placed to derive valuable, actionable insights to leverage their performance.
Moreover, organizations must engage an agile implementation strategy focused on capturing the right insights applying
leading practices in order to realize fully the benefits of cloud metrics. In KPMG’s experience, cloud organizations that fail to
make investments in increasing their transparency often need to make subsequent, costly changes as a result of not having
responding to data already available in their organization.
KPMG recommends that organizations develop a clear, attainable implementation strategy in order to mitigate risks, and
derive the most value from their insights. KPMG has demonstrated success in implementing cloud metrics models, along
with experience evaluating and optimize a cloud metrics implementation strategy that helps ensure limited disruption while
expediting an organization’s performance.
Training Materials Workshop Change Subject Recognized

Experience Management Matter Expertise Leader in Cloud
Professionals Strategy
— KPMG has — KPMG has deep — KPMG has an — KPMG has — KPMG is
exhaustive experience established deployable a leader in
training in facilitating change professionals the cloud
materials Metrics management who were metrics space,
used to train workshops with practice with actually recognized
stakeholders on presentations, experienced responsible for within the
key metrics for learning professionals already leading industry and
their business examples, ready to help large-scale with strategic
model templates make a smooth transformation partnerships
already defined implementation projects and alliances
and ready to with little to with leading
be applied and no disruptions marketplace
deployed to business vendors
operations
KPMG has the experience, materials, experts, and industry recognition needed to train and educate stakeholders for a
successful metrics implementation. We have a clear understanding of your strategic goal and can tailor the metrics based
on your business model.
How KPMG can help?
Our approach
— KPMG Finance Transformation—KPMG helps — Cloud Metric Knowledge—KPMG has demonstrated
clients manage the complexity that often plagues frameworks and technology assessments based on
cloud metric implementation by providing the leading practices and standards. We combine our
structure, approach, and discipline required to define extensive knowledge and implementation efforts in
and implement an effective delivery model. the cloud space to help our clients realize their goals.
— Outcomes and results—we help clients put concept — Agile Business Finance—KPMG has a holistic
into practice. We work with them to develop and approach to address the impact on the entire finance
execute pilot programs, as well as to interpret the organization, and to provide a integrated finance
results and make adjustments. Following the transformation effort. This transformation is one that
conclusion of the pilot phase, we are there to guide creates value by improving transparency, integrity, and
our clients through the implementation of their cloud preventative business controls, while building
metric delivery model, helping enable that client stakeholder trust.
outcome matches expectation. — Breadth of capabilities—We assist businesses in
— Collaboration—Collaboration is at the center of our strengthening their finance operations by improving
values, and define who we are as a firm. We work transparency, information integrity and governance
tirelessly to challenge the current line of thought in through our extensive suite of financial services. We
order to arrive at a collaborative outcome in line with also support efforts to apply the finance discipline to
our client’s needs. increase profitability and drive business insights at all
levels of an organization.
Standard deliverables for a cloud metrics implementation program include and are limited to.
1 2 3 4 5
Standardized Business Data Metrics Financial
Metrics Analysis Foundation Availability Reporting
Definition
— Stakeholder — Requirements — Tag changes to — Availability of — Metrics

Engagement Analysis a contract– metrics in dashboard
— Consistent — Data Analysis Upsell, Down- reporting — Detailed
Metrics sell, Cancel, applications performance
— Gap
Definition Expired, — Business summary
Assessment
Renewal Acceptance dashboard
— Stakeholder — User-story
Alignment — Consistent Testing — Training/Demos
Documentation
metrics — User
— Program — Detailed — Stakeholder
calculations Acceptance
Structure Business Adoption
— User-story Testing
— Detailed Requirements — Change
documentation — Production
Implementation — Mock-ups Management
Plan — Product Validation
Grooming — Metrics
session Accuracy
— Sprint Planning
Notes
Authors and contributors
Authors Contributors
James P. Murphy KPMG would like to thank the following tech industry leaders for their
Principal valuable insights:
Management Consulting
Apple Inc. – Max Muller, Senior Director, Maps
Jim has substantial experience leading and delivering Box Inc. – Paul Chapman, CIO
services focused on finance business strategy and
operational efficiency. His specialties include Cloud and Dell Technologies – Tom Sweet, EVP & CFO
SaaS delivery model strategy and digital finance Equinix Inc. – Milind Wagle, CIO
transformation. He is the Intelligent Automation lead
Fortinet Inc. – Keith Jensen, CFO, and Declan Fitzpatrick, VP Finance
for the Finance Transformation practice of KPMG LLP.
LinkedIn Corporation – Steve Sordello, CFO
Anuj Mathur
Nutanix Inc. – Ben Gibson, Chief Marketing Officer
Director
Management Consulting PayPal Holdings Inc. – Paul Hardy, Head of Global Pricing
Plex Inc. – Scott Olechowski, Chief Product Officer and Co-Founder
Anuj has deep experience in designing and executing
finance transformation strategies for global clients and Snap Inc. – Lara Sweet, Chief People Officer and Jeff Nonnenkamp, Head of
leading process improvement initiatives, including SaaS Financial Operations
delivery.
Lead contributor
Coauthors Marina Odai

Thor Oxnard Senior Associate, Management Consulting
Manager
Management Consulting Additional contributors
Mark Pele, Director, Management Consulting

Malika Adam, Manager, Management Consulting
Sepand Soheili, Senior Associate, Management Consulting
Contact us
For more information about this publication, or to learn how
KPMG can help your Cloud (SaaS) business, please contact us:
James P. Murphy Anuj Mathur

Principal Director
Management Consulting Management Consulting
T: 650-796-4163 T: 623-455-0063
E: jpmurphy@kpmg.com E: anjumathur@kpmg.com
Some or all of the services described herein may not be permissible for
KPMG audit clients and their affiliates or related entities.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
kpmg.com/socialmedia or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.

Your Business in The Cloud: Metrics Implementation Guide

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Your business In

the cloud: Metrics

1Source: KPMG International, “Global Technology Innovation

Advanced growth Agility

Growth — Bookings — Deferred Revenue

Profitability — Revenue/GM/ASP — Annualized Recurring

Sustainability — Customer Count — Churn (Attrition & Down-sell)

Metric Description Business value Calculation

New subscription example

Lack of standardization of metrics Cloud metric projects take

— Metrics accuracy is contingent upon

— Incompleteness of data— need basic — Need standardization of policies across the

What data scientists spend the most time doing

Lack of SSOT and standardization

Support for Challenges Management

Lack of clarity Limited

1 Stakeholder agreement; requirement definition

2 Finalizing solution design; socializing requirements;

3 IT architecture and design SW development management; rollout method

4 Establish valid schedule; establish cross-functional

5a Develop foundational data elements; Calculate metrics

5b Visualizations; layout strategy; content creation;

Adoption; steering committee involvement; prototype

— Doesn't contradict itself

— Every statement can be read in exactly one

— Nontechnical readers should understand

Con: Business to update key data elements for

Overall: Metrics are calculated based on the key

Con: Ending balance approach, not consistent with

Metrics are derived and reported based on

Solution option 1 such as calculating the metrics based on

Saas Metrics ERP/SLS

Contract Dates Yes Contract Term No Use Contracts Dates

Use PID to Term and

Yes No Default Contract

Potential Risks in accuracy of calculation

Metric Delta MRR

No change — Delta MRR = 0 Customer by Product MRR exist in both periods

2017 Q3 2018 Q1 Change in

Customer 1 Product A 100 Not Found (0) -100 Attrition Churn

Customer 2 Product B 250 250 0 No Change –

Customer 3 Product A 300 250 -50 Down-sell Churn

Customer 4 Product B 400 500 100 Upsell iMRR

Customer 5 Product C Not Found 350 350 New iMRR

Boulder Key gap Recommended approach Long term

Analyze Identify Quantify Implement

— Performance gaps — Improvement — Estimate improvement — Schedule

Phase I: Understand Phase II: Evaluate Phase III: Develop

Recommend, Design and

Vision and Mission Process

External environment KPIs and MIS reports

Existence and Effectiveness

Characteristic Waterfall approach Agile approach

Timelines Phased Iterative and incremental

Team organization Different teams involved in Same teams throughout development

Validation schedule Verification completed at final Validations completed

Planning method Predictive planning Adaptive planning

Visibility Less visibility—artifacts, Greater visibility due to working

Change flexibility Less flexible to requirement Changes to requirements are

3. Architectural tenets for developing cloud metrics

Users have more time to familiarize Duration for implementation is long

Project team can learn from earlier phases to

Cross-functional team planning and alignment

Guidance & Escalation

CFO Staff/Business Transformation Office

Finance BU Operations IT Sales Services ...

Program Governance & Data Steward

Project Execution Teams

Operational Council — Program management office —

Data Steward and Program Governance — Program Execution Team —

Develop a valid schedule

Plan Deliver Close