The financial landscape for software-as-a-service companies has changed dramatically over the past five years. Not so long ago, businesses were focused almost exclusively on top-line growth, and enterprises that could demonstrate continuous growth were rewarded with either soaring stock prices or sizable private equity or venture capital investments.
That was an exciting time—but it couldn’t last forever. As interest rates have risen to combat inflation over the past two years, the metaphorical money train has left the station. Businesses no longer have easy access to capital to fund their investments, and the result has been a shift toward a more balanced approach to growth and efficiency.
As businesses embrace efficiency, they are becoming increasingly focused on the ROI of their investments—and it is impossible to effectively gauge ROI without a thorough understanding of the risks an investment brings with it. But businesses don’t want to spend thousands of hours gathering that data—they want to gather and analyze it as quickly as possible.
Take, for example, a business that wants to acquire another company. That act may allow the business to expand its product offerings, improve its technology and generate additional revenue—all good things. But what are the risks associated with the acquisition? Expanding into a new market is great—but that market might carry additional regulatory and compliance requirements.
The ability to quantify those risks tangibly is critical for two reasons. First, it can help businesses attach a dollar value to the risks they take on, making it easier to determine whether the risk is worth it. A strategic acquisition may add top-line revenue, but businesses need to marry that top-line revenue with risk mitigation activities.