SaaStr Annual 2024: Building Technology Infrastructure for Consumption Business Models with Confluent

SaaStr Annual 2024: Building Technology Infrastructure for Consumption Business Models with Confluent

1. Building Technology Infrastructure for Consumption Business Model Sudhakar Jukanti Sr.Director - Business Systems Confluent

2. What is Consumption based business model? Key Characteristics of Consumption-based Models Spend is tied to usage (and value), as opposed to other measures that may not correlate with value - such as time (per month), users (per user) 2. Pricing is set on a consumable unit of measure (e.g., per GB, per transaction), as opposed to features that form part of the package 3. Revenue follows usage of the product or service as opposed to leading the usage (pre-sale) 4. Customer spending is scalable beginning with $0 as opposed to a fixed upfront price or a committed ACV 5. Spend is transparent and controllable by the consumer as opposed to being set by the seller Source: Deloitte, Q2’21

3. Source: TechCrunch, Deloitte analysis Transition to Consumption based model requires cross-functional alignment and focused effort across multiple teams Subscription Consumption Product Design Monolithic Offerings Suites with Integrated Features Product Development Major feature releases Continuous improvement Pricing User or commitment-based Consumption-based Marketing Focus Demand gen PLG & Customer Marketing Sales Focus Land bookings & ACV Consumption & Expansion Revenue Management Historical & Contract-based Predictive Analytics & Customer Cohort-based Customer Success Retention-focused Adoption & Outcome-focused Key Design Questions How do we design and build products that encourage organic adoption and expansion? How can we inform our feature roadmap based on actual usage and willingness to pay? How do we incentivize and enable our GTM teams to demonstrate value and drive continued consumption? How can we forecast revenue based on current and historical usage data? How can we handle ‘flex’ (overage, roll-over) in hybrid commit + usage model? How can we help customers achieve desired outcomes and pilot new use cases? How can we align processes & systems to enable agility, responsiveness and efficiency in delivering our offering and interacting with customers?

4. Core Components Build Product Capabilities Build Telemetry Consumption Billing Consumption CPQ Product led Growth Use case driven Selling Compensation Forecasting Change Management

5. High level architecture for Consumption Business Model

6. Cross functional alignment & Change Management are the Key factors

7. Consumption Metrics Consumption ARR Incremental Consumption ARR NRR Customer Count Customer > $XX Revenue Churn Rate

8. Key Takeaways

9. Core Components Consumption-based models require a shift in technology infrastructure and business processes Core components include product capabilities, telemetry, billing, CPQ, and analytics Success depends on real-time data processing, flexible systems, and predictive capabilities Implementation should be phased and aligned with business priorities Focus on Change Management from Day 1 Continuous monitoring and optimization of metrics is crucial for long-term success