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2014 Maintenance & Services Ratios

Publication date: 12/2014

Executive Summary

Technology pundits are always talking about disruptive changes in the technology world, but they ve mostly missed one of the biggest transformations of the last few years the greatly expanded role of services. This year our report puts a lot of focus on disruptions, including those that are obscuring the kind of financial information that we and you are looking for. We have added a section on the financial reporting from SaaS (Software as a Service) companies. We are also spotlighting five very large technology companies, IBM, Hewlett-Packard, Oracle, EMC, and Google in al section called Disruption Spotlight,

Increasingly the large and growing role of services is often under-measured, under-reported, under-managed, and under-invested. To provide some necessary benchmarks for the services side of the technology business, the ASP has compiled current data from 62 public companies (all of which are named in the report, with data on revenues and services-related financials) on the performance of their services operations. In addition, we consulted top experts on services metrics and accounting issues to offer guidance on the fine points of maximizing services revenue and correctly tracking those revenues.

The ASP's Maintenance & Services Ratios report covers the following topics:

  • Revenue contribution of services to total revenues (percentage and absolute dollars)
  • Profit margin on services (percentage and absolute dollars)
  • Impact of company size (contribution and margin)
  • Maintenance contribution and margin (percentage and absolute dollars)
  • Professional services contribution and margin (percentage and absolute dollars)
  • The bundled subscription model
  • Revenue recognition rules for services revenue
  • How to design a management P&L for services
  • The role of renewal and attach rates
  • A financial model for launching new services
For those who want to explore the underlying data in more detail, the report includes an Excel spreadsheet that contains all the financial data used for our calculations.

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