Optimizing iACV With AI

Business Challenges

Since Xaas/Saas revenue is recurring in nature and runs thru a subscription based model, when subscription goes through a lot of Change/Modifications during the life cycle of the contract, Businesses find it very difficult to accuretely validate the sales performance of the sales teams.
Businesses also find it very difficult to evaluating how much new revenue is being generated from new customers and expansion
By Accuretly computing iACV metrics businesses will be able to do better forecasting which helps in predicting Annual recurring revenue (ARR) growth and better qouta setting and comp plan for sales teams. Also provides a great visibility for timely renewals of subscriptions and clearly define new and expansion rules.

Digital Transformation

Finance Transformation -Understand iACV Metrics rules and policies by taking  part in PRE and POST discovery sessions conducted by Sales/Finance and Development teams and Creating Test Scenarios for each USE CASE, when the data is available in Stage Environment.
Test each Scenarios in stage environment, if they make business sence and the metrics is determined as per the business rules and policies framed.Making sure the data is accurate and  has Zero defects before we signoff for Prod Release.
Down Stream Applications, we also make sure data flows thru all the down stream applications from the foundational tool.

Key Solutions

Implementing accurate and defect-free incremental annual contract value (iACV) metrics for booking categorization requires clear definitions, established validation processes, and cross-functional alignment between sales and finance.
Key IACV Metrics and Definitions
To ensure accuracy, establish universal, company-wide definitions for each booking type:
New Business : Revenue from a brand new customer contract, excluding all one-time fees (e.g., setup, implementation). This is used to measure the effectiveness of new customer acquisition efforts.
Expansion : New, incremental recurring revenue added to an existing customer's contract (upsell or cross-sell) during their contract term. This measures customer success and expansion strategies.
Renewals : The recurring value of an existing contract that is extended for a new term with no change in value. This measures customer retention (gross retention).
Testing Scenarios and Business Validation
Implement robust testing protocols to ensure data integrity and gain confidence from finance and sales teams.

Business Benefits

Sale performance indicator: This is used for quota setting and comp plan
Growth indicator: How much new revenue is being generated from new customers and expansion
Forecasting: helps is predicting Annual recurring revenue (ARR) growth

Best Practices

Standardize Calculation: Since ACV has no universal standard, ensure your internal calculation method is consistent across the company, typically excluding one-time fees (like setup costs) to focus purely on recurring annual revenue.
Structure for Growth: Use contract structures like multi-year agreements with guaranteed annual price escalators, tiered pricing models with clear upgrade paths, or module bundling to encourage higher initial ACV and future expansion.
Integrate Metrics: Track ACV in conjunction with other key metrics like Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), and Net Revenue Retention (NRR) to gain a holistic view of profitability and growth sustainability

Client

Subscription based Companies.