Backlog
Backlog is used in a wide variety of industries, including traditional software and SaaS. Generally, backlog refers to something unfulfilled. In a traditional software company, this is term commonly used mainly in the finance department. Backlog might refer to the value of contracted orders that have not shipped. Backlog could refer to the value of contracted or committed revenue that is not yet recognizable due to acceptance criteria, delivery of professional services, or some accounting rule.
SaaS Heavy Backlog
If your SaaS business is more of a software company model with a SaaS delivery mechanism (single tenant model, provisioning requires actual installation, etc), you are likely to be subjected to the types of backlog issues common to a traditional software company. Installation or provisioning replace “delivery” as revenue recognition issues, affecting backlog. Customer acceptance might also come into play, depending on contract terms.
SaaS Light Backlog
If your SaaS business is a multi-tenant, instant-on model, you likely will not have a backlog in the traditional sense. However, it is not uncommon for SaaS light companies to discuss backlog in the context of unrecognized future revenue from existing recognized contracts. This future backlog could be the total unrecognized revenue portion of the contracts, or could be discussed or reported as a backlog for a certain period, such as:
Backlog 2009: $12,000,000
Backlog 2010: $9,500,000
How do you define and use Backlog? Join the discussion at the SaaS Optics community.