Selling SaaS to a utility: get finance and regulatory in early

Why do finance and regulatory affairs object so late?

They object late because nobody reached them early, and the objection itself is predictable from the first meeting. An investor-owned utility (IOU) earns its allowed return on the capital it puts into rate base. A SaaS subscription is usually an operating expense, which customers repay at cost with no return for shareholders.^↗ So an on-premises system can add to the utility’s earnings, and the same spend on SaaS usually can’t.

That rule applies across most of the US market. In 2017, 168 IOUs served 72% of US electricity customers.^↗ Each of them weighs your subscription against an option that could earn a return.

Regulators have argued about this bias for at least a decade. On 16 November 2016, NARUC, the national association of state utility regulators, adopted a resolution asking commissions to consider better regulatory treatment for cloud computing.^↗ The answer still depends on the state. In 2020, Illinois regulators voted 3 to 2 to reject a proposed rule that would have treated 80% of cloud service costs as if they were a capital investment.^↗

So the question your champion can’t answer has 3 owners. Finance decides which budget pays. Regulatory accounting decides how the cost is booked under the utility’s policy. Regulatory affairs judges whether the cost can be defended in the next rate case. If they first see the deal when the contract arrives, the safest answer they have is no.

A late finance or regulatory objection is a missing seat

We think a late finance or regulatory objection means a seat was missing from the deal. An IOU deal with only the champion engaged isn’t a qualified opportunity yet, however warm it feels. The opex question was knowable at discovery, so it belongs in the discovery plan. Treating it as a pricing problem misses the point, because a cheaper subscription is still an operating expense.

Our reasons are practical. The champion doesn’t own the budget line, the accounting policy or the rate case, so they can’t settle the question. A case relayed through the champion reaches finance without its numbers, and the questions come back as objections. A rep can’t answer a rates manager on prudence and cost recovery either.

So we think multi-threading has to be designed into the deal plan: who on your side talks to which seat, about what and by which stage. We don’t mean every contact must be engaged, only the seats that can stop this decision. At an IOU, finance, regulatory accounting and regulatory affairs are 3 of them. Designing for them won’t win the deal on its own. It moves a known objection from the end of the deal to the start.

The research points the same way. Across 655,000 opportunities, Ebsta and Pavilion found win rates rose by 55% when decision makers were actively involved in the first 2 stages of the sales process.^↗ In Gong’s analysis of 1.8M deals, multi-threading lifted win rates by an average of 130% on deals over $50k.^↗

Map 5 seats at discovery and give each an owner

Start with the 5 seats that decide an IOU software deal, and give each one an owner on your team: the champion, the budget owner, finance, regulatory accounting and regulatory affairs. Add IT, cybersecurity and procurement as the deal firms up. A utility’s buying panel is wider still. Forrester counts 13 internal stakeholders and 9 external influencers in a typical B2B buying decision.^↗ So treat 5 as the minimum.

The owner on your side matters as much as the seat. A finance director won’t work through capitalisation with an account executive. A rates manager wants someone who has been through a rate case. So match people to seats: your CFO or finance lead for finance and regulatory accounting, a colleague or adviser with utility regulatory experience for regulatory affairs and your solutions engineer for IT.

Gong Labs’ deal data shows the extra people pay off. Win rates were 15% with no team selling and 50% with 3 or more sales personas involved.^↗ Adding 1 colleague from the seller’s side doubled the win rate.^↗ It’s a correlation, and it fits the design: more of your people, each matched to a seat.

Give each owner 1 question to settle and a stage to settle it by. Don’t promise the treatment yourself. Whether any part of the contract is capitalised or deferred is the utility’s decision, and its commission’s. Your job is to give its accountants the facts they need: what is subscription, what is implementation and how long the term runs.

Which discovery questions name the finance and regulatory seats?

Ask your champion questions that only finance and regulatory can answer, then ask who answers them. That names the seats and gives each of them a reason to meet you. Use these in the first 2 discovery calls and log every name on the opportunity.

Watch for 2 answers. “We’ll bring finance in later” means the objection is scheduled for procurement. “Regulatory doesn’t get involved in software” can mean nobody has asked them yet. Log both as deal risks and keep the deal in discovery until the seats have names. The rate-case answer also tells you when cost recovery could start, which belongs in your close date.

How do you check the seats are engaged before commit?

You check them with stage exit criteria and a weekly coverage measure. The criteria stop a deal reaching proposal while finance, regulatory accounting or regulatory affairs is unengaged. A name on the opportunity isn’t engagement. Count a seat as engaged only after a two-way exchange inside a set window, such as a meeting they joined or a reply to your question.

Then measure coverage on every open utility deal: engaged required seats divided by required seats. Count each role once, however many people fill it. An IT team of 5 still fills 1 seat, and it doesn’t make up for silence from finance.

Example (a fictional deal): the deal needs 5 seats. The champion and IT are engaged. Finance is named but hasn’t replied, and nobody from regulatory accounting or regulatory affairs is named yet. Coverage is 2 ÷ 5, or 40%, so the deal stays at business case, however keen the champion sounds.

Our own audit uses the same idea. Check D2 in our Panel Check counts contacts with activity in the last 30 days on each open deal above the client’s minimum deal size. It scores 1 when under 25% of open deals have 3 or more engaged contacts, and 5 when over 80% do.^↗ In the CRM, a required field per seat and a task when a seat is missing at a stage keep the rule from depending on memory.

Set close dates from the utility’s calendar too. The budget cycle and the rate-case date regulatory affairs gives you are better anchors than the champion’s hopes. Record where each date came from, so a slip has a cause you can see in the forecast.

ETRM deals need risk, middle office and IT at discovery

Bring risk, the middle office and IT into an ETRM deal at discovery, with the same fix. Name the seats, give each one work in the evaluation and keep the head of trading’s verbal yes out of commit until they’re engaged.

An ETRM deal has its own late seats. Risk owns limits and exposure. The middle office owns valuation and the daily P&L. IT and information security own integration, hosting and the vendor review. Market compliance owns trade reporting under rules such as REMIT and EMIR.

When those seats first meet the deal after the verbal yes, each one restarts the evaluation on its own terms. That is how a close slips by quarters with no competitor in sight.

Give them work before the demo. Ask risk and the middle office to write the scripted demo scenarios, such as a limit breach, a P&L explain and an end-of-day valuation. Send IT and security your integration notes and security pack when the long list forms, so their review runs alongside the evaluation. If a selection adviser runs the process, map them as a seat too, because ETRM selections often run through one. Then apply the same gate: a verbal yes from trading reaches commit only when risk, the middle office and IT have each had a two-way exchange in your window.