Importance of R&D in SaaS Growth

Software companies typically allocate approximately 30% of their revenue to research and development (R&D), significantly less than the amounts spent on sales and marketing. However, while sales and marketing metrics receive substantial attention due to their measurability, R&D remains less scrutinized despite its critical role in product development and growth. The correlation between R&D expenditure and growth rates shows that companies growing at rates below 15% allocate around 22%, while those exceeding 25% increase their spending to about 31%. This indicates that a stronger focus on R&D could potentially lead to substantial growth, though establishing direct metrics and accountability for R&D remains a challenge for many organizations.