To Build or Buy: Key Decision Points for Choosing the Best Billing Solution. Cloud Based Billing & Subscription Management Expert Series WHITEPAPER

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1 Cloud Based Billing & Subscription Management Expert Series To Build or Buy: Key Decision Points for Choosing the Best Billing Solution

2 Executive summary This white paper is intended to serve as a reference for any company weighing the advantages and disadvantages of developing its own proprietary billing solution against choosing an on-demand subscription billing platform. The paper discusses the attributes and requirements for a modern billing system and compares the build versus buy models. Introduction Consumer buying behaviors have forever changed. Today s consumers want to purchase goods and services on-demand and expect engaging experiences at each stage of the customer life cycle. Consumers require competitive pricing plans and superior customer service or else they will take their business elsewhere as soon as they become dissatisfied. Successful companies employing recurring revenue models realize the importance of implementing a flexible billing and customer care solution. Monetization, including billing and payments capabilities, has shifted from an operational necessity to an important element in business strategy for leading organizations. The capabilities of a complete billing solution stretch beyond invoicing and payments, also providing benefits such as greater customer satisfaction, faster order to cash, reduced operating costs, and decreased risk associated with security and compliance. Once a company makes a business case to implement a billing solution, its first major decision is whether to develop the solution in-house or to outsource to a managed software provider. This white paper presents an overview of the key issues that organizations need to consider to make an informed decision about what billing system best suits their company. Attributes of a modern billing system Many companies fail to execute subscription-billing models that foster enduring customer relationships because they build their businesses on existing e- commerce and accounting systems. These systems have limited flexibility because they re designed to fit one-time purchases. Accounting systems are designed to look at past transactions to represent the financial condition of a business. Flexible subscription billing systems, on the other hand, are real-time and allow customers to interact whenever they would like to fulfill purchases, change plans and request support. E-commerce platforms are designed to handle credit card transactions or other electronic payment methods. They simply don t have the flexibility or the scalability of billing systems to sign-up customers, turn on services, track usage or easily manage customer disputes. Companies that try to shoehorn accounting systems and e-commerce platforms into their subscription model find that the only way to resolve problems is through manual intervention, which will never scale, is prone to error and rarely compliant. That s why leading companies choose to build rocksolid subscription billing models by focusing on recurring customer relationships rather than just recurring transactions. E-commerce platforms aren t built for this level of interactivity. The continual touching of customers is the source of value for on-demand businesses, for both seller and customer. An enterprise-class recurring billing system is designed to manage and automate the entire subscriber life cycle, enabling customer acquisition, product and service delivery, management and rating of usage, financial interactions and customer management. Companies with billing systems that build relationships can design improved customer experiences and make continual adjustments based on their customers needs and the needs of their businesses. 2

3 Evaluating whether to build an in-house solution Many businesses with sufficient development resources decide to build their billing system in-house. The perceived benefits of building a custom solution often include the control of source code, retaining current business processes, and compatibility with existing systems. Once a company makes a business case to implement a billing solution, its first major decision is whether to develop the solution inhouse or to outsource While it may make sense for an online business to develop an internal billing system, these initiatives may fail to take into account the long-term needs of the business. According to a recent Forrester Research study, businesses frequently retire homegrown billing solutions because they can no longer accommodate changes in monetization strategy, provide customer data needed for sales analysis, or scale to increased customer volume. 1 Before beginning to develop an in-house billing solution decision-makers should consider: Are we willing to accept the risk associated with the stringent security and compliance requirements associated with billing and credit card payments? to a managed software provider. Is there enough money to analyze, design, and develop a custom system? Can we scale server, storage, network, and personnel? Can we keep our service on the leading edge for connectivity, features, costs, and platform integration challenges? analyze, design, and develop a custom system? provide support and maintenance for a custom system? provide training on a custom system? produce documentation for a custom system? Is it likely that business requirements will change over the life of the system? Is the additional risk of developing a custom system acceptable? Evaluating on-demand billing solutions Unless your company s expertise is billing, it is probably best to direct internal resources to the organization s core competencies and outsource supporting applications to experienced and proven managed service providers. Dedicated billing solution providers invariably have accrued hard-earned expertise monetizing products and services. On-demand billing solutions alleviate the need for developers to become experts on billing issues. Most significant, however, is that outsourced billing solutions provide the flexibility and control needed to accommodate changes to the business, such as new revenue streams, a growing customer base and regulatory controls. Businesses frequently discover the need for more in-depth sales analytics and adding new modes of billing, which are difficult requirements to anticipate when building a homegrown solution. 2 When evaluating billing solutions, ask providers the following questions to determine if they will be a good fit for your current and future business needs: 1 Deciphering Online Billing Platforms, Forrester Research, March 12, 2010, p Deciphering Online Billing Platforms, Forrester Research, March 12, 2010, p expert series

4 Is the solution delivered on-demand? Will the infrastructure support the volume of customers we have now? A year from now? Five years from now? How will the billing solution integrate with existing systems? What new features are on the roadmap that will support our future business needs? Will the solution accommodate my existing business rules and processes? What is their proven real-world experience? Can we talk to their customers and partners? Is the solution compliant with the requirements dictated by the credit card industry and federal regulations? Benefits of a managed billing provider Companies that utilize managed billing platforms benefit from the expertise and experience of professionals who specialize in monetizing businesses. Among other benefits offered by billing service providers are on-demand delivery, faster time to market, flexibility, easy systems integration and integrated customer care. Experience Managed billing service providers offer businesses a solution that is tested and proven by a team of software development and billing experts. Companies can expect a high-quality user experience and features and functionality based on industry best practices. On-demand Delivery On-demand delivery of billing services does not require purchasing, installing or maintaining software or hardware. Businesses should consider selecting a billing service provider delivered on-demand for the following reasons: Scale Enterprise-class billing solutions are by definition scalable, accommodating rising user demand and data volumes. Unlike homegrown solutions, on-demand billing services transfer the burden and risk of scaling to the provider. Irrespective of whether a business customer base rises or falls, companies using on-demand billing software receive the firepower they need without the risk of purchasing too much or too little infrastructure. Low Total Cost of Ownership (TCO) High costs are the primary drawback of developing a billing solution in-house, as well as software deployed on-premises. With no hardware or software to be purchased, companies using ondemand billing services pay only for the functionality they need, when they need it, avoiding exorbitant up-front fees. Security and Compliance On-demand delivery enables businesses to leverage powerful transaction security and compliance controls built into the provider s service. Superior billing and payment solutions are always certified by PCI Data Security Standards defined by major credit card companies. On-demand delivery of billing services does not require purchasing, installing or maintaining software or hardware. Faster time to market Developing an in-house billing and payments solution can take months under the best of circumstances. Often that development time is not feasible if products or services need to be brought to market quickly. A managed billing solution can often be deployed in weeks. In addition, the solution will be user-friendly, easy to learn and easily integrated with existing core systems. Flexibility While managed billing systems always come with 4

5 built-in processes based upon industry best practices, they must be flexible enough to accommodate business rules and processes unique to your business. Billing solutions must support business practices but not define them. User-friendly interfaces should accommodate native data formats and schemas so that business rules and logic can be easily customized. Integration A billing solution that fails to integrate seamlessly with your existing systems will be more trouble than it s worth. Software designed with open architectures accommodates emerging applications, allowing the introduction of new technologies to the enterprise. Full- featured billing applications provide a broad range of connectivity options to various data sources such as message buses, Web services and common ERP and CRM applications. Support for standard document schemas saves integration time and improves data accuracy. Application Programming Interfaces (APIs) enable automated communication between your billing system and related functionality such as provisioning, registration and accounting. Conclusion The decision whether to build a subscription billing solution or to purchase on-demand billing services ultimately hinges on a company s strategic objectives. A company ought to build their own billing system when its core processes are a key differentiator that provides competitive advantage or helps generate incremental revenue. A company seeking to reduce costs by automating business processes such as billing, finance or customer relationship management should buy a billing solution developed by software and billing specialists. The key decision points facing companies evaluating whether to build a proprietary billing solution involve the costs of initial development, ongoing development and implementation, as well as time-to-market, regulatory and compliance policies and employee skill sets. Contact Aria Systems Today! sales@ariasystems.com info@ariasystems.com Integrated Customer Care Billing and customer care functions are interdependent and critical to every customer s decision to continue doing business with a company. As a result, a subscription-billing platform must provide integrated support functionality such as user self-service and a customer care portal for account management. A robust and flexible on-demand billing solution can provide companies of all sizes with a best-of-breed billing platform at competitive prices, without devoting resources for development and maintenance and incurring financial risk that may impact the bottom line. About Aria Systems Aria Systems is the subscription billing and management market leader serving Global 2000 companies. The Aria Subscription Billing Platform is the industry s only enterprise-class solution that automates the entire subscriber life cycle for all recurring revenue models. Disney, Ingersoll Rand, DreamWorks, EMC, Internap, Roku, VMware, Taleo, and Hootsuite all rely on Aria for fast time-tomarket, low operational costs, and monetization flexibility. Aria Systems, Inc. 274 Brannan Street, Suite 602 San Francisco, CA Phone: Fax: Sales Toll Free: Aria Systems, Inc. 600 Reed Road, Suite 302 Broomall, PA Phone: Fax: Sales Toll Free: ARIA (2742) expert series