Subscription Business 2.0

Transcription

1 WHITE PAPER Subscription Business 2.0 Is your business ready for it? GET IN TOUCH (844) 4OB-SOFT 2015 OneBill 1

2 What is a Subscription 2.0 Billing Platform? The next generation of subscription business is here. Find out what it means to your business infrastructure and what you need to be ready for in todays changing subscription business environment. 6.8 billion potential subscribers on mobile, social and web. 80% of customers demand new consumption models. The Economist, 2014 Subscription-based and recurring revenue business models became the rage about 4-5 years ago. Practically every type of product and service business started transforming their businesses from one-time transactional models to recurring subscription models. Innovators like Netflix, Zipcar and Spotify have certainly proven that subscriptions can work for more than just software. The benefits were many: from predictable customer value to higher valuations. Other companies who have made the switch have found they were able to attract a broader customer base by offering a subscription-based model, which has a much lower upfront cost to customers. But the transition is sometimes easier on the customer than on the company, where the transformation to a new business model can be incredibly disruptive to the way sales and marketing is run. Working with channel partners and resellers with this model is particularly challenging. Many of the early movers found, subscription business is much more than a static monthly invoice based on customer-contracted pricing and terms. It means a complete re-think of several fundamental aspects of the business. Can your existing infrastructure support your move into the brave new world of Subscription 2.0 business? The shift to Subscription models is accelerating. Companies have begun to realize the financial, market, technology, and customer loyalty benefits of deep, long-term subscriber relationships, and have started looking seriously at their transformation plans OneBill 2

3 70 percent of customers are through the buying cycle before they contact you. Customers are connected and in control already informed on products, pricing, competitors and reviews. Subscribers expect services to be personalized, real-time and memorable. There is a fundamental mismatch between how organizations market and sell, and the way people actually shop and buy. Subscription-based models help businesses grow, but also hold companies accountable for long-term value to their customers. One major problem is their legacy systems. Companies have invested large amounts of resources both time and cash into customer relationship management (CRM) and enterprise resource planning (ERP) systems to support sales automation, customer service, inventory management, supply chains, and accounting. Traditional CRM and ERP systems were designed for transaction businesses, not for companies with subscription business models. In a world where every customer is now a subscriber, companies pursuing a Subscription model have found they must review their operating systems: from managing the entire subscriber lifecycle, including new subscriber acquisition, subscription management (enabling subscribers to upgrade, downgrade, renew and modify their subscriptions), to automating recurring billing and payments, and measuring recurring revenue and subscription metrics. Jim O Neill, CIO of HubSpot What do you need in your Subscription 2.0 platform? BUSINESSES DELIVERING IN THE SUBSCRIPTION ECONOMY ARE WINNING. It s the 21st century. Businesses are shifting focus from products to relationships. Businesses with subscriptions, like Adobe and Box, are disrupting their own industries, captivating customers and reinventing the way subscribers engage with their products and services. A Subscription 2.0 platform needs to do much more than generate monthly invoices. It needs to manage the entire customer lifecycle from concept to cash. Integrate across the customer journey and purchase cycle Provide the ability to dynamically invoice, i.e. accommodate proration, rating, upgrades, downgrades, changes in plans, one-time vs recurring metered charges Integrate with business tools: CRM, ERP, Financial systems Provide flexible invoice formats Accommodate domestic and international taxation Provide real-time reporting and dashboards for rapid-response business decisions 2015 OneBill 3

4 END-TO-END SUBSCRIPTION LIFE CYCLE Catalog Management Dashboard & Metrics Customer Acquisition Self Service Order Fulfillment Finance Automation Subscription Management Bill presentment & Payment automation Subscription 2.0 life cycle for telecommunications services, IT services, and those of many other industries will look different the it does today. A billing platform in the Subscription 2.0 economy will have to be able to go from Quote to Cash and everywhere in between. The next big challenge will come from the Internet of Things (IoT). The Internet of Things will generate a whole new world of solutions and data that need nimble cloud-based infrastructure. To offer everything the customers want, the data center provider or the CIO of the enterprise will need trusted partners that provide solutions and services that add value by dynamic pricing for managing the elastic demand. This situation will become even more complex as SaaS and IoT explode. A truly convergent revenue management platform will be required which will offer: Unlimited product/service types hardware, software and other products, subscription services, professional services or any combination thereof. The sky s the limit. Highly flexible, customer/subscriber driven dynamic pricing models. Renewals, updates, additional services, reconfigurations manage changes or allow customers to handle their own subscriptions on any device they choose. Pro-rate based on service start date. Partner/reseller/agent management. How onboard partners can be added in a few clicks, making the services available to them to up-sell and manage multi-party settlements OneBill 4

5 CLOUD REVOLUTION: Opportunities & Challenges CONSUMERS Expecting personalized services and demand to pay only for what they use ENTERPRISES Looking for Bundled services rather than Ala-Carte SERVICE PROVIDERS Shifting to subscription business models & Leveraging Channel Partners In a recent correspondence with people working to provide subscription billing solutions for Alcatel-Lucent, here is what they said, The technology market in general and the enterprise communications market in particular are moving to subscription based models. Alcatel-Lucent Enterprise is building its go to market capabilities to accompany the launch of its subscription offers. Those offers are mostly designed to be sold through channel partners to our end-customers in different market segments, from SOHO to very large enterprises. Alcatel-Lucent Enterprise identified the need for a solution to manage subscription offers, handle payments, invoices, revenue recognition and accounting in synch with its existing transactional information system. Subscription offers may vary from maintenance offers on existing CPE installed base to fully hosted SaaS offers, through offers mixing CAPEX and OPEX models, including hardware and software items. Alcatel-Lucent Enterprise also needs to be able to follow up on subscribers and subscriptions, including the possibility to take action depending on consumption trends or specific data analytics. In the various options considered, one is to use 3rd party solution, and Alcatel-Lucent Enterprise is starting preliminary search for this. Companies like Acatel-Lucent, Telstra, AT&T, Verizon and many others in industries outside of telecommunications and IT services all have the same challenge. They all sell through resellers and channel partners. The challenge for channel partners in all industries is that their clients, the Enterprise, are asking for greater diversity in the choice of carriers, vendors, suppliers, service providers as to brand, price, and billing options. It is very difficult for channel partners, VARs, distributors, and resellers to find subscription billing platforms that integrate with the existing billing systems of most vendors. Subscription 2.0 billing demands flexible, elastic, and highly customizable billing solutions for connecting disparate billing platforms and the ability quickly respond to Enterprise customer needs OneBill 5

6 Channel Partner Pain Point: How to offer Multiple Vendor Options on One Bill To Their Enterprise Customers Bundling of Services Enterprises are demanding personalized bundles Technology Problems Integrating with service providers Highly Guarded/ Proprietary systems Multiple Invoices Enterprises receive multiple invoices for various services Resell complexities Different partners & settlement policies Why Do Enterprises Use Channel Partners? There are three high-value reasons Enterprise customers use channel partners. First, partners become a natural extension of a company s sales force that are compensated strictly on performance. Second, the Enterprise gains revenue and market share, while someone else deals with the day-to-day service and support issues and complexity of working with multiple suppliers and providers of products and services. Third, channel partners own long-term relationships that give them access to the decision makers that most competitors would never be able to get. On top of that, adding the task of accessing product catalogues, pricing, supply chains, deliveries, returns, and the related billing and revenue management issues involved is better handled by the channel partner so the Enterprise can focus on it s core business. The problem for channel partners is always the same. They deal with several vendors all with disparate systems while trying to provide solutions for enterprise clients that have constantly changing and evolving needs. Subscription 2.0 must empower channel partners, system integrators, and solution providers with the ability to offer complex and sophisticated bundled solutions to their Enterprise customers without programming and all on one fully integrated bill; saving time, resources, and money OneBill 6

7 The universe is moving very fast towards a complete subscription based model for quite a number of goods and services we consume. This necessitates dynamic pricing for each of these products and services depending on either volume, velocity, time or any other identified factor which measures the utility of these services by the consumers. The elasticity requirements of different verticals vary based on the consumption of the service as well as the perceived value it provides. The complexity increases manifold with the arrival of virtualization, cloud and analytics using big data. The platforms and networks in the data center are evolving to becoming stateless and one can opt for a change of vendors and suppliers of IT Service providers quite seamlessly. In such a scenario, a Subscription 2.0 billing platform has to be agile and nimble to price services and products based on usage and also optimize the resources available to its maximum capacity. A robust Subscription 2.0 revenue management platform, available as a SaaS, which can be customized very easily to cater to the elastic pricing rules of different industries is the need of the hour. It is quite challenging for traditional billing solutions to cater to this evolving business model as they were built around business rules of the eighties and nineties and are very difficult to change to cater to a mature pay per use model. Subscription 2.0 Key Benefits Fast time-to-market Personalized bundles and pricing Elastic subscription End-2-end life cycle support Integrated provisioning & activation Peaceful coexistence strategy 2015 OneBill 7