So, On Demand Service Providers can have good turn over in this model by having an efficient CMS and Billing Systems in place.

How customer retention results in revenue generation?

Service Provider receives payments from customer on periodic basis in subscription model, but one should be aware of the fact that losing a customer in middle of any subscription period might bring down sale value, instead which onetime sale would have bought him more money. So, retaining a customer in subscription model is a key for recurring revenue. Service providers need to efficiently and effectively handle the some / all of the below activities in order to retain a customer in subscription model

Pricing and Packaging Management: Create and offer flexible price plans, offer discounts and promotions, etc to win a new customer and also for retaining the existing customers.

Contract Management – Service providers need to efficiently store and manage the contract related transactions such as up gradation/down gradation/renewals) to maintain a continuous information of a customer. By knowing purchasing behavior of a customer on a continuous basis will facilitate a service provider to retain a customer.

Billing – Number of invoices generated will be more in subscription model compared to onetime sale. Service providers should be able to generate invoices on periodic basis with different frequencies (monthly/quarterly/half yearly/Yearly) as per contract agreement.

Customer Care – Need to provide 24/7 online help desk services, handle requests in time, and provide self-care portal with privileges to view their contract details, bills, raise tickets, etc for providing transparency.

Some service providers handle these operations manually, which might work for a business with a low customer base, but for higher ones there should be a system in place to take care of these operations.  In the case of a small company the billing process is handled manually and faces a critical challenge in scaling up their business. And a reasonably large company faces critical issues by managing their business in a manual fashion or by obsolete systems. Subscription centric billing systems like eVapt are fast replacing various traditional billing systems in many companies across the world. These billing systems come with a set of features that are increasingly becoming necessary rather than a option to run the business. These modern day billing systems come with various abilities like integration with CRMs, ERPs, Financial Accounting Systems, etc and ability address various organization specific billing requirements and supports data transformation / sharing
These benefits are increasingly being adopted by various business houses across the world and are enabling them to scale up their business by completely automating their business process and supporting in faster time to market their services & offerings.

In the context of IaaS or data center (Cloud computing), Partners play an important role of business process. Be it as a technology partner who is enabling the service provider by providing technology support or a sales partner who is sells the products to the end customers. No matter what kind of a partner one is, he is an important part of the value chain of a company and should be rewarded according to his contribution. Companies see to it that their partners get their benefit in terms of commissions, which are also called revenue sharing. Some of the examples of these partners are virtualization platforms, resellers, vendors, payment gateways, sales personnel to name a few. This business model of passing on the benefit to its partners can actually improve the presence of a company in the market, without actually spending directly towards the same. A strong market presence in the market using partners can be helpful for better market penetration, new product introduction, increasing the markets into new segments, reduce the efforts required to build a system, handle payments etc.

Partnership model of business, however has few challenges to address from a business process point of view. Partner agreements are different from one another as the agreements are made on the basis of each partner’s role in the business process. Hence the revenue settlement cannot be done on the basis of a single agreement. Companies without billing systems generally take care of the revenue settlement manually in a tedious process and this leads to reduction in revenue and increase in expenditure.

Billing systems like eVapt come with a revenue settlement module as revenue settlement is treated as an important part of revenue management. These systems come integrated with payment gateway and a FAS(Financial Accounting System). So once the receivables are received, the billing system will automatically credit the respective amount of money in the partners account in your accounting system based on the pre-defined settlement rule.

Cloud service providers should be capable of billing automatically based on any billing cycle. But one must not ignore the pains of a cloud service provider in calculating the usage of each and every customer, applying a specified rate plan, and generating a bill. So there should be a proper mechanism in generating a statement of account or invoice/bill.

Now the challenge here is, cloud service provider has to have a continuous watch on the usage consumption of its customer(s) which may prevent from significant revenue loss. Solution towards this is a Metering component, which integrates with cloud service providers database servers / control panel /virtualization platform to collect the usage detailed records (UDRs).

Does this accurate usage collection details really facilitate in generating usage based invoices/bills? In order to do so, a flexible rating engine should be in place to rate each individual service usage. Rating engine should allow service provider to comprehensively define different price rules and measure based on the usage. So rating engine should be extensible with no restriction on units of measurement, support flat and tiered (incremental) rating schemes and also support both the prepaid and post paid scenarios.

Following are the different rate plans a cloud service provider metering and rating system should support.

Volume based rate plan: Based on the total volume (e.g.: storage space) consumption, system should support incremental slab where price per unit varies. Depending on the total usage invoices are to be generated.

Time based rate plan: Any day of the week, day of the year and time of the day are considered in order to define different rate plans (Off peak, holidays, business hours etc). And based on these parameters the usage is been calculated and the bills are generated accordingly.

Billing: Invoicing/billing process will use the charges generated from rating engine i.e. discounts and tax calculation and posting them into accounts. Billing engine should also be flexible to support prorate rules while calculating the final invoice/bill.

]]> http://www.evapt.com/blog/agility-and-flexibility-in-rating-and-billing/feed/ http://www.evapt.com/blog/challenges-of-usage-metering-in-cloud-computing/ http://www.evapt.com/blog/challenges-of-usage-metering-in-cloud-computing/#comments Fri, 12 Mar 2010 12:39:25 +0000 djandhya http://www.evapt.com/wordpress/?p=189 Whose challenge is this ? Marketing team is coming up with innovative price plans, Sales is aggressive in acquiring customers, Technical team is provisioning services, Customer is availing every option of service extensively but end of the month, usage metering , calculation and invoicing !…..How do we do this? Is this a concern for every cloud computing provider ?

To have competitive edge and sustain in the cloud market place, cloud service providers are flexible in terms of their services, price plans or pricing structure which introduced the concept of Pay Per Use (PPU). But, one must not ignore the pains of a cloud service provider in tracking, collating and calculating the usage of each and every customer, applying respective rate plan, and generating a bill.

In addition to the usage based pricing parameters such as storage space, bandwidth consumption, computing cycles, number of users, modules, services, instances, downloads, alerts, hours etc, every cloud service provider has its own vertical specific usage based pricing charges e.g. in SaaS HRM vertical , they charge based on number of employees, or per month per user, Now the challenge here is cloud service provider has to have a continuous watch on the usage consumption of its customer(s) which may prevent from significant revenue loss. Alerting and allowing a customer on the usage limit (threshold) is again one such crucial business process. Cloud service provider follow a manual process or they have a tool in house developed to track such things. This exercise involves additional human resource or efforts to their operations .

Manual usage tracking is not much of a painful process for start-ups with less customers. However usage tracking process would become a challenging and painful process for the service providers with Large customer base. Hence cloud service provider should automate its usage tracking process and keep a weather eye on the individual customer’s usage consumption. This will reduce the revenue loss occurred in manual process.

eVapt has proven experience in collecting the usage records for cloud subscription service providers across the globe. eVapt has deployed its solution along with it’s Metering module which integrates with cloud service providers database servers / control panel /virtualization platform to collect the usage detailed records (UDRs). This will collect data that is in logfiles, databases or can run scripts written in Java to collect data. The Metering component in eVapt allows collections of multiple usage type and accurate processing of the same. This will plug the loss of revenues through accurate usage collection and processing.

Service providers are more competitive in offering modular packages such as Bronze, Gold, Platinum with additional services topping on the higher packages and Pay as you go services in order to suffice the market requirement. Though services are offered across the globe, they should support local currencies or a single standard currency.

Service provider system should have the option to scale up and scale down the services with respect to the market. Flexible service plans such as region and customer specific packages, dynamic pricing, lower monthly fixed plus usage based charges, long term contracts exclude or include different tax rates and support based services are few important factors which enhances the customer acquisition rate.

A service provider system should be flexible enough to allow customer to avail the service, even after exceeding the usage limit and charge them on the overages rather than terminating the service. This results in less efforts in customer retention process and more concentration of customer acquisition .

Some more scenarios where service provider’s system should support.

• Automates in changing the customer package on a future date.
• Override the existing price and define a new price for the same price plan.

]]> http://www.evapt.com/blog/dynamics-of-cloud-service-plans-and-pricing/feed/ http://www.evapt.com/blog/cloud-solution-fitting-into-the-jigsaw-of-the-current-it-eco-system/ http://www.evapt.com/blog/cloud-solution-fitting-into-the-jigsaw-of-the-current-it-eco-system/#comments Wed, 03 Feb 2010 07:14:56 +0000 djandhya http://www.evapt.com/wordpress/?p=177 We have seen a significant increase in cloud solution adaption during the financial crises period. Customers / users are now more cautious in evaluating the cloud solutions. In addition to the adaptability, user friendly and scalable criteria, organizations are now more concerned about any third party system’s capability in interacting with the existing solutions in the eco-system. Where as the eco-system may have few home grown solutions, standalone applications, third party systems, back office solutions etc.,

Opting a cloud business application affects all the areas of an organization, from sales & marketing, technical, operational and till customer support. An integrated cloud system should ensure that there is no redundancy in data, yet without compromising on its security. So System should have a flexible architecture which ensures integration with external systems and internal systems of the organization. And the overall system should be tightly integrated resulting in enriching the value of their offerings through the synergy of functionality brought together on these platforms.

Though there are good number solution providers aware of this fact, still few of the solutions offered to Cloud Business are not fully geared up in delivering these promises or expectations to their customers.

As we all are familiar that, Customer acquisition is one of the important phases in the business process. There are certain best practices to increase the customer acquisition rate and reduce churn. Streamlining customer acquisition process will boost the sales of any cloud service provider.

1. Trial Sign-up Process:

Cloud computing enabled users or end customers with Try & Buy model which gives an option to sign up for a Trial period, evaluate and go for commercial contract. Cloud service provider should have a system in place which allows them to define a trial plan and activate their access. The system should automate the life-cycle of a Trial User such as trial plan activation, providing limited/controlled access to the service, deactivation of the trial services based on the trail period expiration.

2. Effective follow-up :

Cloud service provider should communicate to its Trial Users effectively in advance to convert them into Paid Users . Sending regular communications will help in keeping the trial users in engage and explore to the additional & attractive services by opting for the paid subscription which will result in maximizing the cloud service provider’s revenue.

Cloud service provider should have a system which provide the list of Trial Users whose access is about to expire . System should send regular communication on the account expiry date and other promotional service offerings.

3. Contract sign-up & tailor made plans

It is very challenging activity for cloud service provider to sign-up a commercial contract with its customers. In addition to the plans or packages offered by cloud service provider, customers will have their own plans, service requirement and contract terms during contract negotiation. Cloud service provider should meet their customer requirements by singing up tailor made contract. Cloud service provider system should be able to define flexible service packages, plans, pricing & contract terms.

Cloud Service providers should provide customers, the choice to utilize their preferred services. Which not only reduces the churn rate substantially but also retains high value and profitable customers. With this, service provider can experience increase in overall organization profitability. Cloud service providers should have a Business Support System and Monetization platform, which streamlines the above discussed customer acquisition process.

eVapt, a customer management, metering & billing solution for Cloud computing, SaaS, PaaS, IaaS, and On-Demand businesses. This billing and monetization platform available on-demand and enables service providers to both automate their back office operations, as well as support more sophisticated pricing and billing models. eVapt is revolutionizing the way Cloud businesses can run and manage billing. In addition to dramatically simplifying a service provider’s billing, payments and subscription management capabilities, eVapt can also offer additional benefits to other parts of a service provider’s organization such as Marketing, Finance & Accounting, Sales.

Though SaaS and On-Demand model allowed operators to manage the downturn with no Capex and lower Opex, but now its time for solution providers to concentrate on improved quality and further value add offering. Otherwise, competition may take extra edge and Operators / Users may again go back to enterprise solutions, by leaving SaaS as stopgap arrangement.

The key is to win relationships with quality service delivery and not just contracts.

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