The beauty of On Demand Services is that, you can access and avail service any time you need, but for premium ones you need to pay for it.  There are also challenges in maintaining these kind of services, as a corporate if you have On Demand Services these should be accessible by your customers at any time through internet and these customer can be from various region and from a region there might be different types of customers (Sex, Age, etc) accessing the service and so you need deliver the appropriate content based on parameters such as region, customer profile, etc. There are content Management systems (CMS) available which can index the content based on parameters and store it, qualify the request for content based on parameters such as region, customer profile, etc and provision the appropriate content.  So, Content Delivery is managed through these systems but on pricing part, On Demand Service Provider might come up with different prices for the same content in different region and also packaging of services using various combinations of services as promotional activity and further more invoicing and collecting the payments, before provisioning of the content. CMS are not capable of packaging & pricing of the services, invoicing & payments collection, this part can be handled by Billing Systems.

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

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Principle of Subscription Management Business Model - “Transforming Onetime Revenue to Recurring Revenue”. This lured many corporate and even industries to shape, offer and buy their services on subscription basis by the customer. Many (companies) turned to subscription model to -(leverage on) the advantages embedded in the principle  such as business continuity (Financially), brand and customer loyalty, up selling, revenues from subscription sale (value) greater than Onetime, etc. Customers prefer to buy product or service on subscription basis as it eases the payment for expensive items, saves time in case of frequently purchased items, etc. This Model fetches advantage for both the customer and service provider.

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.

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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.

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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.

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“Pick what you want” is the mantra that made cloud service providers to stay ahead in the competitive cloud arena. The “On-demand” services offered by cloud service providers are now more dynamically availed by customers. Based on the usage analytics, cloud service providers have to offer new exciting plans to keep customer happy and to get competitive advantage. To meet such requirements of the market dynamics, cloud service providers have to come-up with new promising plans that enhances customer stickiness, sign-up for long term contracts and engages them to avail services continuously.

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.

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