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.

Billing, Cloud computing, OSS, Pricing, SaaS, SaaS Monetization, Saas pricing billing system, Cloud, Cloud Billling, Cloud computing, customer care, Customer Retention, Pricing, pricing management, Recurring Billing System, Revenue Management, Revenue Maximization, SaaS, SaaS Billing, Saas pricing, Subscription Business Model, subscription management

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.

Cloud computing, Pricing, SaaS, SaaS Monetization, Saas pricing

“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.

Billing, Cloud computing, Pricing, SaaS, SaaS Monetization, Saas pricing

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.

Cloud computing, Economy, SaaS

Slowdown has created business needs for high level optimizations, for generating more output with lesser inputs & best utilization of existing resources(capital, assets & skills). Inventing innovative methods of selling products or simply repackaging solutions and services to combat slowdown opens a window of opportunity for existing players. For instance, small operators in telecom & pay media industry can opt for co-sharing resources, saving on huge capital investments. Similarly, Enterprise software solution providers, started offering their solution on hosted multi-tenancy model. Today, there are ample opportunities for Infrastructure sharing (passive infrastructure), subscribing to hosted applications & even outsourcing non-core functions. Another aspect is establishing long term, meaningful partnerships in business with vendors, suppliers & customers. When economy is in recession, every business has to go through almost similar challenges. When the ecosystem is strong & synergised, the impact is lesser.

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.

SaaS SaaS, SaaS Transition