Challenges and Best Practices for Adopting Intelligent Billing and Agile Monetization Strategies
I was recently in Amsterdam and was invited to join a panel at the MGI Research Monetization 9 event. The audience was an interesting mix of technology, business and talent acquisition leaders from around the world which made for a powerful day of collaborating around the ideas of monetization. Attendees ranged from CXOs and senior leaders of leading global companies such as Experian and eBay, to major telecom operators – all looking to effectively monetize new products and services.
What we all had in common was a passion for continuing to drive technology to innovative places as we solve complex real-world challenges and deliver on the promise of more meaningful customer interactions through increasingly sophisticated cloud-based solutions.
We’ve all watched this confluence of disruptive forces around digital transformation continue to make headlines as companies large and small work to streamline operations, leverage virtual environments and workforces, harness the power of the cloud and deliver content, services and products on a “pay as you go” model for increasingly more savvy end consumers.
I’d like to share some of the topics that really resonated with what we’re seeing here at goTransverse as we help companies navigate through these challenges, specifically those around agile, cloud billing.
Q: What are the biggest challenges to organizations adopting agile billing? What’s holding people back?
We’ve found that, at the core, many organizations don’t have anyone with true billing domain expertise. They have amazing IT teams, but no one who grew up really solving tough billing challenges. Hence, they don’t know what they don’t know, and in some cases have a very limited view of what a powerful billing and rating engine (to process and price complex usage data) can do for their top and bottom line. It’s a significant missed opportunity for competitive advantage, in my opinion. There are too many trying to do too much with legacy systems that can’t support them and they’re missing the intelligent billing boat all together. Modern consumers want modern ways to buy what you offer, and that takes reimagined, modern billing solutions.
Even understanding and acknowledging that it is the billing system that is holding them back can be an initial stumbling block. If organizations don’t know what their billing platform should be doing for them, and all the ways it should be helping them produce both top-line revenue (getting products and services to market faster, leveraging customer behavior and usage data to better serve consumers etc.) and bottom-line saving (automating manual processes, eliminating errors, and stopping revenue leakage, etc.) then they can’t begin to fix the problem effectively. It’s important to work with a billing and agile monetization provider who’s “been there, done that” and can offer best practices as it relates to your unique requirements – not lock you into the only way their system operates. We see this a lot – companies that have to adjust their business models, after the fact, to conform to the billing vendor’s system limitations. This general results in costly, slow failures.
We also see companies that recognize that they need a new platform, but their instinct is to design the requirements to mimic the older, more limited system (or systems) that are being replaced. They implement numerous “grandfathered” products and/or services instead of architecting new products and offers. The cost to implement these old schemas can far exceed incenting users to switch to new pricing strategies.
Cloud billing solutions should enable you to go to market and serve your customers in ways that weren’t possible before. Partner with a billing and monetization team that can help you get started simply and profitably but can also help you scale in terms of the size of your business, geographies you cover and the variety of pricing and business models you’re able to deliver. Don’t limit yourself from the outset.
Q: What delineates the need for a simple subscription vs. more complex requirements? What should companies be mindful of as they think about their needs?
A: The answer here is similar to the one above in many ways. We find that the most important thing for companies to understand is this idea of future proofing. Many vendors can solve today’s problems, but companies need to ask themselves if the system is flexible and extensible enough for when their needs change. And it’s “when” their needs change, not “if” their needs will change. MGI Research reports that 60% of SaaS providers are currently working to develop subscription models that give customers more ways to buy. At the same time, only 20% have the right systems in place to implement a usage-based model. Even if you are offering simple subscriptions today, chances are the need to evolve to consumption-based models will come. And it might be sooner than you think.
Technology and choice will continue to create new types of demand and new competition for consumer dollars. Make sure your billing provider can deliver on even the most “out there” future state scenarios through configuration, not custom coding. Rearchitecting the system and all the associated inputs and outputs every time a change is needed is untenable and unnecessary if you choose your platform carefully.
The billing platform is the hub that underpins the entire quote-to-cash lifecycle and is a primary touch point with your end consumers. It needs to deliver on your business imperatives today and tomorrow.
Q: Configure Price Quote (CPQ) vs billing – Which comes first?
A: We get asked this a lot. The answer depends on the business challenge being faced. It is possible to implement CPQ first in a manner that can lead to costly constraints on the billing system further down the road, so the decision should be tackled very strategically. The first issue is to understand what you’re looking for a CPQ solution to do.
- If you need to be able to offer bundles and discounts, you should first look to understand if the billing and monetization system can handle those needs. Often, they can. We have many clients who realized they wouldn’t need the additional 20% functionality of a stand-alone CPQ after implementing goTransverse CPQ Essentials.
- The answer is similar with quoting. Some more advanced billing and monetization platforms can handle the quoting function as well, precluding the need for a separate CPQ.
- For very complex configurations, like those found in telecom, manufacturing, or warehousing, a stand-alone CPQ is often warranted.
Q: What are the ingredients for success, from your point of view, for organizations looking to adopt new monetization platforms? What are the characteristics of successful projects?
A: The key is to have an overall owner of the internal project who has end-to-end understanding of the people, processes and technology to get it done. They should have a holistic view of the impact the solution will have across the organization, and the support needed to drive the project and associated people and process changes with it. Often there is executive level sponsorship to help prioritize the billing project against other internal activities in motion or on deck. It can’t be treated as an IT replacement with no real change. The billing and monetization functions are business critical.
Next, a reasonable timeline and achievable business goals need to be set and agreed upon. When time frames are too flexible, scope tends to increase, and it can be difficult to complete the project. This can be costly in multiple ways. One way to mitigate this is to manage towards a “fast follower,” or second phase. The first phase must get finished before the second can be kicked off.
Finally, look for a vendor who is dedicated to making you successful quickly. We partner very closely with our clients to choose projects and phases that offer them accelerated speed to value, getting them up, running, and getting their feet wet as quickly out of the gate as possible.
If you are looking to evolve to new pricing strategies and business models or have questions about where or how to start thinking about it, let me know. I’d be happy to discuss it with you further.
Jim Messer, Founder & CEO