Cloud Billing: How Businesses Can Profit From New Payment Models

Cloud Billing

Being ‘first to market’ has always been considered an advantage. However, more recently, the barriers to entry for many markets have been lowered by digitisation, and it’s not unusual for another business to quickly mimic the first-mover’s product or service, but offer it at a cheaper price.

This certainly appears to be the case in the tech world. But, of course innovation hasn’t lost its power. It just means that the original disrupter needs to come up with a new tweak, addition or special offer to regain their ground. Today, in fact, everybody is accelerating their product and service development to keep the market engaged – and continuing to buy or subscribe.

What is seldom discussed is the cost of innovation. Yet few businesses have the luxury of endless resources to invest in new products and services. If the best way for a market invader to gain a foothold is simply to undercut their rival on price, this intensifies the pressure not only to innovate more – but also to innovate more cheaply.

This challenge has become more acute as an increasing number of businesses become “as-a-service” providers or change to a subscription business model. Barriers to entering this digital services market are much lower than, for example, the physical goods market. No sooner than a business has launched one service, it must know what’s coming next and how it will continue to evolve its offering to stay one step ahead of the competition.

In the digital services world this won’t necessarily involve an entirely new service – it could be a new add-on, bundle, offer or pricing option. But it does involve pushing boundaries and the problem with this is that it can be difficult to predict what will work and what won’t.

Businesses need a way to experiment. But with this often comes failure – still not an option for many organisations because it spells further expense. However, finding a winning formula means learning from mistakes and quickly adapting offerings to the demands of a dynamic market.

So how can this be done without overheads going through the roof? A good proportion of the cost of trying out and launching new services lies not so much at the ideas stage, however expensive hiring the top talent might be. It comes from continually changing processes in the back office, especially when using legacy systems not known for their agility.

The cloud has revolutionised many areas of business – and this is no exception. There’s an old adage that goes, “if you can’t bill for it, you don’t have a business” – and there is a certain irony in the fact that these days there are some innovations that never get off the ground, not through a lack of vision or creativity, but because of difficulties with inflexible billing processes. This is particularly the case in this new “everything-as-a-service” environment because of the intensified need to include additional services, create special offers and build original bundles.

This is where the latest generation of cloud billing systems can really make a difference, however we need to be crystal clear about what cloud billing really means. A true cloud billing system doesn’t just reside in the cloud (although this is a requirement as its name suggests), it must also be designed as a native software-as-a-service (SaaS) application. It should, of course, be able to bill for cloud services, but should equally be applicable to any digital or non-digital products and services.

With cloud technology of course, users pay only for what they use, and can be up and running in a matter of days or weeks rather than being bound by lengthy integration projects and high capital expenditure. But the real beauty of these systems as far as digital services are concerned is their flexibility. They make it easy to make changes, to try various iterations of an idea to see what works best, and to quickly scale up in order to deal with growth or big peaks of administration, for example when managing annual renewals. Furthermore, using cloud billing to automate processes will increase your billing accuracy and efficiency.

All this can save significant sums of money; a point endorsed by a recent online survey which polled the views of 200 senior IT professionals. Cost savings were identified as the biggest perceived benefit of cloud billing systems. This was particularly the case for large companies (1,000+ employees), with 85% of those currently using on-premise systems identifying reduced cost as a key benefit of cloud billing.

The ongoing migration to subscriptions is changing the face of many commercial fields. The payment model has many benefits – not least the promise of recurring revenue and an opportunity to get closer to customers. But anyone who wants to take part in it needs to act urgently. Cloud billing has a vital role to play in turning billing from a barrier between innovation and success, into an enabler of business innovation and revenue growth.

Louis Hall is the CEO of Cerillion Technologies. Louis is a co-founder of Cerillion Technologies and led the management buyout of the original business from Logica in 1999. Louis has been in the enterprise software industry for over 25 years and has held a variety of positions in management, sales, product management, design, development and delivery. Prior to joining Cerillion Technologies, Louis was the business unit manager for Logica’s in-house customer care and billing product line.