Tuesday, 22 August 2017

Cloud Billing to drive subscription revolution

Cerillion Technologies
Tuesday 18 February 14

A new survey by Cerillion Technologies, polling the views of more than 200 senior IT professionals across a broad range of industry verticals, has revealed that more than half of all businesses today (53%) are still using either an in-house-developed system or manual processes to bill their customers. At the same time, the results highlight a clear shift in the way products and services are sold: away from traditional one-off product sales towards a more flexible pricing model based on subscriptions and usage. One-off pricing models are currently used by 84% of organisations but the research shows that this proportion is set to fall to 51% in the future…

A new survey by Cerillion Technologies, polling the views of more than 200 senior IT professionals across a broad range of industry verticals, has revealed that more than half of all businesses today (53%) are still using either an in-house-developed system or manual processes to bill their customers.

At the same time, the results highlight a clear shift in the way products and services are sold: away from traditional one-off product sales towards a more flexible pricing model based on subscriptions and usage. One-off pricing models are currently used by 84% of organisations but the research shows that this proportion is set to fall to 51% in the future. In contrast, new pricing initiatives built around an on-going service relationship are growing steadily, including subscriptions, pay-per-use and freemium pricing models.

“Today, we are experiencing a shift in the way consumers purchase goods and services as part of the subscription revolution. This is a fundamental change in the kinds of pricing models businesses are using in order to monetise service offerings and drive recurring revenue,” says Louis Hall, CEO, Cerillion Technologies. “This process is set to accelerate as revenue models mature and the need for innovative pricing and product packaging to differentiate and create value in customer relationships becomes more acute.”

“Unfortunately, in-house systems are typically not agile or sophisticated enough to handle this transition and manual processes cannot scale,” Hall continues. “That’s why these new business models are perfectly complemented by the rise of enterprise cloud billing solutions. This is an approach which can deliver flexibility and agility for businesses in mixing and matching service and usage-based pricing models, while enabling them to quickly set up and start billing for a new service without the need for any infrastructure or upfront licence fees.”

In line with this, the survey results paint a picture of a cloud billing market about to undergo rapid growth. It is currently relatively small in the UK, with just 4% of survey respondents using a cloud billing system or Software-as-a-Service (SaaS) approach today. However, a further 11% say they are using a managed service - and with cloud penetration generally on the rise - Cerillion foresees dynamic growth in the cloud billing market as businesses strive to meet the demands of the new subscription-based economy.

According to Hall, “agility, flexibility and matching products to the market’s demands are key. This is the same both for small businesses or start-ups looking to get a foothold in the market by introducing new services quickly and cost-effectively, and for more established organisations wanting to spread their wings and expand into new markets or geographies. Working in the cloud provides that – and any smart business should be looking to bill in this way.”

The survey also identified cost savings as the biggest perceived benefit of cloud billing systems. This attribute was highlighted by 37% of the sample and was most strongly supported by respondents in the manufacturing (59%) and telecommunications (47%) sectors.

Cost savings are clearly a major attraction for large companies (1,000+ employees), in particular, where 69% currently use on-premise enterprise software and 85% identified reduced cost as a key benefit to be derived from cloud billing. Cost saving appears to be much less important for smaller businesses which are motivated more by wanting to introduce a structured approach to billing and ensuring the information they need to drive their pricing strategy is easily accessible.

Indeed, in the survey as a whole, “accessibility of billing information from anywhere”, was cited by 31% and widely seen as key in driving enhanced competitiveness in an increasingly crowded marketplace. This is seen as particularly important in insurance, with 64% of respondents referencing it, followed closely by telecommunications at 60% and banking and finance, with 56% of respondents referencing it.

The survey also revealed that proven billing expertise and having a track record of delivery is the characteristic that businesses most look for in their cloud billing provider with 29% of respondents referencing it.

“At Cerillion, we are well placed to deliver on these expectations. Unlike our competitors, we bring a rich heritage of enterprise billing experience stretching back over 20 years to the cloud billing arena,” Hall adds. ”This is the foundation upon which we have built Cerillion Skyline, our powerful Software-as-a-Service (SaaS) billing application for the next generation of subscription and usage-based services.”

Please visit http://www.cerillionskyline.com/en/blog/posts/2014/february-2014/the-rise-of-cloud-billing-[infographic]/ to download the related Infographic and to request the Cerillion white paper, “The Rise of Cloud Billing – Driver of Business Agility in the New Service-based Economy”.


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