Cloud-based agile billing solutions are on the rise, and companies moving to cloud-based, as-a-service offerings are finding that their billing platform doesn’t meet their needs. I discussed the issues around cloud billing in enterprises with William Schonbrun, chief customer officer of Monexa Services, Inc.
Andrew Dailey: How has the cloud changed the billing industry as a whole?
William Schonbrun: Cloud-based billing is a great equalizer. Suddenly small and midsize companies have access to the same powerful billing capabilities that were once only available to large, multibillion-dollar companies with access to significant resources.
Equally, for large organizations that aspire to the agility of a startup, cloud-based billing gives them the speed and agility that on-premises solutions can’t deliver. The cloud, and cloud-based billing, have completely turned the world of enterprise software on its ear.
This democratizing effect has important implications for billing. Regardless of the size of the organization, billing is a critical piece of support infrastructure that every company needs to get right in order to monetize their cloud or as-a-service offerings.
As more companies take advantage of the cloud to deliver new products and services, billing is not only a more complex endeavor but is also a key competitive differentiator. Being able to offer transparency, flexibility, and variability becomes essential.
With cloud-based billing systems, it no longer takes months or years and lots of customization to deliver what customers want. Cloud-based agile billing solutions are revolutionizing the billing industry — and at Monexa Services, it’s helping transform customers’ businesses.
Andrew Dailey: Customer needs are changing dramatically. How can companies make sure they are able to handle these needs? As chief customer officer, how do you stay close to the customer?
William Schonbrun: At Monexa, we try to anticipate customer needs through strategic conversations with clients about where their businesses are growing and how they are preparing to tackle market challenges. I spend a lot of time listening to clients and trying to help clients think not only about where their business is today, but where it could be tomorrow.
Progressive companies are beginning to view billing as a strategic imperative. It’s an essential tool to quickly respond to shifting customer demands. We’ve developed symbiotic relationships with our clients, which helps keep us in the loop. I’m constantly impressed by the amount of innovative thinking that’s being done around pricing and billing strategies by our clients.
Andrew Dailey: What are the key challenges you foresee in enterprise billing?
William Schonbrun: We’re definitely seeing a shift in how customers demand new products and services. Instead of companies leading with, “Here’s how we sell our products,” customers are saying, “Here’s how we’re prepared to buy your products.” So the first big challenge is the need to keep up with how customers are driving your enterprise billing strategy through their needs and wants.
Secondly, we see organizations struggling to figure out how to introduce more flexible pricing models and fit them into their existing billing world. They have no real idea of how to effectively facilitate flexible usage and subscription-based billing models.
A common (and costly) mistake is to try to mold recurring payment processes into a SKU-based billing model. It’s deceptive; you think you’re adding subscription billing capabilities, but that approach doesn’t provide the business with real agility.
Third, it is difficult to find talent that understands the rapidly evolving nature of enterprise billing and that is capable of translating that knowledge into new products and services pricing plans (and billing options) to meet the evolving customer demands.
For organizations that can source that talent, or find partners that bring deep domain expertise, billing goes from being a back-office cost of doing business to being a key enabler to launching new products and services.
We’re already seeing challenges across organizations and industries when it comes to pricing, and it’s having a real impact on a company’s ability to effectively adapt to market changes. Every customer we speak to in the market today started their journey to flexible pricing using an Excel spreadsheet because their ERP system couldn’t handle it. And spreadsheet upon spreadsheet is onerous and expensive.
Billing is now coming into its own because there is so much complexity to it. It has become such a significant piece of the enterprise discussion around monetizing new products and services. The good news is that companies can augment their existing systems and take advantage of new capabilities in a time frame that can’t be done in a traditional ERP system.
Andrew Dailey: What are the three things that CEOs and CFOs need to look for in a billing provider?
William Schonbrun: Agility is essential. Start with finding a partner that provides you with the greatest amount of pricing flexibility. It’s not just about recurring revenue or subscriptions or usage-based models. You want a solution that can handle all of those models. From setting up different recurring billing periods to offering discounts, launching promotions and releasing pricing plans in a variety of currencies, billing systems that are built to serve subscription-based and usage-based pricing models are absolutely crucial.
Second, integration is absolutely critical. Much of the billing process is part of an accounting and ERP system, and it will continue to be integrated with key enterprise processes like order to cash. Having a billing system today that can handle greater complexity and still be agile is very important, and it doesn’t mean you should have to replace your ERP system. Organizations can supplement their current accounting systems without having to replace them. Billing platforms need to be able to integrate with current systems. No vendor should ever tell a customer to replace anything.
Finally, we’re moving into this era of Big Data and analytics. Billing systems contain very valuable data and insights that can be translated into EBITDA improvements and easy revenue gains. A modern billing solution should provide a company with strong analytics and reporting to harvest those margin and revenue gains.
The billing system should also help companies think more strategically about pricing and revenue optimization. Instead of spreadsheet analysis that takes place outside of a billing or ERP system, billing systems should provide analytics and tools so executives can see what is working and what isn’t from a revenue-management perspective.
And, without a doubt, a company’s billing should be transparent and accountable to everyone— to employees, management and customers.
Andrew Dailey is a managing director of MGI Research. He leads the enterprise applications and billing solutions coverage for MGI. He has over 20 years of diversified technology and financial services experience as a software executive, industry analyst (Gartner) and advisor to Fortune 500 companies. Follow him on Twitter.