By Chris Couch, COO of Transverse
The cloud makes it possible for companies of all sizes to leverage sophisticated rating, charging and billing capabilities without multi-million-dollar price tags for licenses, integration and maintenance. Though cost avoidance is often an initial driver, the desire to push business models to the next level using “billing” as a strategic asset for anticipating, recognizing and responding to the dynamics of people often becomes the real catalyst for adopting Cloud Billing. There are many claims about ‘billing in the cloud’ and its benefits, but it is necessary for businesses to look under the hood to ensure a Cloud Billing Solution will deliver what they need.
Cloud Billing Fundamentals
Unless a business has a static business model where few changes are made to products and pricing, it is important to seek out more than simple invoicing and payment capabilities (readily available from companies like PayPal, Chargify or Zuora). An overly simplistic solution will mean trouble when it comes time to modify product or marketing strategies, or when growth requires billing to scale quickly.
There are a number of fundamental capabilities one should expect in a Cloud Billing solution, not only to capture revenue, but also to cultivate relationships that build ARPU and customer loyalty. These include:
• Data Mapping and Transformation
• Process orchestration
• Customer Management
• Product Management
• Billing Management
• Payment Management
• Internet Of Things – Device and Service Management
• Business Intelligence
• Audit & Control
• SOA API (SOAP/REST)
This range of capabilities also points to the need for billing to interact and share data with a company’s key business processes. Cloud Billing solutions should be able to link readily into existing systems, processes, and applications, such as:
• Sales Automation (SugarCRM, NetSuite, Salesforce);
• CRM Systems (Microsoft Dynamics CRM, Salesforce);
• Enterprise/On-premise Systems (InstallShield, IBM, Sun, Oracle, SAP);
• Platforms (Rackspace, Google, Amazon)
• Accounting Systems(Netsuite, Intacct, corporate accounting);
• Social Networking (Twitter, Facebook, Chatter, g+);
• Services and applications.
Integration with these core systems requires considerable expertise and knowledge. The ability to build data stores, processes, tools, functions, applications, interfaces and adapters is critical to business flexibility and scale. Solutions that cannot support this level of business integration can create problems like errors, broken processes, lost data, and customer frustration in the near term, thus offsetting any cost savings they might offer as a result of being less sophisticated.
Cultivating Customer Relationships
The ability to build multiple, combined revenue streams for each customer is important for long term growth, diversification, and business sustainability. Companies like Apple, Skype, Google, Amazon, Car2Go, MailChimp demonstrate that when customers are engaged in more “activities” they are less likely to churn and more likely to try new activities that can generate revenue.
“Activities” can be virtually anything marketing dreams up and are things which can be measured and hence monetized. For example, a content download is an “activity” as is the creation of a new object in a SaaS application, the scan of a QR code, or a coupon redemption. A Cloud Billing solution can drive growth by encouraging and monetizing activities if it can manage both the Order-to-Cash and Activity-to-Cash™ cycles.
The Order-To-Cash cycle is where a relationship with the customer is established.
It is very effective in opening a relationship with the customer if an automated and seamless stream of processes takes place to manage Accounts, Orders, Activities and Entitlements, Billing & Invoicing, Payment Processing, Customer Care, and Collections.
The Activity-To-Cash™ cycle is where the relationship is expanded according to customers’ behaviors and preferences over time. It should nurture customer relationships forged in the Order-to-Cash cycle by tracking and managing the different activities in which customers engage and the resources necessary to make those activities possible.
Real Time Capabilities
To expand customer relationships in the Activity-to-Cash cycle, Cloud Billing should give companies the chance to create services dynamically. Doing so a Cloud Billing platform that can dig into real-time usage and event information to support informed decisions regarding how to further engage customers with services tailored to their preferences and changing circumstances. Digging into event and usage information enables the business to gain a greater understanding of how customers use their services.
As businesses learn more about their customers’ behaviors and usage, the Cloud Billing platform should enable a near-infinite number of “price levers,” which can be assembled and re-assembled according to the ways in which customers are engaging with services over various devices. It should allow the businesses to tie together different subscriptions, sign-up/activity/event fees, bundles, add-ons, incentives, and promotional products, all of which can be pieced together according to the ways in which customers are responding in the moment.
Achieving that kind of dynamic interaction and flexibility, however, requires that a Cloud Billing platform be able to manage multiple pre-billing processes and complex functions, like event handling and rating, in order to control usage and activities.
Cloud Billing must also be able to manage entitlements which authorize and authenticate whether a person is who he says, and to what services he should have access. The billing platform therefore must know – up-to-the-second in some cases – what a customer has purchased, where he is in the consumption of his subscribed services, and whether certain actions should be taken (e.g., advice-of-charge, balance checks, updates of allowances or reversal of events, suspension of accounts, and application of late payment fees and penalties).
Once the initial authorization, authentication and entitlements check is made, there is a series of processes that communicates to the rating engine whether the customer is authorized to consume, and still wants to proceed based on the information just provided regarding account balance, application of fees, and so forth. The rating engine must then apply the proper charge while recognizing whether payment has been made in real-time or will be paid after-the-fact. To assure a service is delivered and has performed as the customer expected, another series of complex processes must take place which makes integration of the Cloud Billing system with the business’ existing environment critical.
The bottom line is that the communications marketplace is becoming more dynamic in terms of the range of service offerings and the ways in which they are offered and provided to customers. As a result, more is asked of the billing process because it is so closely associated with authorization, payment, service delivery, and customer experience. If a Cloud Billing platform is going to serve as a strategic asset that enables competitive differentiation, it needs to go beyond basic recurring payment functionality and support the full customer relationship and experience that continues to emerge from this complex and dynamic marketplace.