We’ve been trying to define Cloud-based billing terminology better, but we also need to look at who’s using some of the solutions. Cloud-billing, or really BaaS (because I happen to think that reflects something more sophisticated than lightweight billing for recurring subscriptions) isn’t just for telcos. Now, if a telco adopts a BaaS solution, that probably speaks pretty well to its robustness and capabilities. But, the nature of the cloud-billing space is that it cuts horizontally across a variety of vertical industries, their emerging digital services segments, and the horizontally oriented cloud-based solution providers who aim to serve them. The companies that use Cloud/SaaS/BaaS billing solutions (like I said, we are still working on the definitions) are intriguing to examine because its a sudden increase in their product and service complexity and need to scale that is pushing them into the market for BaaS solutions.
It was announced this week that DemandWare will replace its existing billing system with Tranverse’s TRACT BaaS solution. This is interesting because DemandWare is a big player in online commerce. Many of its customers are huge brands in apparel and other retail oriented merchandise. So, DemandWare helps these big companies go online and direct-to-consumer by taking care of their eCommerce needs. That spans the shopping experience on the front end and their product catalogs in the middle to payments and tax on the back end.
A company like DemandWare has a somewhat diverse business – various combinations of its cloud-based software solutions, professional services, business consulting, training, support, and so forth. So, its billing needs end up being pretty sophisticated and exposed to a lot of change as clients take up more services, expand their usage, go through their own online makeovers, and so forth. More and more we’re seeing companies like this running into challenges where they drown in their own billing needs as they grow (even if they do something kind of like billing for their own customers). So, this is one good example of BaaS being adopted by a company that specializes in supporting an established vertical’s digital business models which are, as it happens, rapidly becoming more complex.
We’re seeing a lot of companies emerge in what’s also called the “cloud services” market. When you look more closely you see that these companies provide core, IT-related business services to companies across many different industries. PT Infinys System out of Indonesia is a Microsoft Gold Certified partner that provides application hosting and access to business tools like Microsoft Exchange and Windows server out of its data centers. As enterprises procure more of these types of applications in offsite, or cloud, models, companies like PT Infinys are offering more solutions and more combinations of them. Their markets are also becoming more crowded and competitive. So, it makes sense that their businesses are rapidly becoming more complex – they’re not just hosting websites and email servers anymore. In response to this, PT Infinys System replaced its billing server with MetraTech’s Metanga last May. This week, MetraTech announced that it added more pricing and product management capabilities to Metanga. PT Infinys was quoted as having adopted them in order to do more sophisticated and custom service pricing and bundling for their customers on-the-fly, with the ability the apply new pricing and other changes in mid-cycle and to past bills as well. A company like this is sort of Telco-like, at least in the sense that Telcos increasingly offer many similar data center services (and sometimes struggle to bill cleanly for them). More importantly, PT Infinys System is growing in size and complexity, so the BaaS market offers it some needed answers.
Similarly, Info-Frame, a cloud-based, project resource management solution provider to the banking industry, based in Hungary, announced last August that it had adopted Metanga essentially because it’s business is also becoming more complicated. Sure, it provides a timesheet management solution for complex project accounting. But, as many such companies find, the more they grow, the more their customers want additional services, integrations, and customizations to their products. So, their product catalogs and billing needs become more complex. They quickly outgrow whatever process they were using when their business was simpler. In response, they see a maturing market for BaaS solutions and turn to it for help. So, here’s another example of a tech-oriented company serving a major, established vertical, whose billing requirements suddenly look something like a Telco’s – at the least, they need to bill for a lot of different flavors of services on an ongoing basis and do so with great accuracy. Much like Telcos, they also need to become much better at change management in the middle of the billing cycle.
A Utility in the MVNO Business
Okay, so an MVNO is – in some sense – a sort of Telco. The difference here is that RedKnee announced last week that a large gas and electric utility in the EMEA region is adopting RedKnee’s BaaS offering to launch its MVNO business. Now, MVNO businesses are much more complex than they are often credited (I’ve got a story brewing on this subject…stay tuned). And it kind of makes sense that, given the V for Virtual in MVNO, that a BaaS solution would make a lot of sense.
This deal, though, strikes me as different because we’re talking about a utility- a company that is accustomed to scale. So, while the examples above focused on complexity, let’s consider the scalabilty factor for a moment. An operation like this probably isn’t aiming to win 10,000 subscribers and generate enough cash flow for the founder to buy a yacht and a McMansion. These guys – though so far unnamed – probably have millions of existing customers. I’ll bet they’ve done the math on just how big they need to grow this MVNO to make it a worthwhile venture into new territory (i.e. from utility to wireless). With that forward-looking agenda in mind, they’ve chosen a BaaS solution for the long run from a company that made a pretty big statement in the past year in regards to its staying power (i.e. NSN acquisition).
Why does this matter to the Telco industry?
The OSS/BSS community has been screeching at Telcos for years that they should export their expertise to other industries who need it increasingly as their online and digital services initiatives grow (or even become the core of their evolving businesses). The examples above each involve BaaS providers with Telco roots who have moved beyond Telco to serve clients across multiple verticals. We will continue to see this trend evolve. So, as we work to define, or redefine, what we mean by things like BaaS or Cloud-billing (or whatever we call it next), let’s keep in mind that the addressable market for these things goes well beyond our Telco home base. Let’s also keep in mind that increasing product complexity is a common theme across industries; the ability to manage that complexity is what seems to separate the wolves (BaaS solutions) from the sheep (subscription-centric cloud billing).
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