Is the Cloud fuelling a pricing revolution?

When Alexander McCall Smith finished his latest novel, ‘The Minor Adjustment Beauty Salon,’ he tweeted “the sky has been cloudless, quite empty, and yet I managed to save my manuscript to the Cloud; quite amazing…”

The Cloud is quite amazing. If you ask Peter Cochrane, futurologist and one time CTO of BT, he will tell you. To him, it is a question of scale. The internet cannot support 9 billion connections all demanding data. The Cloud, according to Cochrane can. It is our only hope.

So why is everybody not doing everything in the Cloud and delivering everything from the Cloud? A cross industry survey carried out by Censuswide and commissioned by Cloud billing specialist Cerillion aims to answer that question.

The survey polled 200 IT professionals in the UK, across a range of industries, the largest being manufacturing; retail; banking and finance and media.

The good news is that four percent of those surveyed are already using Cloud billing and a further eight percent have plans to do so. On top of that a further 11 percent use managed services for their billing.


That said, it seems that while that points to a huge potential it also points to barriers to adoption. The biggest of these barriers, according to the survey and Cerillion’s white paper, is that companies are happy with their current in-house system. Fully 60 percent cited this as a reason for not adopting and another 21 percent were too busy to fully investigate the options. An encouraging 15 percent thought that security was still an issue – which is a lot less of a concern than a couple of years ago.

But being too busy may not be the best excuse – the time to think about Cloud billing is now, in order to support new and quickly emerging business models. Currently, 84 percent of respondents are using one-off pricing models and this is set to decrease to 51 percent in the near future. As the relationship with the customer becomes the keystone of any strategy, more agile, intuitive and perceptive pricing will become commonplace. The rise of subscriptions, pay-per-use and freemium models will dominate.

It is clear that new pricing models will need new, agile engines to provide that agility. Add to this the advantages of not needing to invest in infrastructure and having upgrades available immediately. These are compelling arguments across the board, while for large enterprises, cost is the key driver. For many reasons Cloud is the obvious answer.

There is a problem, though, in that the definitions of Cloud are, to use an obvious pun, foggy at best. In the same way that many billing companies became instant revenue assurance companies in the early 2000s – when telecoms was suffering its own recession – many companies are offering ‘cloud based services.’ But what, actually, does Cloud billing mean?

First, a true cloud billing system “does not just reside in the cloud (although this is a requirement); it must also be designed as a native Software as a Service (SaaS) application,” says Cerillion CEO Louis Hall. “It should, of course, be able to bill for cloud services, but should also be applicable to any digital and non-digital products and services.” And digital services, to state the obvious, are on the rise. Every sector that took part in the survey plans to significantly increase its digital products and services over the next few years.

As well as defining what a Cloud based system is, it is also useful to define what a Cloud based system is not. “A Cloud billing system is not just the same old enterprise system installed on an IaaS platform and charged on a monthly basis,” according to Dominic Smith, Marketing Director at Cerillion. “Some vendors are doing this to ‘cloudwash’ their applications in an effort to stay relevant, but this is just hosted billing by a different name. And of course customers will still face the lengthy implementation and integration projects, as well as the cost of maintaining and upgrading their system in the future.” A native SaaS application avoids these pitfalls.

In support of the trend of people being able to access any information from any device anywhere, which is now mainstream, the billing functionalities now need to do the same. In the survey, 64 percent of insurance companies, 60 percent of telecoms companies and 56 percent of banking and finance companies said that the ability to access their billing information on any device was a critical factor.

Cloud billing and the wider issues around Cloud are clearly high on the agenda for almost all industries, and hopefully will be for those 21 percent who are too busy fighting fires to evaluate the new generation of fire extinguishers. On paper a Cloud based solution works for many reasons and solves many problems – from cost to flexibility to transferring capex to opex.

And who would you choose for your Cloud billing provider?

As pricing becomes more sophisticated, some simple solutions that are perfect for a simple business model will begin to feel the strain. If, ultimately, your business will need to support a range of pricing options then a company whose pedigree is complex rating and billing combinations would definitely be worth a look. In the survey, almost 30 percent agreed with this argument, with 19 percent needing excellent customer service and the same number needing industry specific knowledge.

While this particular survey is focused on the UK, it is still relevant and applicable to many other markets. What it shows is that there is huge potential in the Cloud billing space but that careful investigation is needed to make sure that the definition of Cloud matches your needs. It will be interesting to see how soon – or if – those who are happy with their in-house systems begin to see that they need more flexibility to support their evolving business models.

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About Alex Leslie 400 Articles
Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet.

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