Jeff Kaplan is founder of THINKstrategies, a strategic consulting firm focused on cloud computing and SaaS innovation. Kaplan has nearly 30 years of experience and recognized expertise in IT/network management, SaaS, cloud computing, managed services, telecommunications and outsourcing trends.

Gotransverse: We’ve heard a lot about the subscription economy, but we see the market quickly moving beyond simple subscriptions to consumption or usage-based models. Are you seeing this as well? What additional challenges does this pose?

JK: Absolutely. Business models continue to evolve as SaaS and other vendors compete for mindshare and wallet share in a world that is quickly evolving both in terms of consumer expectations and technology advancements. More and more consumers want to pay only for what they consume.

Creating the right kind of customer experience requires that the vendor satisfy their customers’ rapidly evolving needs. Satisfying these escalating expectations isn’t possible without the right kind of systems in place.

Gotransverse: Given the customer driven world we live in, how important is it to not just have a functional billing platform but also an intelligent billing platform? And what are the key features for an intelligent billing platform?

JK: Today’s on-demand world has pushed aside the idea of companies being able to sell and maintain a static set of products and services with a simple pricing schedule.

Instead, companies must be equipped to handle a variety of pricing schemes that are constantly being adjusted to respond to changing market dynamics and operational requirements.

Billing platforms need to be agile enough to handle this rapidly fluctuating environment. This means the billing platforms must also be intelligent enough to rate transactions, or “events,” at scale and accurately bill for various kinds of pricing models, including consumption-based models and surge pricing mechanisms.

Gotransverse: How does a consumption-based billing model differ from traditional billing models? Are there unique challenges and considerations for adopting these models?

JK: In the past, companies could sell a product to a customer and demand payment whether the customer utilized the product or not.

In today’s on-demand world, customers prefer to only pay for what they intend to consume. Part of this change in customer preference has been driven by the tech world which has made it easy for us to order products and services online, or for companies to acquire computing resources via the Cloud.

This new world reality has made it necessary for an increasing number of companies to adopt consumption-based pricing models and implement a new generation of billing system to support them. There can be myriad challenges starting with how to conceive of new business models, determining what consumers are willing to pay for, how to migrate customers to new plans, and more. Finding a billing vendor and/or partner who’s “been there and done that” can make a big difference.

Today’s best-in-class billing platform must be dynamic enough to make quick changes and to deliver at scale across multiple geographies. The platform must also be capable to address yet-to-be conceived-of billing models in the future.

Gotransverse: What is your advice to organizations considering the move from perpetual licenses to subscription + consumption-based business models?

JK: Many organizations fail to appreciate the importance of having the right systems in place to support subscription and consumption-based business models.

In today’s increasingly competitive marketplace, creating a frictionless customer experience is essential. David C. Edelman and Marc Singer suggested in their November 2015 article in the Harvard Business Review entitled Competing on Customer Journeys that, “Rather than merely reacting to the journeys that consumers themselves devise, companies are shaping their paths, leading rather than following. Marketers are increasingly managing journeys as they would any product. Journeys are thus becoming central to the customer’s experience of a brand—and as important as the products themselves in providing competitive advantage.”

THINKstrategies believes this is particularly true as a result of the proliferation of SaaS, Cloud and various mobile apps which promise customers easy access to products and services on-demand.

Having an intelligent and agile billing system which can accommodate customers’ evolving product and service needs in a subscription and consumption business model is critical to business success.

Gotransverse: Your recent whitepaper discusses the impact SaaS business models have on the customer or experience. Can you tell us a bit about that?

JK: I believe the success of SaaS was the catalyst that triggered the explosive growth of other Cloud-based services. SaaS vendors proved that corporations, as well as consumers, were looking for pay-as-you-go alternatives to traditional products and services.

However, too many SaaS and other subscription-oriented vendors overlook the critical importance of their billing system in creating a positive customer experience and ensuring their ultimate success.

SaaS vendors often dwell on the packaging, pricing and positioning of their products and services. But, if they don’t employ a billing system that can enable their customers to quickly and easily transact business, the SaaS vendors will not be able to successfully execute their go-to- market strategies and are doomed to failure. Having the right billing solution in place can enhance the customer experience in number of ways.

Here are a couple of examples which we identified in our whitepaper entitled Is Your SaaS Billing System Sabotaging Your Customers’ Experience?:

  • Price Enablement: This is the most obvious way that a billing system ensures a positive customer experience is by enabling the vendor to craft appealing pricing schemes and provide an easy-to-use purchase mechanism for their solutions.
  • Transparency: Customers are far more educated that their predecessors in the legacy, on-premise software environment. A key ingredient in the SaaS business model is creating simple, easy-to-understand pricing options that can be publicly displayed to satisfy the needs of an increasingly demanding and educated buyer.
  • Frictionless Transactions: An essential aspect of every SaaS offering is the ease-of-acquisition of the solutions. The ability to procure a SaaS solution easily online is a powerful way of delivering a positive customer experience. Implementing a billing system that makes it easy to acquire the vendor’s offering creates a positive customer experience and gives the vendor a competitive advantage.

For more examples of ways an intelligent billing system can enhance your customers’ experience, download the full whitepaper Is Your SaaS Billing System Sabotaging Your Customer’s Experience.

Clare Corriveau is the Director of Marketing at Gotransverse. An award winning marketer, Clare has built her career in SaaS and demand generation. Prior to joining Gotransverse, Clare oversaw North American prospect demand generation at Blackbaud. When she’s not kicking SaaS in marketer-mode, you can find her spending time with her husband and kids, hiking with her pup Pippa and cheering on Michigan State.