Rightscale – uses Aria to monetize cloud management services including subscriptions as well as “elastic” usage (for example Rightscale helps their customers automatically provision additional server instances off Amazon or other clouds based on peak loads). Digital bridge monetizes B2B telecommunications services with Aria including subscription and usage charges. AWS TruePower (formerly AWS TrueWind) provides wind and solar power research and consulting services to energy providers. Their services include site screening, due diligence, grid management, assessment of air current data and more. AWS TruePower uses Aria to automate billing both for subscription products (i.e. last wind data assessment) as well as custom consulting and research projects. Issuu is a leading digital publisher who does digital publishing for organizations like Google, The United Nations, Siemens, and even individual self-publishers. They use Aria to monetize a combination of subscription (i.e. monthly magazine) and usage based (i.e. per-periodical charges) fees.Zoominfo is a professional social networking site that’s somewhat similar to linkedin, except that information on contacts and connections is gathered automatically by web crawlers as opposed to being maintained by individuals. They automate both flat-rate subscription billing (i.e. $2,000 / year for a sales rep to be able to download a certain number of contacts) along with special charges (i.e. marketing guy wants a one-time download of 20,0000 telco contacts). Zattoo is a European “Hulu” – TV on-demand to PCs in Europe. They chose Aria to automate both subscription and one-time-use charges. Zoombak is a personal GPS device provider who provides small GPS devices for things like tracking your car (in case it gets stolen) or for putting in your kid’s backpack. They automate billing with Aria. KingsIsle makes the very popular and well-advertised Wizard101 family-friendly massively multiplayer online game. They automate monthly subscription billing through Aria and use Aria as a secure way to store credit cards for automated monthly processing.
Applications deliver value in many different ways. If you consider the way some traditional applications are monetized, there are many different measures of value beyond infrastructure. There’s no reason the cloud has to take away the ability for application developers to really monetize the value of their applications. Some applications like payment applications sometimes charge per transaction. Marketing automation tools sometimes charge fees based on the number of contact records in your database. Ads charge based on views and clicks. Lots of traditional applications have had segments by feature set – lite, premium, enterprise, etc.
Even people who are just getting started often envision a day when their service is offered by multiple resellers or other service providers. A simple example would be the packaged online e-mail services that get OEM’ed by hosting and domain providers. People like distribution models because they create market reach and distribution capacity. But they also create complexity. Are you planning to offer your products and services differently via different channels? Will it vary by geography? Do you want to sell your “high end” services directly, but have channels sell your “low end services?” How will you manage that? And how will you track it so that you can pay your partners? And will you have any knowledge of the end customer at all?
In today’s world, if someone signs up for your services online, they expect immediate access. It’s seems so simple from a user’s perspective, but it can actually be really complex from a vendor perspective. Have any of you ever purchased applications on the salesforceappexchange? We have. Aria once purchased a lead-sourcing service, as well as a campaign management service and a data cleansing service. We purchased them online, and received different e-mails over the next 30-45 days as those services were activated. 45 days later, we had an end-to-end system that we could use.
Rightscale is a good example of the nuances of billing for cloud services in a B2B context. As they grew into doing larger and larger deals with big customers, the contracts inevitably became more customized. For example, their typical contract charges for usaged, with declining per-unit charges as users consume in higher and higher tiers. Sales reps needed to be able to adjust both the “boundaries” of the tiers – so if the standard contract had a flat-rate up to 1000 hours of usage, reps needed to be able to drop that to 500 hours of usage before the next-tier discount kicks in. And they needed to be able to adjust the per-unit costs in each of the tiers and bands. And they had to do this without forcing their finance team to manually manage and reconcile these kinds of customized B2B contracts that are more typically the rule than the exception in large-scale. And their big customers who uncovered multiple “pockets” of usage inside their company wanted integrated invoicing with volume discounts applied to their *aggregate* usage.
The value of a collaborative app for an advertising agency has nothing to do with the 6MB of cloud storage needed for the ad campaign mockup image. The value is in supporting the process to help companies create world-class advertising creative.
It was just announced that Cisco is going to offer Mozy’s cloud-based backup as part of the larger Cisco cloud portfolio. Mozy needs to be able to manage that huge distribution channel and still make margins on a core product that costs less than $6 per month.
RightScale is very popular for large-scale cloud applications. 9 of the top 10 largest social games like Farmville use Rightscale. We discussed the B2B challenges of their contracts related to discounts, customization of tiers and rates, etc.
1. Monetizing the Cloud<br />Aria Systems<br />Billing and Subscription Management<br />Robbie Forkish, Senior VP, Engineering<br />
2. Agenda<br />Aria Systems introduction<br />The Challenge of Cloud Monetization<br />Real-world examples<br />Q&A<br />Resources and contact info.<br />
3. We are the technology leader in billing and subscription management<br />Founded in 2003 – The pioneer in SaaS billing<br />>300% growth in monthly recurring revenues in 2009<br />Aria Systems: Company Profile<br />Broad Customer Success<br />Cloud Providers: SaaS, PaaS, IaaS<br />Telecommunications<br />Publishing<br />Social Media<br />Entertainment<br />On-Line Retail<br />Online Gaming (MMO)<br />
4. The Challenge of Cloud Monetization<br />
5. The Cloud: Great News for App. Developers<br />Flexibility<br />Wide range of platform choices<br />Elasticity<br />Scale up applications without purchasing infrastructure<br />Lower costs<br />Pay-per use<br />Low/no fees to get started<br />Distribution<br />New way to make pre-configured apps and stacks available on a global basis<br />No infrastructure purchase required for customers / end users<br />
6. “It’s Not About The Money….”<br />“Oh Yes It Is!”<br />
7. Considerations for Cloud Monetization<br />Economic models<br />Distribution / Sales<br />Service Delivery<br />Other subtleties and complicating factors<br />Automation<br />
8. The “Dark Side” of Pay-Per-Drink<br />“Pay-per-drink” is the early dominant model for cloud application usage<br />“Grew up” at Infastructure-as-a-Service (IaaS) layer, largely driven by Amazon.com and DevPay<br />Good fit for infrastructure<br />Storage<br />CPU<br />Memory<br />Bandwith<br />
10. Economic Models: Monetizing Your Value<br />The cloud doesn’t have to take away your ability to monetize the value of your application.<br />How do you measure that value?<br />Transactions?<br />Records?<br />Views?<br />Service Level?<br />Features?<br />Seats?<br />Songs?<br />Instances?<br />Combination?<br />
11. Resellers and distributors can be force multipliers in the cloud<br />How do you sell and distribute your application?<br />Online?<br />Direct?<br />Via Partners?<br />Geographic Resellers?<br />OEM’s?<br />Changing mix over time?<br />Considerations<br />What can they sell?<br />How do they get paid?<br />What’s your connection to the end customer?<br />Distribution / Sales<br />
12. Delivery<br />Someone just purchased your cloud-based service<br />What do they need to use the service?<br />One or more accounts?<br />Physical device?<br />How many of your services need to be turned on?<br />What about third-party services?<br />
13. Other Subtleties and Complicating Factors<br />Time-bound free trials<br />Opt-in or opt-out<br />Freemium products and services<br />Track usage or time to provide targeted “upgrade” notices<br />Pre-paid usage<br />Tracking debits against pre-paid credits<br />Reminding subscribers when it’s time to re-up<br />Hierarchical accounts<br />Associating “household” accounts in B2C<br />Associating departments and business units in B2B<br />B2B<br />Custom contracts, discounts, etc.<br />
14. The Automation Imperative<br />Preserving margins with cloud-based apps requires significant automation<br />Subscriber signup (including channels)<br />Activation of services<br />Management of entitlements<br />Billing and payments<br />Customer service and online self-service<br />Without automation, you can’t scale, and miss out on the opportunity of cloud computing<br />
15. Real-World Examples<br />
16. Real-World Examples: SaaS Startup<br />Launch of AWS-based collaboration platform for designers and marketing/ad agencies<br />Challenges<br />Automating monetization of discrete feature values<br />Value of application had no relationship to storage, bandwidth, or other units supported by Amazon DevPay<br />Core Application<br />Voice Over IP<br />Video Conferencing<br />File Storage<br />Future Add-ons<br />
17. Real-World Examples: EMC Mozy<br />Offering cloud-based backup for consumers and small businesses<br />Challenges<br />Subscription fees plus usage (storage)<br />Multiple OEMs and distributors<br />Branded signup and self-service<br />While retaining pricing and offering control for Mozy<br />
18. Real-World Examples: RightScale<br />Offering management tools for popular cloud platforms<br />Challenges<br />Billing for millions of hours of usage in dozens of countries<br />Accepting multiple payment methods – net terms (B2B), check, credit card<br />Tracking usage during free trials<br />Customized B2B contracts with changes to rates and usage tiers per-contract<br />Providing integrated invoicing for B2B customers with multiple departmental users of RightScale<br />