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4 Key Challenges in the Shift to Digital Recurring Revenue


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Digital delivery models are impacting traditional businesses. Driven by consumer demand for convenience and new consumption models, including subscriptions, enterprises are moving to Digital Business offerings and finding huge upside from predictable revenue streams built around long-term customer relationships. But this shift is not easy. Companies at the beginning of the journey want to know - what are those challenges? And what are the strategies that lead to success?

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4 Key Challenges in the Shift to Digital Recurring Revenue

  1. 1. Confidential and Proprietary Information. Do not distribute beyond intended audience. Four Key Challenges in the Shift to Digital Recurring Revenue W e b i n a r w i t h Z u o r a a n d S a u g a t u c k T e c h n o l o g y
  2. 2. Brian Bell Chief Marketing Officer Mike West Research Fellow Joe Andrews Sr. Director, Marketing Moderator Featured Guests:
  3. 3. Agenda 1. Context – the enterprise business shift 2. Research – the four key challenges in making the shift 3. Relationship Business Management – a system of innovation 4. Learning from companies who have made the shift
  4. 4. Slide 4 − Zuora Confidential, not for distribution beyond intended recipient 4 Disruption of Everything. CODE: VIP50
  5. 5. The Subscription Economy takes the changes wrought by the SaaS model and applies them to companies in every industry. We call this the Subscription Economy Monetize RelationshipsShip Products The Shift To Models Built on Relationships
  6. 6. CONSUMER BUSINESS 4 out of 5 businesses believe their customers are switching to new consumption models.“ PearsonZendesk HPDellConnect America KaplanSPH Reed Elsevier Intuit American ExpressNCRTripAdvisor GoodMouthTouring Car Suisse ServCorpQualcomm InformaticaDocuSignCarfax MindBodyFinancial Times Customer Preferences Have Changed
  7. 7. High Tech Cloud Infrastructure Internet Of Things Education Healthcare SaaS Communications Creating Business Model Innovation In Every Industry 51% of companies have changed or are in the process of changing the way they deliver goods and services“ ” Media
  8. 8. Copyright 2014 ǀ Saugatuck Technology, Inc. ǀ All Rights Reserved Mike West Research Fellow Saugatuck Technology
  9. 9. Retooling for the Digital Economy and Recurring Revenue 9 The Challenge: How can you make these changes happen cost-effectively and with the least disruption?
  10. 10. The digital imperative Presents new technology challenges…  recurring revenue and monetization  new business partners  new systems  integration 10
  11. 11. recurring revenue and monetization 11 “Used to be 90 percent broadcast, but today it’s over 50 percent digital products. It’s everything from pure ad revenue to content reach on online platforms we monetize, but the bigger piece is in the shift to digital downloads and other ways of distributing video-on-demand in a combination of a la carte and subscription….”
  12. 12. Copyright 2013 ǀ Saugatuck Technology, Inc. ǀ All Rights Reserved www.saugatucktechnology.comPage: 12 new business partners “We’ve been happy with ability to deploy faster, increase the speed at which we are moving, by partnering and adopting an agile approach… …especially with a complex solution involving multiple partners. We are dependent on our infrastructure provider, our billing provider, on our Cloud platform for scaling to meet demand and need.”
  13. 13. new systems 13 “Need to make sure you’re not just bringing the old stuff and adding a few things…” “New systems are necessary, whether billing or revenue recognition or go-to- market, catalog, or social channels in customer care. New tools mostly but sometimes just the same tool implemented differently.”
  14. 14. integration 14 “We have a need to hook ERP environments into third party APIs, doing handshakes for exchanging sales keys -- If it’s not automated, you can’t scale -- for monitoring customer experience and for monetization performance”
  15. 15. summary Meeting the four key challenges: one recurring revenue and monetization two new business partners three new systems four integration 15 How can you make these changes happen cost-effectively and with the least disruption?
  16. 16. closing 16 “We are always surprised where innovation comes from. As we deploy new capabilities in the Cloud to make things easier for the business, it lets the business focus on innovation.”
  17. 17. summary Meeting the four key challenges: one recurring revenue and monetization two new business partners three new systems four integration 17 How can you make these changes happen cost-effectively and with the least disruption?
  18. 18. Innovation Requires Agility, But… As An Enterprise, You Have A Unique Challenge A system that is not sufficiently flexible to meet changing business demands is an anchor, not a sail, holding the business back, not driving it forward. “ You have invested heavily in your ERP application But your ERP system doesn’t help you innovate in an agile fashion
  19. 19. BUY NOW SUBSCRIBE Recurring Revenue (Long-term, adoption, loyalty) New approach to growth Sell One-Time Units Fixed, SKU Based One-Time Transactions Backwards Looking Metrics Flexible, Plan Based (Editions, Bundles, Usage) Recurring (upgrades, add-ons, renewals) Forward Looking (ARR, MRR, Churn, Renew als) You require a completely different approach New approach to pricing New approach to commerce New approach to finance
  20. 20. Innovation in Pricing & Packaging Complexity in Commerce & Order Management Complexity in Billing Complexity in Payments Complexity in how you Measure Innovation in one area of your business causes complexity in other areas Without a system that can manage this complexity, business model innovation is hard 1 2 3 4 5
  21. 21. Confidential and Proprietary Information. Do not distribute beyond intended audience. You Need Relationship Business Management
  22. 22. RBM Is Your System of Innovation ERP Is Your System Of Record Built For Monetizing Products Built For Monetizing Relationships
  23. 23. The Relationship Business Management Difference Plan-Based Catalog Multi-channel Commerce Lifecycle Orders E-Commerce CPQ Engines RBM System Relationship Commerce Billing Engines Recurring Billing & Payments ERP Recurring Billing Automation Recurring Payment Automation Recurring Revenue Mgmt Accounting Close Revenue Recognition Subscription Metrics
  24. 24. It integrates with your existing enterprise ecosystem Systems For Customer Engagement Systems Of Record Relationship Business Management CRM Website ERP Financial Applications Systems Of Innovation
  25. 25. “NCR rivals Paypal as Square’s scariest competitor.” The Business Model Shift: • NCR Silver represents NCR’s first foray into selling POS solutions to individuals and small businesses • NCR Silver is NCR’s first iPad base POS solution The Challenge: • Needed the ability to launch flexible pricing models and iterate rapidly to compete in a crowded market of over 300 providers like Square • Needed to be launch in 2 months The Solution: NCR chooses Zuora as the commerce, billing and finance management platform for NCR Silver. The project is delivered in 61 days, with web self service sign ups, integration to Salesforce, and summary journal entry updates to Oracle. NCR uses Zuora to rapidly launch new pricing models, automate high volume billing and collections, and manage subscription lifecycle events. “NCR missed the transition to digital,” said CEO Bill Nuti, “and it hasn’t been engaged with small business owners since 1971. But NCR wants a new relationship with small and medium businesses, and today it’s about to start. And it’s going to do it via Apple’s iPad. Today marks the launch of NCR’s first new division aimed at small businesses in 50 years.”
  26. 26. “Touring Club Suisse replaces AS400 with Salesforce ,Zuora.” Diginomica The Business Model Shift: • A business that counts half the population of Switzerland as its customers needed to stay relevant in an increasingly competitive market • TCS needed a way to engage with a younger, digitally engaged demographic The Challenge: • TCS had been running its operations on a AS/400 computer for over 20 years • Making changes was an expensive and time consuming process • TCS was unable to offer anything other than annual memberships on its current platform The Solution: TCS rebuilt it’s IT infrastructure with 6 cloud native apps. At the heart of this new infrastructure are Salesforce and Zuora. Salesforce is the core CRM environment used by sales agents in the call center, and Zuora is used for subscription management, billing for almost 3 million subscriptions. Zuora is also integrated with SAP for consolidated financial management. “Easy pricing, easy billing is absolutely key. We have built an environment now where the system adds a lot of value …With Zuora we do get that kind of flexibility where we manage the whole payment cycle [separately] from managing the subscription.” Ernest Gmunder, CIO, TCS
  27. 27. “Acxiom’s Audience Operating System could reinvent data driven marketing.” The Business Model Shift: • AOS is Acxiom’s most important business initiative in 30 years • The launch of AOS represents a pivot from a low volume of large 7 figure, high touch perpetual license B2B sales to a high volume of B2Any subscription sales in new markets. The Challenge: • Needed flexible subscription based pricing and packaging for the success of AOS • Needed seamless integration to Salesforce for front office and PeopleSoft for back office • Needed to be live in less than 6 months The Solution: Acxiom chooses Zuora as the commerce, billing and subscription management platform for AOS. The project is delivered in 159 days, with integration to Salesforce, PeopleSoft. Acxiom uses Zuora to experiment with new pricing models, and sign on new AOS clients that represent new markets and the next phase of growth for the company. “We are at an inflection point and starting the next chapter in our journey,” said Acxiom CEO Scott Howe. “We are a new company. Over the past two years we have worked to build a better business and to drive innovation. While it’s early, we are pleased with our launch of the Acxiom Audience Operating System and the resulting customer reaction and support.”
  28. 28. 2 Disruption of Everything. CODE: VIP50
  29. 29. Thank You!