The document discusses various cloud monetization models, including subscription-based and usage-based billing systems. Subscription models can either be company or user-provisioned, offering advantages like predictable revenue and aligning with licensing patterns, but also pose risks like potential revenue loss and management complexity. Usage-based billing allows for payment based on actual consumption, which encourages cost control but can lead to unpredictable expenses and is challenging to meter accurately.

1. Cloud Billing - Monetization

2. Cloud Monetization Models
Cloud Monetization Models
Subscription model (Company provisioning)
Subscription model (User provisioning)
Pay As You Go (Usage based)
Combination of the above models

3. Subscription Based Billing (Company Provisioning)

4. Subscription Model (Company Provisioning)
• Concept:
– Flat Rate Billing , typically monthly Recurring Revenue.
• Pros:
– Suits CSP’s moving to the cloud as they understand that SaaS is generally a recurring
revenue business
– Suits cloud consumers instead of upfront investments on licenses + maintenance fees
• Cons:
– Inadequate for providers who need to bill based on consumption
– Not beneficial for customers who expect to be charged based on the consumption
behavior

5. Subscription Based Billing (User Provisioning)

6. Subscription Model (User Provisioning)
• Concept:
– Based on the actual number of users assigned to the SaaS service
• Pros:
– Enterprise benefit as billing starts when provisioned to individual users
– Model is reflective of the enterprise’s license pattern
• Cons:
– SaaS software entitlements need to be managed
– May not be useful to CSPs as it may result in loss of revenue when licenses are not assigned
to enterprise users

7. Usage Based Billing

8. Usage Based (PAYG) Model
• Concept:
– Based on the actual usage of the cloud service
• Pros:
– Pay only for the actual volume of resources consumed
– Possible to optimize and control cloud spend by governance
• Cons:
– Enterprises have difficulty in predicting the cloud expenses
– A bill shock likely without effective policy control and enforcement
– Metering the usage and providing granular details is complex for CSPs/Resellers

9. Subscription Based (Company Provisioning) + Usage

10. Subscription Based (User Provisioning) + Usage