BluLogix

Revolutionizing B2B Monetization

BluLogix - Revolutionizing B2B Monetization to Drive Growth

Laying a Foundation for Cisco Flex Plan Collaboration

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Capital expenditure models are shifting to operating expenditure models for information technology solutions. In response to this shift, Cisco Partners are focusing on building and managing annuity revenues for their organizations.  Selling Cisco’s Flex Plan Collaboration is a significant step toward delivering on the goal of building a business model where both customers and partners benefit from a consumption pricing model.

Another step for Cisco Partners, moving in this direction, is the ability to combine and bundle their Flex Plan offers with other offers.  These offers include managed services or telecommunications network connectivity, like SIP and SD-WAN.

Bundling multiple services into a single offer creates additional value that translates into additional revenue and margins for the Partner.  Doing so, however, creates operational challenges with quoting, ordering and billing, or what BluLogix calls “Monetization”.

When delivering a quote to the customer, the expectation is that all relevant products and services will be on a single quote.  The ability to combine multiple services from multiple service providers, on a single quote, often requires a solution for pricing and quoting outside of the service provider portal.

A quote should be easily converted to an order.  The act of converting a quote to an order should trigger a set of automated and manual tasks ultimately leading to provisioning or fulfillment of the order.  Tasks are be pre-defined based on the product ordered.  They often require some dependency to take an order from a pending status to an active status.  BluLogix calls this “Process Automation and Orchestration”.  Once an order is fulfilled and active it is in a proper state for billing.

BluLogix recommends service provider delivered services, like Cisco Flex Plan, use a “rebilling” process.  Rebilling is the ability to take the Cisco Flex Plan invoice, read it electronically, adjust the price, and generate an invoice to the customer in the exact same format.

Collaboration solutions often require multiple services from multiple service providers.  In this case invoice data for rebilling must be mediated into a single record.  Pricing is applied to the invoice as if it were a single transaction.  For example:  A Webex Calling Flex Plan charge combined with a DID, Usages (international & toll free) and a hardware as a service fee.

Billing for partner driven charges is enabled from a separate service catalog.  These charges are delivered on the same invoice and managed by the partner.  This catalog includes additional products and services that are both recurring, like managed services, and non-recurring or one-time charges like hardware or implementation fees.

There is significant operational value to the “Monetization” process defined above.  BluLogix customers demonstrate a 75% reduction in resource utilization with BluLogix quote to cash process.  “Rebilling” alone eliminates the almost impossible task of replicating the billing logic from multiple service providers.  It also eliminates the need to reconcile what you are billing your customers versus what you are getting billed for from the service provider.  Additionally, the ability to store costs and revenue with each transaction enables accurate profit analysis at the customer, product and service provider levels.

As Cisco Partners begin to build their businesses around the annuity-based Cisco Flex Plan offers it is important to lay the proper foundation to scale operations as business accelerates.  At BluLogix we often work with Partners who developed a process over time using a combination of existing systems and spreadsheets.  While this may work temporarily, undoing this process creates a significant change management challenge.  The fact that these processes are often spread across multiple stakeholders (sales, finance, operations, IT) reduces the chances of success for the change management process that must occur for partners to scale.

BluLogix recommends a discovery process driven by one of our analysts to define a single repeatable process for every service being offered by every service provider the partner is representing.  Cisco Flex Plan Collaboration is the perfect place to start in laying your foundation for future annuity revenues.

COVID-19 and your IT Management SaaS Channel

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The COVID-19 pandemic is driving revolutionary changes in the IT services marketplace. To excel in this changing environment, IT Management SaaS providers will need to offload operations to their channel in order to meet demand.

IT Decision Makers

A new survey by Aruba, of 2400 IT Decision Makers, illustrates some surprising changes brought on by the COVID Pandemic. IT decision-makers see the need to adjust their investment plans to accommodate new realities in the post-pandemic workplace including more home office environments and distributed workforces.

In light of these changes, many IT leaders are shifting to consumption or subscription models. For SaaS companies, the most important prediction in the Aruba survey is for 41% growth of SaaS subscriptions by IT leaders in the next 12 to 24 months in response to business challenges driven by COVID-19.

The Aruba report, entitled Preparing for the post pandemic workplace: How IT decision-makers are responding to COVID-19 has some surprising findings, including:

  • Only 8% of IT Decision Makers said they would continue IT Capex investments
  • 55% said they would explore “as-a-service” solutions for either hardware or software.
  • 53% say they will explore a managed service for a turnkey hardware/software solution.

It concludes that: “After months in which the nature of how we work has fundamentally altered, it is unlikely that the workplace will ever be the same again.” 

The Impact For SaaS Businesses

This data suggests that financial flexibility will be an important buying criterion for IT infrastructure in the next 12 to 24 months and beyond.  There will be a shift away from Capex investments and toward more predictable spending that can be closely controlled as business operations expand or contract.

Overall, this will lead to a reduction in upfront capital investments, in favor of “as a service” models that carry lower adoption and usage risks over time.

Today, 24% of IT Decision Makers consume half of the IT solutions ‘as-a-service’.  After the pandemic, the growth of hybrid workplaces will drive the consumption of ‘as-a-service’ solutions to 72% over the next 12 to 24 months, according to the survey.

Boon or Bust?

For IT ‘as-a-service’ companies, the market opportunity could be great, but many Software/Hardware as-a-service providers simply are not prepared to manage this level of business acceleration.  There are two primary constraints, where I see critical capabilities are missing:

  1. The ability to dynamically adapt product and pricing plans to align with market demand and leverage the value added capabilities of a channel.
  2. An advanced reseller sales channel, where partners take on more of the operational burden for support, quoting, order management, and billing.

Agents vs Resellers.

The common approach to leveraging “as-a-service” channels for SaaS has been a standard agent partner approach.  Companies simply leverage the channel for sales opportunities and pay a commission to agents for selling the deal. 

The agent model has worked for solution providers because a large part of their customer experience, including overhead tasks like managing upgrades, configuring and provisioning new services, and reporting, are managed in the solution provider portal.

Some companies have attempted to sell SaaS using a reseller model instead, by enabling their partners to manage upgrades and other tasks. But the complexity and difficulty of replicating the solution provider portal experience, while maintaining some level integration is difficult for resellers. It requires significant investments in time and resources for what ends up as an inferior customer experience.

A New Reseller Model

In light of today’s quickly changing workplace, solution providers must be able to push more management to the channel to meet demand.  While solution providers’ early attempts to use a reseller model have ultimately failed, there is a next-generation approach beginning to gain traction among partners and distributors of SaaS.

Although partner communities will never be able to adequately replicate the solution provider’s portal experience, some providers are finding that they can hand off the billing and collections responsibility to their partners.  This is a win/win for everyone.  The solution provider off-loads processes that are expensive to manage, while the partner gains top-line revenue and more customer ownership.

Benefits for Providers and Resellers

In this new model, the partner can manage their own service catalog and package the solution provider’s products and services with their own products and services to simplify the customer’s sales experience. This also enables resellers to deliver more value to the customer and differentiate against competitors. 

This next-generation partner-reseller model will also drive more sales for solution providers by leveraging the channel to differentiate products and services with new, partner-enabled value. Resellers will be empowered to expand their reach into local markets with direct sellers. This will enable them to decrease churn and increase upgrade opportunities leveraging local partner relationships.

In this model, the solution provider continues to deliver their own customer experience as customers interact directly with the solution provider portal to manage and maintain their subscriptions to solution provider products and services.

Enabling Technologies

B2B Subscription Billing platforms can help solution providers and resellers manage their shared responsibilities for billing and collections. A subscription billing platform enables companies to build a system of record they can share through integrations between their CRM and ERP systems.

These platforms can be configured to work with most mainstream business software, and platforms like BluLogix have “out of the box” integrations with CRM solutions like Salesforce, which will enable cross platform integrations across the entire Salesforce ecosystem.

BEYOND SUBSCRIPTION BILLING – WHY DOES MONETIZATION MATTER IN THE SUBSCRIPTION ECONOMY?

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There’s little dispute that digital transformation has affected nearly every aspect of B2B commercial activity. Success in the digital economy requires that organizations move beyond traditional ways of doing business while accelerating market-facing responsiveness across all functional areas. Increased competitive pressures and shifting market dynamics complicate revenue predictability.

Therefore, the ultimate measure of effectiveness will be how efficiently and accurately organizational expertise is translated into products and services that generate market demand and drive profitable revenue growth. In other words, organizations in the digital economy have no choice but to become monetization-focused.

 In real terms this means businesses must hone or develop skills related to:

  1. Identifying what customer’s value and aligning new offerings to meet these demands
  2. Expanding organizational awareness of monetization activities beyond the finance, accounting, and billing departments
  3. Creating an organizational “monetization mindset.”
  4. Articulating and implementing new business practices that cross operating areas
  5. Leveraging the economics of the digital marketplace to create new product and service offerings
  6. Optimizing sales and customer engagement strategies to capture recurring revenue opportunities throughout the customer lifecycle versus “milestone” billing events
  7. Evaluating existing business processes, resources, data flow, systems, and to create an optimum environment for monetization activity

Next Steps:

Draft The Framework

Once your organization has completed the review of your key operations, processes, systems, and activities – as outlined above – the organization will have the necessary information to create a draft Monetization Framework. You can download the BluLogix template for a Monetization Framework from our website or create an outline that works for you organization to compile your findings.

Organizational Buy-In & Kick-Off

Once the initial Framework is drafted, the Monetization Champion should circulate the documentation for internal review and discussion to ensure that it reflects the input and concerns of key stakeholders. Once the appropriate input is solicited and incorporated the project should move into the subsequent phases of implementation and change management. With your Monetization Framework as a guiding document, the organization will be well-positioned to develop monetization as a core business discipline and impact strategic objectives.

DIY or Get Help?

The effort related to the development of a Monetization Framework should not be underestimated. Therefore, it’s worth considering whether or not to engage an external monetization authority to help with facilitation and development of the Monetization Framework.

External facilitation can help keep a project on track from a focus and bandwidth perspective. External facilitation also injects third-party objectivity into the process and may spur fresh thinking about challenges and issues. A third-party may also be able to spot potential pitfalls, while also offering benchmark data and anecdotal case studies about the monetization initiatives of other organizations.

Billing and Monetization: What’s the Difference and Why Should You Care?

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Most people understand the basic concepts behind billing. It is the process of determining an amount owed for a product or service, informing customers about their total bill, and collecting payments. It is a straightforward process that technology has improved through online and automatic solutions that enhance accuracy. However, these technologies are tools that help; they do not transform how business is conducted. This transformation is monetization, and while it relates closely to billing, the overarching role is much broader.

What Is Billing?

Billing is defined as the process of generating invoices to recover payment from customers. Billing procedures can be simple or complex, depending on the goods and services delivered that require payment. They generally include collecting information needed to put together an invoice, creating the invoice itself, and sending the invoice to the customer. 

Billing software is a computer program that tracks billable products and services and automates the preparation of invoices or other documentation.

The takeaway: Billing is a business process that focuses on collecting transactional debts. Billing software is a tool to help this process along and can result in quicker payments and stronger cash flow.

What Is Monetization?

The definition of monetization from the Merriam Webster dictionary is utilizing “something of value as a source of profit.” Monetization means to generate revenue from a service or product your business provides. Where billing is about retrieving the payment from a customer, monetization is about a process through which your business turns a profit.

Monetization software is the technology platform that is one component of a business’s overall practice to generate revenue. It should bring a data-centric mentality to connect your various information sources, which helps create insight from that data to drive growth.

The takeaway: Monetization is a business discipline that goes beyond billing to understand what drives customer value and turn organizational expertise into revenue. It is a business model transformation that helps companies tap into new opportunities to impact customer loyalty and reduce churn. This transformative quality is the main difference between billing and monetization.

Billing vs. Monetization Today

Today’s digital economy has changed the way businesses work. The last decade has seen the concept of customer engagement rise in importance, and it now drives everything from customer service to the delivery of products and services.

Billing automation and process improvements may get more cash in the door, but they do not create an optimum environment for monetization. A monetization process touches a business’s core and is crucial for strategic growth. It leverages engagement with customers, prospects, and partners to help a business turn those relationships into profit-generating ones for an extended period of time. Contrast this with billing for a flat fee service relating to a one-time service or product provided to a customer, and it’s easy to see the benefit of a monetization relationship: it structures a relationship around ongoing revenue and service.

Businesses in the digital economy will be forced to reconcile their basic billing procedures with a new discipline for monetization – or they risk falling behind. Many businesses have already made the shift to embrace monetization, but it’s important to consider the short-term operational impacts of monetization before taking the leap. If you think you’re ready to explore how monetization can transform your business, check out this free PDF that explains the 10 most common organizational implications we at BluLogix have observed when working with clients as they shift to a monetization focus. 

If you’d like to get in touch with any questions you have about billing or monetization, don’t hesitate to reach out.

Laying a Foundation for Cisco Flex Plan Collaboration

By

Capital expenditure models are shifting to operating expenditure models for information technology solutions. In response to this shift, Cisco Partners are focusing on building and managing annuity revenues for their organizations.  Selling Cisco’s Flex Plan Collaboration is a significant step toward delivering on the goal of building a business model where both customers and partners benefit from a consumption pricing model.

Another step for Cisco Partners, moving in this direction, is the ability to combine and bundle their Flex Plan offers with other offers.  These offers include managed services or telecommunications network connectivity, like SIP and SD-WAN.

Bundling multiple services into a single offer creates additional value that translates into additional revenue and margins for the Partner.  Doing so, however, creates operational challenges with quoting, ordering and billing, or what BluLogix calls “Monetization”.

When delivering a quote to the customer, the expectation is that all relevant products and services will be on a single quote.  The ability to combine multiple services from multiple service providers, on a single quote, often requires a solution for pricing and quoting outside of the service provider portal.

A quote should be easily converted to an order.  The act of converting a quote to an order should trigger a set of automated and manual tasks ultimately leading to provisioning or fulfillment of the order.  Tasks are be pre-defined based on the product ordered.  They often require some dependency to take an order from a pending status to an active status.  BluLogix calls this “Process Automation and Orchestration”.  Once an order is fulfilled and active it is in a proper state for billing.

BluLogix recommends service provider delivered services, like Cisco Flex Plan, use a “rebilling” process.  Rebilling is the ability to take the Cisco Flex Plan invoice, read it electronically, adjust the price, and generate an invoice to the customer in the exact same format.

Collaboration solutions often require multiple services from multiple service providers.  In this case invoice data for rebilling must be mediated into a single record.  Pricing is applied to the invoice as if it were a single transaction.  For example:  A Webex Calling Flex Plan charge combined with a DID, Usages (international & toll free) and a hardware as a service fee.

Billing for partner driven charges is enabled from a separate service catalog.  These charges are delivered on the same invoice and managed by the partner.  This catalog includes additional products and services that are both recurring, like managed services, and non-recurring or one-time charges like hardware or implementation fees.

There is significant operational value to the “Monetization” process defined above.  BluLogix customers demonstrate a 75% reduction in resource utilization with BluLogix quote to cash process.  “Rebilling” alone eliminates the almost impossible task of replicating the billing logic from multiple service providers.  It also eliminates the need to reconcile what you are billing your customers versus what you are getting billed for from the service provider.  Additionally, the ability to store costs and revenue with each transaction enables accurate profit analysis at the customer, product and service provider levels.

As Cisco Partners begin to build their businesses around the annuity-based Cisco Flex Plan offers it is important to lay the proper foundation to scale operations as business accelerates.  At BluLogix we often work with Partners who developed a process over time using a combination of existing systems and spreadsheets.  While this may work temporarily, undoing this process creates a significant change management challenge.  The fact that these processes are often spread across multiple stakeholders (sales, finance, operations, IT) reduces the chances of success for the change management process that must occur for partners to scale.

BluLogix recommends a discovery process driven by one of our analysts to define a single repeatable process for every service being offered by every service provider the partner is representing.  Cisco Flex Plan Collaboration is the perfect place to start in laying your foundation for future annuity revenues.

Top 5 Reasons Agents Should be Rebilling

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Is the channel the right path to growth?

Many cloud service providers that achieve early success with a direct sales model quickly come to realize that if they want to reach their full growth potential, they will need to leverage indirect sales “channels” (VARs, MSPs, IT Solution Providers).

But pivoting to embrace the channel model is more operationally tricky than it first appears. Critical challenges arise because many aspects of the business, including business processes, the customer experience, and revenue cycles are optimized for a direct sales model. Therefore the “agent” model has evolved as the only viable channel option because it allows the indirect channel to get paid for sales, while the service provider achieves revenue growth with a minimal amount of business process or customer experience impact.

Unfortunately, for most VARs, MSPs and other IT Solution Providers, the traditional agent model can be a less than ideal scenario, when:

  • You are giving away customer relationships developed over years of successful partnership
  • You no longer have a revenue relationship with the customer
  • You can’t control your margins
  • Your top-line revenue drops through the floor
  • You only get paid well after everyone else gets their share

Luckily,  there is an alternative. BluLogix has partnered with AVANT to introduce an innovative offering that addresses these agent challenges head-on. AVANT and BluLogix now support “rebilling” for a network of more than a dozen – and growing –  top service providers.  In a rebilling scenario, the service providers’ customer experience (provisioning, onboarding, etc.) remains unchanged, but the VAR, MSP, or ITSP maintains customer ownership and is able to bill the customer for services directly.

Rebilling is a better solution for all parties involved.

  • Service providers can deliver the optimum customer experience for the service, have a competitive advantage with channel partners, reduce churn, and take advantage of increased upsell opportunities.
  • VARs, MSP, and ITSPs can retain ownership of the customer relationships they have worked hard to develop, recognize top-line revenue growth, and present a unified billing perspective to their customers.
  • Customers are more satisfied because they can retain their relationship with their trusted advisors for strategic and revenue-related or service issues.