BluLogix

Revolutionizing B2B Monetization

Move Beyond Billing Software & Drive Growth with B2B Monetization

What is Subscription Billing?

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Before software developers such as Microsoft or media aggregators such as Netflix leveraged the subscription billing model, most people thought of newspapers and magazines when the term “subscription billing” came to mind. And even with a mass adoption of subscription billing by the world’s most innovative companies, some still aren’t clear on how subscription billing can transform any business into the future of revenue recognition. 

In today’s digital world, where internet access is ubiquitous and the costs of data collection and storage is increasingly affordable, the subscription economy is able to thrive and expand beyond the use cases many traditionally think of. In addition to an abundance of devices with internet touch points and efficient data storage, the speed of technology lays the groundwork for subscription-based billing. People no longer want to pay upfront for products or services that may become outdated. They want on-demand service, improving infrastructures, fresh content, or the latest software update. 

For these reasons, companies across every industry are pivoting to subscription, consumption or usage-based billing. In this article, we’ll focus on the first of those offerings: subscription billing and why businesses are finding major advantages in it. 

What is subscription billing?

Subscription billing is a business model in which an enterprise requires customers to pay a recurring fee at a fixed schedule for access to a product or service. Contrast this with more traditional transactions such as paying hundreds of dollars for a software license upfront and then having to make the decision again when a new version is published.

The recurring fee is charged at set intervals, usually monthly, quarterly or yearly. This arrangement provides businesses recurring revenue that they can consistently count on. In many cases, subscription billing customers will enroll in autopay, further ensuring recurring revenue.

B2B or B2C? Both.

Subscription billing can be utilized in business-to-business relationships as well as business-to-consumer relationships. Consider Adobe Inc., the multinational computer software development firm behind Photoshop, Premier Pro, After Effects and many more creative industry standards. 

Adobe offers subscriptions to their Creative Cloud Suite, which contains a multitude of powerful applications, at the individual level ($52.99/month) and the student level ($19.99/month). But they also offer the suite to businesses ($79.99 per month per license) and universities. Adobe no longer needs to have a big marketing reveal of their latest software to drive purchases–they simply update apps through the cloud and subscribers reap the benefits without paying for something new and unproven.

Software developers used to charge customers hundreds of dollars in upfront costs for product licenses. This practice could create a high barrier to entry for prospective individuals who might be uneasy about investing in a product they are not yet familiar with, limiting the prospect pool to businesses with prior experience and the funds to invest in enterprise software. By shifting to a subscription model, developers offered their consumers and growing enterprises flexibility and decreased risk, in turn growing their audience. Some even offer free trials before requiring a subscription to alleviate risk entirely. 

In the B2C scenario, subscription billing often sets a recurring fixed rate for a defined set of features. Tiered pricing expands the set of features accordingly. B2B subscription billing also utilizes tiered pricing and fixed rates, but will often set the rate per user, seat or license, or set usage-based payment structures. If you want to learn more about subscription pricing strategies, check out our article B2B Subscription Billing & Pricing Strategies. 

Which industries are best-suited for subscription billing?

There is no shortage of companies across various industries turning to subscription billing. At BluLogix, we specialize in the following sectors: SaaS, UCaaS & Telecom, Internet of Things (IoT), and Cloud Services, as well as companies looking to optimize their channel partnerships. Our origins in telecom have provided us the experience required to transform businesses processes in these sectors.

Why should organizations care about subscription billing?

In her 2015 book The Membership Economy, Robbie Kellman Baxter lays out three powerful reasons that subscription economies matter to organizations:

  • It creates recurring revenue and removes lumpiness. Most businesses have to deal with seasonality–some more than others. Having monthly subscription revenue can smooth out the peaks and valleys in annual sales.
  • It builds a more direct relationship that strengthens the brand, by putting customers at the organization’s center. An organization that has a strong, positive relationship with its members is able to use that loyalty to grow as members recommend the enterprise to others and to resist competitive threats.
  • It generates an ongoing data stream that can be used to improve services and identify opportunities to increase satisfaction. The more the organization understands its customers’ needs, wants, behaviors, and attitudes–that is, much more than their raw demographics–the better it can serve those needs. 

Recurring Revenue

As previously alluded to, subscription models nearly guarantee recurring revenue. Instead of having to project spikes and dips in revenue as a result of seasonal changes or product upgrades, companies can rely on regular intervals of revenue realization. 

A side effect is that it alleviates the cyclic nature of product or service development. Rather than roll out big reveals with marketing and R&D expenses that can change from year-to-year, organizations can focus on constant development and innovation while having the security of regular revenue. 

Customer Relationships: Loyalty & Retention

In a subscription billing model, businesses can more appropriately distribute their valuation of current customers versus prospective customers. Rather than pouring an overwhelming amount of time, energy and capital into new customer acquisition, the focus increasingly shifts to customer retention. That’s not to say that new customers are not critical–both acquisition and retention are crucial to growth and sustainability. But there is less friction in retaining and nurturing a customer who is already satisfied with a product or service than there is in converting a prospect. In addition, more and more prospective consumers are actively seeking subscription bundles, satisfying appeals to acquisition.

In a Harvard Business Review article by Frederick Reichheld titled The One Number You Need to Grow, Reiccheld finds that it is five times more costly to acquire a new customer than it is to retain a current customer. Another study by FiveStars found compelling evidence for retaining loyal customers. An article by MarketingProfs summarizes these findings:

FiveStars performed an analysis of 14 million store visits from more than 1 million customers, as well as the results of loyalty programs from over 2,000 businesses. The study found that loyal customers (those who visited stores at least 10 times) account for about 20% of the company’s customers. Businesses, however, shouldn’t scoff at the deceptively low percentage. That 20% drives 80% of your business’s total revenue and 72% of total visits to your business. According to FiveStars, “depending on the vertical, loyal customers can account for up to 84% of total visits.” Best of all, loyal customers spend 10 times more than new ones.

While the FiveStars research focuses on brick-and-mortar stores without subscription billing, the lesson remains for any business providing a product or service: it is your loyal customers that generate the most revenue. With a subscription model, a business can convert all of their customers (whether individuals or large organizations) into loyalty members who routinely return for access to a product or service, starting at day one. Once they are on board, you make the decision of retaining the service much easier than shelling out a large sum when a license expires. 

Consistent Data for Consistent Improvements

Subscription billing generates data streams that would otherwise be unavailable to businesses. For example, subscription bundles often give insight into which features of an application users value the most. In the Cloud Computing space, subscriptions and consumption models provide information on data usage that can be broken down by industry, cluing in on future trends. 

Having regularly available data about the user experience, enabled by the subscription infrastructure, allows for improvement of products and services in an extremely accurate and timely manner. The end result is more satisfied users, who feel their attitudes and preferences are being catered to.

Monetization: More Than Billing

Subscription billing is one way to advance a company into the future of business. However, it is just the tip of the iceberg. At BluLogix, we view the transition to subscription billing as just one step in the transformation to a fully monetized business. To take full advantage of a changing digital landscape, as-a-Service providers need the infrastructure to capture operational data (services, activation, provisioning), manage channel partners, process complex mediation, expedite tax calculation, and more. Only then can a revenue stream be monetized to its fullest potential. 

BluLogix specializes in creating the infrastructure for as-a-Service offerings at the enterprise level. Our flagship product, BluIQ, is designed to not only enable subscription, consumption or usage-based billing, but to enable seamless and encompassing digital transformation. To learn more about the difference between billing and monetization, view our post comparing the two and download our white paper on the 10 impacts of embracing monetization. 

Process Automation vs Workflow

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How Process Automation Enables Scalability 

Building consistent and repeatable processes is a key challenge most companies face in their Digital Transformation. In fact, it is not possible in many cases to make a smooth, full transition without first addressing these processes. 

Addressing the process challenge typically falls across multiple organizational stakeholders, many of which have legacy systems in place they are not compelled to change. Therefore, effective process change must be driven from the top down if it is to be successful. 

In this post we’ll provide some clarity around two approaches to process change as it relates to digital transformation and three suggestions for how to implement these changes. 

Key Distinctions between Process Automation and Workflow 

In the journey toward digital transformation, it is important to understand the differences between process automation and workflow. Process automation is a bottom-up approach that starts at the elemental level of a product catalog where each product in the catalog carries business logic for provisioning or fulfillment. This ensures that when a product is ordered, either a manual or automated task initiates the movement of the product to an active status and triggers further automation throughout the activation process. 

Workflow, on the other hand, is a static sequence of tasks typically associated with a solution or service type order. If all orders fall into the same service type, the product catalog is limited, and there is low order volume, a workflow approach can satisfy the management of manual tasks to complete an order. But because the tasks are driven at the product level, automation of these tasks is never an option. For these reasons, workflows do not promise the same level of agility as process automation.  

The Problem with Workflow 

Many companies start by managing processes manually. As business grows, the hours turn to days and before you know it you have a team of people managing repetitive tasks that could easily be done using process automation solutions. Some businesses get so caught up in the day-to-day that they never stop to question whether this is the best allocation of resources. For example, rather than an entire team, BluIQ can manage these tasks 24 hours a day, 7 days a week with no vacation or sick time. 

Businesses who have pivoted to process automation have reaped the rewards. In a 2018 survey conducted on companies leveraging process automation tools, 42% of respondents said that they spend less than an hour a day on manual data entry. A BluLogix customer operating as Software Solution Provider recently reported that, “BluIQ brought a team of six full-time employees down to one part-time administrator.” 

Workflows relying on manual tasks will inevitably hold a business back. Replacing manual tasks with a process automation solution such as BluIQ enables businesses to free up valuable resources. This freeing up of resources creates scalability and profitability that cannot be achieved otherwise. Companies become free to reallocate assets from areas of tedious manual tasks to areas that promise growth and increased revenue.  

Process Automation: 3 Tips for Success 

So–you’re ready to replace manual workflows with process automation. What do you need to know as you take this step? Below are three tips for success based on our experience in helping companies transition to process automation. 

1. Make it a CEO priority 

In designing an automated process, multiple stakeholders across an organization can be affected. If stakeholders are not universally aligned throughout this shift, it becomes difficult to navigate the levels of changes involved in supporting process automation. In this regard, a step in every direction is a step in no direction. If a business is to successfully implement process automation in a way that’s consistent across an organization and accommodates the goals of each department, they’ll need a cohesive effort toward a clear direction. 

The good news is that there is a simple solution: making process automation the CEO’s priority. Process automation has to come from the top down, ensuring organizational goals are synchronized. While various departments within an organization can have independent objectives, it is the CEO who ultimately weaves those together with a comprehensive vision. As process automation can expedite that vision, the CEO must be involved in it’s implementation. 

2. Define a Single Process 

When converting to an automated process, it’s important to design for uniformity. You need to define a single process for all products and services to achieve success. You should identify core elements specific to products and services, and define your standards around the common denominator between them. Use variable data such as quantity, usage, service details, etc. as inputs into this process. A single process across all products and services allows you to remain agile in response to customer demands and industry trends without disturbing the underlying infrastructure.  

3. Create a System to Track Remaining Manual Tasks 

A key part of process automation is leveraging APIs to their fullest potential. Efficient process automation utilizes data integration from multiple API sources in a way that limits the need for manual intervention. Nevertheless, it doesn’t remove manual intervention entirely. 

In the aggregate, the need for manual tasks will be significantly reduced; however, you need to prepare for what remains. Manual tasks benefit from a system of accountability. Tracking manual tasks with notifications and standards of operation will help ensure that those manual tasks have continuity with automated tasks. 

BluIQ and Process Automation 

For businesses that want to scale in an environment where customers expect increasingly rapid responses to their needs, process automation is a necessity. Without process automation, a company’s growth is tethered to their ability to update the workflows of manual tasks as well as the time required to execute those tasks. 

If you want to be ahead of the curve, a process automation platform such as BluIQ is your solution. At BluLogix, we’ve helped companies across sectors such as SaaS, UCaaS, IoT and more replace outdated manual workflows with process automation through BluIQ. Part of what makes our methodology so successful is that we place a priority on front-end planning. Giving time to detailed discovery and planning phases allows BluLogix to create and implement a solution tailored to the unique needs of your business. 

Want to learn more about the power of BluIQ when it comes to process automation? Check out our Insights post covering Quote-to-Cash automation. If you’re ready to speak with a BluLogix process automation expert, schedule a demo today and we will be in touch. 

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.

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.

Please Stop Buying “Billing” Software

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You Probably Don’t Need Billing Software

Ok, that’s a statement you probably didn’t expect to read in a blog post from the CEO of BluLogix.  But I am serious. There is a two-fold problem that’s creating a widespread disconnect in the billing software and “subscription management” market. First, organizations identify revenue-related issues in their business and generically label their need as a “billing problem.” Second, software vendors looking to generate sales – understandably so –  focus their marketing and sales efforts on curing these “billing problems.

Unfortunately, this go-to-market approach means ignoring the broader organizational issues causing the perceived billing challenges.  As a result, we are observing an increasing disconnect between the solutions that organizations genuinely need and the software alternatives currently in the market  – resulting in misunderstanding, frustration, and wasted resources.

After interacting with hundreds of prospects and clients, it’s my conclusion that this disconnect and misunderstanding in the billing software market comes down to a single issue – data. In almost every case, billing problems are symptoms of a larger, structural environment of data disaggregation within the organization. Only solving the transactional symptoms of the problem by using traditional billing software ultimately highlights the more subtle symptoms of revenue-related data disaggregation:

These symptoms include:

  • Inability to automate the quote-to-order processes, order-to -provisioning processes and service activation management.
  • Lack of 360 customer visibility across the lifecycle –  order status, contract renewals, account balance, active services, service details, etc.
  • Revenue leakage due to an inability to reconcile costs against revenue.
  • Lack of integration with other essential enterprise systems like CRM and ERP. accounting, or external service providers
  • A need to fully automate the invoicing process and accommodate unique business process needs

Most traditional billing software companies focus on alleviating transactional challenges – the last symptom listed above – because that is what they were architected to achieve. Yes, organizations will save time and increase efficiency by automating their invoicing process. However, gains in transactional efficiency will be offset by the fact that yet another platform now needs to be managed and an additional data silo exists.  In short, the underlying data problem has been exacerbated – not solved.

So what’s the solution to this fundamental disconnect?

At BluLogix we have architected – BLUIQ – our data-enriched monetization platform to address “billing problems” differently. We start outside the realm of software and technical solutions, using our MIND Methodology to conduct an in-depth discovery process before we engage with a client to solve their billing challenges. It’s been our observation that most organizations have quote-to-cash related data residing in at least five internal silos and 2 to 5 times that amount of data coming from external sources like vendor partners.

Therefore, our solution approach goes beyond delivering just billing software to aggregate disparate data sources into a single system of record, create the starting point for delivering “data-enriched monetization,” and address all the symptoms described above, including transactional billing requirements. Our unique Data-Enriched Monetization approach also becomes the starting point for building an organizational Monetization Framework to leverage connected data, generate new customers insights, and enable revenue growth.

So whatever you do, if you think you have a billing problem,  please don’t rush to buy billing software to fix the problem. First, consider the full organizational context and data environment for your quote-to-cash lifecycle and then you’ll be better prepared to define the best solution and technology approach for your business. If you’d like some more food for thought, you might want to check out our white paper “How to Build a Monetization Framework.”