Blulogix

Revolutionizing B2B Monetization

Recurring Revenue Management

Major pitfalls to avoid on your recurring revenue journey

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Recurring revenue has become the gold standard for many organizations in the SaaS, IoT and Cloud Computing industries as shareholders and customers alike are increasingly satisfied with this new way of doing business. Customers of organizations that generate recurring revenue appreciate that these businesses only charge clients for what they need and nothing more. Shareholders know that a dollar generated by recurring revenue is more valuable than a dollar generated by transactional revenue.

But what about organizations that do not yet have streams of recurring revenue? Many of these businesses wish to deploy infrastructure to enable recurring revenue. Before doing so, stakeholders within these businesses need to understand the challenges they may face during their transformation. As legendary inventor Alexander Graham Bell once said, “Before anything else, preparation is the key to success.”

In the journey to recurring revenue, there are pitfalls along the way that can cause failures in implementation. However, those pitfalls can be avoided with due diligence. By being prepared and having those challenges on the radar, a business can guarantee themselves a successful transition into recurring revenue. In this article, we identify three major pitfalls businesses can face in the recurring revenue journey and effective strategies for avoiding them.

Executive Alignment

In the journey to recurring revenue, a digital transformation is required which will touch every person, division and aspect of a business. This transformation will change a business’s behavior, strategic relationships, and positioning within ecosystems. It will do so for the better — enabling scalability, improving efficiency, and generating higher revenue.

Given the all-encompassing impact of the digital transformation required on the journey to recurring revenue, the journey must be led from the top down. Leadership within an organization has to be the guiding light throughout the transformation. This leads us to our first pitfall: failure to ensure executive alignment. Businesses that attempt the transformation to recurring revenue will limit potential or even fail if executive alignment is not a priority.

During a digital transformation, organizations will see pockets of resistance internally. People do not like change, it is natural to prefer the familiar over the unknown. This reality extends into the professional sphere. Employees may feel threatened by the transformation and internal challenges may arise. To mitigate any internal uneasiness, the highest executive within an organization must lead the charge, followed by senior executives.

This executive alignment, where leadership is on the same page and effectively communicates the why and the how of a recurring revenue journey to their teams, is the first step in mitigating challenges along the way. When a CEO buys into digital transformation, it paves the way for cultural adaptability.

Cultural Adaptability

The second pitfall we often see along the journey to recurring revenue is a failure to induce cultural adaptability. Cultural adaptability unquestionably hinges on executive alignment, making the two factors crucial and inseparable in a digital transformation. So, what exactly is cultural adaptability?

Stemming from executive alignment, cultural adaptability is a pervasive attitude of embracing change with an open mind and an eye toward the future of a business. When executives champion change and clearly communicate the incentives of a digital transformation, team members within an organization are much more open to adapting to the needs of a recurring revenue model, even if it means major adjustments to their workflow and objectives.

Cultural adaptability is not only about intangibles. Digital transformation can require an investment in new talent and skills and executives must be willing to make those investments. New talent can be anything from hiring a round of entry level employees to bringing aboard new senior executives. It can also be the skill development of existing employees or forming new partnerships with experts to help complete your journey.

With the right mindset and a willingness to invest in talent, the benefits become reinforcing as a self-perpetuating cycle of excitement and buy-in begins to consume the organization’s culture. What you will find is that even the stakeholders who initially showed reluctance become motivated by change and opportunity. At this point, the digital transformation gains full traction internally.

Building for Tomorrow

The decision to move a business model toward recurring revenue is a strategic one, executed with interest in a company’s future in mind. Many of the world’s leading technology companies have already begun digitally transforming to prepare themselves for the future. Gartner Research has even predicted that by 2022, more than 90% of software providers will have migrated to subscription-based business models (a popular method for generating recurring revenue). 

However, the decision to phase into recurring revenue alone is not enough. The entire execution of a digital transformation needs to accommodate the future of a business. The third pitfall we see most often is a failure to plan for tomorrow, beyond simply making the decision to undertake the recurring revenue journey. 

Yes — digital transformation enables recurring revenue. However, organizations need to adapt business models, services, and operations to maximize potential. This requires a willingness to change a business in very significant ways. It can be comfortable and reassuring to continue to think of your company’s behavior as it was pre-transformation. But the truth is that the recurring revenue journey requires more than a change in mindset and culture.

Businesses must rethink their productization process. Digital transformation includes identifying new revenue streams and channel opportunities, finding a new audience, welcoming and trusting workflow automation, improving profit margins, and replacing legacy tools with new, more advanced resources. Organizations need to consider repackaging their services, bundles, and products to better suit subscription or consumption-based models. They should also understand the value of monetizing their data. All of this requires a business to see itself in a new light while prioritizing the longer term. It’s more than a cultural adaptation. It is an entirely new go-to-market strategy designed for what the company will be capable of offering — not what it currently offers. 

Are you ready to start the recurring revenue journey?

The recurring revenue journey calls for major changes to an organization. Those changes are necessary to keep pace with ever-evolving technology-driven industries. Additionally, they significantly improve the revenue potential of any business. It is no wonder that Gartner Research predicts massive adoption of recurring revenue models in the coming half-decade.

If your business is looking to stay ahead of the trends and maximize revenue, then a digital transformation is what you need to ensure a successful implementation of a recurring revenue model. If you would like to learn more about the challenges you will face in your digital transformation and successful tips for your recurring revenue journey, view our TSIA Interact webinar covering all the things that can go wrong on your journey. 

If you would like to speak to a digital transformation expert about how BluLogix can empower your company’s recurring revenue initiative, reach out to a representative today. 

When is the right time to automate billing?

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Every business needs a process for charging or invoicing customers. In the realm of Software-as-a-Service and Cloud Computing technologies, automated billing is increasingly prevalent. Automated billing allows for better resource allocation, removes friction from the billing process, and leverages multiple data points. Most importantly, automated billing provides companies a stream of recurring revenue. But the complexity of a recurring revenue model requires businesses to rethink how they manage monetization.

Updating, launching, or building a home-grown monetization system requires a significant investment of time, money, and energy. With so much to invest, this begs the question: when is the right time to automate billing to ensure a successful transition? This post will examine crucial inflection points companies can look to when adjusting their monetization strategy.

Why implement automated billing?

Before establishing a timeline for automated billing implementation, a business should understand the benefits of doing so. Ultimately, automated billing leads to growth and owning a more significant share of the market. This is achieved both directly and indirectly through the implementation of an automated technology. The following list provides just a handful of the benefits of automated billing.

  • Save time and resources by relieving the need for manual intervention of billing processes.
  • Improve financial accuracy through the utilization of structured and automated systems, leading to more consistent data.
  • Simplify payment collection with the establishment of recurring, self-executing transactions.
  • Generate monthly and annual recurring revenue.
  • Provide a better user experience leading to increased customer satisfaction and retention.
  • Create an infrastructure for subscription or usage-based business models.

In addition to the advantages listed above, automated billing keeps a business from losing to its competition. Digital transformation is part of the future, and automation technology is a crucial aspect of digital transformation. 76% of CIOs report increased demand for new digital products or services during the pandemic, and 83% expect this demand to increase further in the upcoming years. Industries across the board are advancing revenue operations (RevOps) with technology. A business has to choose whether to get on board or fall behind. 

When is the right time to automate billing?

The decision to automate billing is an easy decision for many. Most businesses see the value in leveraging automated billing to free up resources that would otherwise be dedicated to billing. The challenge is establishing a timeline to implement an automated billing infrastructure. The effects of a change in billing reverberate throughout an organization. With so many stakeholders involved, the process needs to align several initiatives.

The most essential step in doing so is getting the timing right. Bad timing only makes the implementation harder, causing inefficiencies in data migration. By getting the timing right, all facets of business operations are on the same page, and implementations by each business unit happen hand-in-hand. The benefits do not stop there. With proper timing, a business will find that they can achieve more flexibility in their transition in revisiting goals during a phased implementation as opposed to something rushed and poorly timed. Finally, the right timing makes for the swiftest drive to market.

Key Inflection Points

The right time to automate billing is relative and depends on an individual business’s circumstances. But for all companies, the timing consistently relies on key inflection points. Below is a list of common triggers that can cause a company to change the way they bill.

  • Launching a new product: A product launch serves as a perfect experimentation theater for automated billing. As a new product or service is rolled out, billing and provisioning models need to be accounted for. Already placing a priority on designing a monetization strategy that makes sense for a new product, a transition to automated billing can be done incrementally at the product level. 
  • Pivoting to a subscription model: Like launching a new product, implementing a subscription model is an ideal time to rethink monetization and incorporate automated billing. Because subscription models rely on recurring charges, an automated billing system is not just an attractive option — it is a critical asset for success.
  • Accelerating growth: There is nothing more frustrating than having the potential for growth capped out because of antiquated systems that cannot match a business’s growth acceleration. As companies grow and claim more and more market share, outdated billing processes can cause bottlenecks in finance. A business can increase the efficiency of financial transactions to enable growth by automating many aspects of those transactions.
  • Acquisitions or mergers: When it comes to growth, an acquisition can be a perfect time to rethink monetization strategy. Following an acquisition, there will always be organizational restructuring and redistribution of responsibilities. This creates an environment where a new billing system transitions feels organic and timely for all departments involved.
  • Debuting a new go-to-market strategy: Part of designing a new go-to-market strategy is establishing a budget. As this process inevitably impacts revenue, it is an appropriate time to consider automating your billing process. 
  • Experiencing churn: The importance of retaining existing customers has been well-documented across many industries. A research study performed by Bain & Company found that “a 5% increase in customer retention produces more than a 25% increase in profit.” The study makes its conclusion that returning customers buy more from a company over time. Automated billing makes retaining customers and reducing churn much easier. This is achieved by removing friction from the billing process. When billing is simple, efficient, and self-executing, both providers and customers benefit by eliminating the painstaking and time-consuming process of manual billing or invoicing.

Building In-House or Finding a Partner

Once a business has decided on the proper timing for a new monetization strategy and automated billing system, it is time for the technical implementation of that system. Building the infrastructure for a new way of billing is a challenging and resource-consuming process. Rather than focusing on what they do best and developing products, the employees of a company could end up spending all of their time designing, implementing, and refining a billing system. For this reason, it is advantageous to find an expert partner who can walk through the transition with you.

Learn more about the pros and cons of building in-house versus going with a partner.

At BluLogix, we’ve been that expert partner for businesses across multiple industries, including SaaS, UCass and Telecom, Internet-of-Things, and Cloud Computing. We leverage over a decade worth of experience in designing and implementing billing systems to provide our clients with a seamless transition to automated billing. If you would like to learn more about how BluLogix can empower your monetization strategy, reach out to schedule a demo today. 

Digital Transformation: More Than A Technology Upgrade

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What is Digital Transformation?

Digital Transformation (DX) is the journey of creating new business processes or updating existing business processes using the power of digital technologies to improve customer experience, automate processes for increased efficiency and drive long-term business value. Many changes brought on through digital transformation are driven by customer expectations, which only establish higher and higher standards as technology grows. Throughout this change in processes, companies often develop new, more lucrative business models and revenue streams. Ultimately, digital transformation will lead to higher customer satisfaction and increased revenue when properly executed.

In today’s highly accelerated business environment, digital transformation is a must. Companies and firms that ignore evolving technologies and industry-altering software advances will inevitably fall behind and see their market share shrink. But how exactly is digital transformation put into practice?

What does digital transformation look like in practice?

At a fundamental level, digital transformation is realized through new workflow actions taken to digitize business operations. In the early days of digital technology in the workplace, this could mean anything from storing documents on a virtual server to shifting to email for direct communications. More recently, digitizing business operations often revolves around sophisticated software, cloud computing, Internet-of-Things, artificial intelligence, and big data processing to support a new go-to-market strategy.

At BluLogix, we help our clients to transform the way they manage billing and realize revenue. Our agile monetization platform, BluIQ, goes beyond the automation of billing processes to power every department involved in executing, tracking, managing, and monitoring the performance of delivering as-a-Service offerings. From enabling subscription and usage billing to managing provisioning and orchestration and countless more, BluLogix has facilitated digital transformation for partners in industries including SaaS, UCaaS, IoT, and Cloud Computing. 

All of the above examples reflect efforts to leverage the strategic advantages of digitization. But digital transformation is not just about implementing a new software stack or digitizing business processes. In fact, the most significant change a business needs to make for a successful digital transformation has nothing to do with investing in digital technology. The most important aspect of digital transformation is a cultural shift within a company.

Adapting your culture for digital transformation

When a digital transformation does not go as planned or is ultimately unsuccessful, there are usually common themes. The following are recurring errors we’ve seen in this culture shift:

  • Poor design of the vision on the part of leadership.
  • Lack of cross-functional communication and cooperation.
  • Failure to align transformation goals across business units.
  • Inability to generate employee engagement.

As the above list illustrates, failure in digital transformation is typically not a matter of selecting the wrong software partner or investing in lousy technology (though those can, of course, sink a digital transformation initiative). The biggest pitfalls in digital transformation revolve around a lack of preparation for the culture shock that comes with digital transformation.

When a company seeks to digitally transform its business operations, the entire organization needs to buy in. From IT and product development to accounting and human resources, every department must understand its role in digital transformation and how it impacts other business units. This is because digital transformation can have an effect on every aspect of a company’s operations. To account for the organizational shift, the culture of the organization needs to embrace innovation.

Taking Ownership at the Top

Of course, in any cultural adaption, leadership must serve as the spearhead. Digital transformation is no different: it must come from the top down. It is on the CEO of a company, along with C-suite executives, to jump-start, design, and implement an organization-wide effort to digitize business operations for revenue growth.

The role of a CEO is to see the big picture and plan for a company’s future. This is why CEOs’ responsibility, along with other executives like COOs and CTOs, to take the lead on digital transformation. Digital transformation future-proofs a business against rapidly changing trends and developing capabilities within their industry. While this involves implementing new technologies and digitizing business processes, directing and adapting an organization’s culture is paramount. 

C-Level executives and team leaders need to not only cultivate an atmosphere that welcomes transformation but incentivizes it as well. One primary reason employees may not welcome digital transformation with open arms is because it can cause massive disruption to their daily workflow. Understandably, this is unsettling. But the truth is that digitization empowers employees and frees them up to work on what they do best, and focus on innovation and strategy. This should be made crystal clear by leadership from the jump. Once an organization embraces digital transformation from the very top to the very bottom, the bridge to success has a rock-solid foundation.

For more insight into how cultural changes help adapt for digital transformation, view our blog post Change or Go Extinct. If you would like a test drive to see how BluIQ can enable your business to transition into a subscription or usage-based model, reach out to a BluLogix expert today.

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.