Defogging the Cloud webinar
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Defogging The Cloud where you'll hear Billingviews.com Publisher Alex Leslie, as well as our own billing expert Jason Mondanaro walk through best practices for choosing the right monetization solution for your business.
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Defogging the Cloud webinar
- 2. 2 Welcome Alison MacLaughlin Moderator Marketing Director, MetraTech Use the chat window to submit your questions for today’s webinar. Follow the conversation on Twitter #defogthecloud
- 3. 3 Your Presenters Alex Leslie Publisher Billingviews.com Jason Mondanaro Director of Product Management MetraTech
- 4. 4 Traditional and Evolving Answers Hosted Cloud-based Application Service Provider Software as a Service Managed Services Outsourced Billing as a Service
- 5. 5 Hosted Billing In the cloud Customizable for each customer Longer contracts Enterprise software configured for each customer
- 6. 6 Software (Billing) as a Service Not customizable per customer Multi-tenancy Upgrades dependent on provider not customer Levels of complexity vs. business model sophistication
- 7. 7 Managed Services Partnership based on trust Hosted at provider or customer Software either provider’s or customer’s http://www.billingviews.com/heck-cloud-billing-anyway/ Outsourcing day-to-day management responsibilities
- 8. 8 Where will your billing system be physically? Who is going to operate each layer of your technology cake? Balance of exclusives or sharing? What does it need to do? Beyond the Labels
- 9. 9 The Trade-Offs of Location Resilience Elasticity Incremental Capex Opex In Your Own Facilities Low/Depends Low Very High Low In a Co-Lo Medium Low Medium Low In the Public Cloud High High Low Medium What characteristics are important for your billing solution infrastructure?
- 10. 10 Who’s In Control? Infrastructure Infrastructure Operations Application Application Operations Customer Provider IaaS Vendor OS and Base Systems Customer Provider Customer Provider Customer Provider PaaS Vendor Who will operate the components of your solution?
- 11. 11 Balance of Custom and Upgrades We’ll get right on that feature! Features are free! As soon as you sign this SOW… But we only work on cool ones, and they come on Thursdays… You get what you pay for, but not everything you want may be for sale.
- 12. 12 What is Billing to You? And that is the supplier revenue share portion of the global contract discount rebate… OR Just price times quantity? Or do you need to run complex contractual billing and settlement?
- 13. 13 Can a Single Number Do it All? Service Provider Desires: Cover Costs Maintain margins Grow Business Customer Desires: Receive Value Be treated fairly
- 14. 14 Value Curve in a 3rd Dimension Amount Willing To Pay Functionality Utilization Flat Subscription Price Bigger Cheapskates Gobblers Lost Opportunity Cheapskates Potential Opportunity Customers Waiting for Something Better One price but unlimited functionality -- what is the market perception?
- 15. 15 The Subscription Cliff Customer’s behavior changes Adding more price points introduces more decisions Potential Increase Churn
- 16. 16 Flat Fees By Another Name Consumption models may automatically scale with your customers, but the market may wash your margins out with the tide.
- 17. 17 Need to track more forms of utilization and establish new measures of value Need to allow customers to use more if they want to but be aware of consequences Go Beyond Single Prices
- 18. 18 Establishing New Measures Boundaries are everywhere in business. But there are consequences to crossing They are intentionally permeable
- 19. 19 Customer Perception Matters Influencer “Now Cast” EnforcementInformation
- 20. 20 Driving Customer Behavior Peak and Off Peak Promotion Periods SurchargesCo-Pay SLAs Commits Volume Bundling Cash Flow TRANSPARENCY
- 21. 21 Big Data Is Not Enough Is this data or information? With one day left in the bill cycle, how does this information help me?
- 22. 22 Behavioral Billing™ Operational data must be in a business context that matters
- 23. 23 Now-Casting and Notifications Shared language for value Configurable thresholds and limits for notifications
- 24. 24 Turn it Up a Notch What if APIs were used for data-driven product creation & pricing rather than data synchronization?
- 25. 25 Intelligent Product Configurator Product Costs Profitability Goals User Behavior Intelligent Product Configurator Real-time Offers Product Managers Package Changes Customers Now-Casting Real-time Notifications Automating new Product Development based on Customer Behavior
- 26. 26 Science Fiction Not Fact Airlines’ yield management systems Amazon Web Services spot pricing Geolocation driven coupons Exchange Powered Business Models Prices vary up and down customers pay on value not on equal price.
- 27. 27 Questions
Notas del editor
- Where – In the end Super Storm Sandy among many other disasters in the news tells us that cloud or no, all our IT systems are in fact rooted in some physical location. The question is how can you leverage both providers and architectures to protect yourself and in the best case scenario be in “two-places at once” at the very least!There really are only three places where you can run your IT systems these days. You either run them in your own building/facility, you rent space at someone else’s facility or you run it in the public cloud. It is very rare that people’s own facilities are highly resilient Most office buildings do not have multiple provider utilities you probably have limited square footage and a minimal number of spares of equipment regardless of how you’ve configured your servers. Co-Lo facilities have similar issues although their physical plant is often more robust, there are still limits with a single building (SquareSpace Anecdote) and you still have the spares question. Often this is why the Public cloud is becoming a superior option. Not only do you have redundant facilities (assuming your applications are architected to take advantage!) but they take care of the economies of scale with physical spares.Some may be asking but what about Hosting at my Provider’s? Well your provider has themselves chosen one of the three options above so you better figure out which one it is and estimate the likely impact.
- Who – Who is going to run each layer? Who buys and installs hardware, swaps failed drives, wires the network? Who patches security flaws and database upgrades, who upgrades your billing software itself or even runs it? Do you have people who can do all this? Do you want to have people spending time doing all this?Over 8 Combinations here. What does “On-Prem” mean when your licensed software is run in the public cloud? What about “Managed Service” or “Hosting?” The technology stack can be split across so many vendors now that these traditional terms almost have no meaning without a follow-up sentence for clarification.
- Balance – Exclusivity has a price. If you want to be able to develop new features and capabilities at a whim and with any integrator you want you may have to pay for it. However, if you don’t mind being flexible and waiting for consensus, you can save a lot by taking plain upgrades as supported by your maintenance or service.
- Billing at the root is just figuring out the amount to put on an invoice and get paid! There is a whole gamut of capabilities out there from simple POS platforms that generate receipts for purchases, to recurring billing services, all the way to powerful settlement and agreement contract management systems. You need to understand where you are today, and where you might be tomorrow.Let’s dig a little more deeply into this aspect of Billing. It has a little to do with pricing, and understanding the consequences of pricing models.
- What is the perfect Price? It is a matter of perception and therefore as varied as there are suppliers and customers. Beware of Simple Answers, often they just move the challenges to a different part of the business.When you are just starting you may be tempted to keep things simple and go with a single Subscription price.
- Value Curve == Blue Ocean Strategy term. But for any given Value, what is the resulting population in the market?Speaking Points:With a single subscription price you have split the market from those happy to get the service and those for whom it is not a good value. However, while the value is good for everyone to the right of the price line what are the other impacts? As a Service Provider you have some population of “Gobblers” who are seriously over utilizing your service. Will you always have enough low-cost users to offset them? Will low feature users develop a sense of unfairness in the pricing? After all they are paying the same amount as the gobblers, this may adjust their perception of the value over time and result in increased churn. They are also susceptible to simple and niche services. One of the big promises of SaaS is constantly increasing features and functions for the same price. But does that make sense? How big are each of these audiences? How can you get more?
- Customer’s behavior and usage of services has some degree of variability. If you add more price points and limitations on features available at price points then you are bounding customer behavior is smaller and tighter boxes. Bumping into cliffs and walls are not comfortable and invite the customer to re-evaluate their purchase of your service on a frequent basis. Spending more money might invite a new purchasing process and evaluation hindering business agility for both vendor and customer.Many Cliffs does not equal Stairs….
- Who has a finite number of minutes on their mobile plan?What happens when you hit the limit?Frequent Flyers out there, how close are you to premier status this year?Do you want to finish the year at 49k or 99k miles? No! -> Flights to no-where in December.Image Source: http://24.media.tumblr.com/tumblr_lmiyzccTpY1qkso5no1_400.jpg
- Who always drives the speed limit? – Boundary without enforcementWho likes Red light cameras? – Boundary with explicit enforcementWho generally slows down when given a warning? – Boundary with InfluenceCustomers know when they’ve breached a contract boundary and have to pay more or penalties. They usually will be very upset and turn the problem around: “How dare you not warn me that I was doing something that was going to have consequences!”Tie back to Airline example if you knew you were only a few hundred mile short of premier status you might take a random flight to nowhere in December. Otherwise in January you’re going to be very angry.
- So there are lot’s of ways business can attempt to influence behavior. And they all generally come down to dollars and cents.Free-Nights and weekendsSpot Pricing for compute hours to maximize utilizationCommitment contracts to offset capital investmentThe key is transparencyBut what can your customers see?
- I get an Azure balance update every 3 days. I see the number go down, but I’m the one who has to keep in my head my burn rate, my lead-time for issuing a PO, how long my vendor take to reflect a payment etc… to know when I should add more money.What does this ATT message mean? I have 1 day and 35% of my data plan left. So is this saying I have nothing to worry about? Has my usage trend grown so much that I might actually run out by tomorrow? What is the point of this message!?
- MetraTech is introducing what we call Behavioral Billing. Which tries to add context to data by the system that is most likely to have the context people care about (Financial!) and that’s the billing system.
- Many back office systems have Product Catalogs, CRM, ERP, Billing, CPQ. Each have different abilities and need to be integrated so they have APIs. But what if we used the APIs not just for mundane data synchronization but instead data driven product creation? Automatic generation of A/B testing versions of products etc..?
- Airlines – We are all familiar with constant price fluctuations, the best price actually isn’t the earliest price (No incentive to discount early)Amazon constantly monitors capacity of hardware compared with expected demand and underlying costs, uses Spot Pricing to fill the gaps and increase profitabilityWe are seeing Location based services just taking off where people can be given a coupon or incentive based on proximity, maximizing context and as they add relationship tracking will be able to offer more advanced options.Of course the most common grand-daddy model is any exchange based business, which is moving from commodities and auctions into cloud, peer-to-peer car rental services and more.