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As Services Move to the Cloud, Monetization Solutions Must Adapt

Agreements drive business relationships and billing processes must reflect this

Across service industries, companies are recognizing the value of delivery via the cloud, and they're adapting their business models to exploit the advantages. But the change to a new delivery mechanism only pays off if the new business models can be monetized, as well.

Today's evolving services are almost always characterized by an increase in operational complexity. As a general rule, most involve lengthier value chains with multiple interested parties (agents, partners, re-sellers, suppliers), two-or more-sided business models and a requirement for far more dynamic pricing and compensation than before. The old "one provider/one consumer/one price" business model is on its way out. Today, agreements drive business relationships and billing processes must reflect this.

Cloud-Based Services Need Agreements-Based Billing
Can cloud business models, particularly the increasing number that have an element of complexity inherent in them, be easily monetized? The answer is "yes," if you make the right IT decisions. But stick with an outmoded, legacy business support system and there's a real risk of missing out. For example, take the familiar flat rate Internet service packages we've all seen in the communications industry. The common "all you can eat" offering is not an example of service provider largesse, but rather an inability to bill for non-standard usage metrics not accommodated by traditional business logic. In short, the legacy billing system can't do more than it was originally designed to do, or at least not in a timely or cost-effective way.

Yet when enterprises do adopt technology capable of facilitating the fluid, personalized, multi-party agreements we see today, both inside and outside the cloud, they gain numerous benefits, including:

  • Winning competitive deals and exploiting partnerships where flexibility and differentiation are critical
  • Increasing agility in responding to changing market conditions such as new regulations
  • Collecting additional revenues without disruption
  • Meeting mission-critical strategic imperatives quickly, making the organization more competitive

ABB - a new paradigm conceived to monetize today's complex services - provides those moving to the cloud with the ability to negotiate and dynamically set parameters for the complex agreements around which their business models will likely be built. Modifiers such as rates, promotions, discounts, accelerators and more become easy to incorporate into the process and increase opportunities to grow the business. Meanwhile, monetizing a salesperson's list of accounts is also simplified, since accounting for corporate hierarchy, services, regions, period volume, new services and innovative pricing and business models is mapped automatically to individual agreements.

Monetization made for the cloud does what legacy and even off-the-shelf systems cannot by configuring metadata with profiles and supporting agreements and synchronizing with external account structures and product catalogs. Flexible billing structures are accurate, auditable and understandable, and they meet the growing need for chargeback modeling and proration bundles.

Top Five Best Practices for Agreements-Based Billing in the Cloud
We can see that companies have to work out how to exploit the cloud as a new service delivery mechanism and they need to have the infrastructure in place to do that. What steps should they take? Best practices in many cloud-related areas have yet to be created, let alone become firmly established. Fortunately though, when it comes to cloud infrastructure and particularly the monetization component, early best practices are now emerging.

Below are the top five best practices for deploying ABB in the cloud:

1. Accept that monetization is mandatory.
The best product or service in the world is valueless if you can't exchange it for money. Yet today's emerging business strategies invariably involve far more complex business models than ever, often featuring interrelated, multi-party relationships that make the corresponding monetization requirements more difficult to execute. But the fact remains, commerce today is driven by agreements, and that means the same ultimately has to be true of billing processes. Sooner or later, a billing solution based on ABB is going to be a pre-requisite. Businesses that get on board now will better serve customers and partners and ultimately increase their market share.

The simple buyer/seller model is disappearing. Business models have evolved from products to sophisticated relationship models. Mergers and acquisitions with supply chain players also serve as a way to capture new revenue sources and derive efficiency improvements - assuming that business models can be seamlessly supported by the monetization infrastructure. Now, deals involve an extended value chain of acquisitions, partners, suppliers, resellers and others. Uniquely negotiated agreements, product bundles and bespoke pricing are all increasingly commonplace. By managing agreements properly and in one place, a business can define and execute tailored workflows, enable online self-care and easily translate business terms into automated processes.

2. Deliver the transparency and auditability customers - and regulators -- demand.
Transparency is an inexorable trend across industries. An ABB solution helps because it simplifies the calculation, auditing and understanding of the state of agreements across many interrelated relationship models. In industries such as financial services, as an example, many companies seek to outpace regulation by charging clients fees (such as monthly charges for debit cards and online banking charges more similar to a traditional professional service model) rather than percentage-based rates. Other industries face similar challenges to maintaining revenue streams while also observing tightening rules.

3. Improve online customer care and stakeholder compensation processes.
While cloud-based companies must consider billing related matters such as pricing, bundling, discounting and promotional demands, there are other implications of ABB. The cloud increasingly demands the inclusion and bundling of third-party content and applications. This results in the need for the automation of fluid, personalized, multi-party agreements that take into account both billing and compensation - including revenue sharing, remuneration and settlement.

4. Recognize - and make use of -- the potential of online business to be global business.
This best practice requires accommodating multilingual billing and communications. This is complex. Global institutions must manage agreements in dozens of countries with multiple languages, currencies, tax codes and regulatory requirements. Billing and compensation solutions for these use cases must have the functionality to accomplish the required tasks, whether they are in the cloud or in on-premise environments.

5. Don't expect legacy systems to support cloud innovation, but don't scrap everything you have either.
A billing system is (almost) never a standalone entity. Most service providers have numerous enterprise applications, and more than one for billing. It needs to be integrated with other software components to create a complete solution. That integration should be seamless, and it should not require a business to scrap existing technology investments in order to adopt an ABB approach. Billing should fit your needs and work as an adjunct to your existing infrastructure, if that is what's appropriate.

ABB Benefits Innovative Businesses
The right monetization platform is critical to exploit the unique situations that every organization faces. Whether the need is for transaction enrichment and validation, auditing and transparency requirements, business model flexibility, hierarchical transactions, channel and reseller compensation, supplier compensation, customer electronic invoices for chargebacks or point-of-sale transactions, businesses should insist on the exact features they need to meet both current and future monetization requirements. This is likely to result in system change.

When organizations make these changes, they gain benefits that grow business. The first involves flexibility. This allows companies to quickly differentiate themselves for competitive advantage. They can quickly model any new business requirement, thereby reducing the time and cost required to go to market. Business analysts can create new service configurations that will be automatically reflected on bills and audits, as well as in customer care interfaces.

ABB also delivers freedom, since users can negotiate and monetize value from all customers while reducing receivables, improving customer care, and winning new business through the ability to individually tailor contracts. Users can reflect and act on recent trends in customer purchasing preferences as well, since these become clearer to track and view.

Finally, rich monetization options support the internal management needs of enterprises with rapid modeling and modification of account hierarchies and automation of repetitive processes. ABB therefore reduces the chances for error, and that increases customer satisfaction. With the right service, the flexibility of the cloud, and the monetization tools to create value, businesses in a wide range of industries have vastly greater potential for growth.

More Stories By Scott Swartz

Scott Swartz is Founder, President & CEO of MetraTech. He has over 15 years of software and services industry experience and spearheaded the deployment of MetraTech's billing and partner settlement solution for Microsoft's Cloud Computing services offering. He has a degree from Harvard University and was named a Technology Pioneer by the World Economic Forum.

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