Is it better to buy managed on-premise software or buy an on-demand, cloud billing solution?
That is the question. This e-paper discusses what's required to power today's successful recurring revenue models and outlines the pros and cons of the two deployment models so that you can answer that question to best support your business and your customers.
For those who still wonder if building a system is a viable option, they should know that unless their company's expertise lies in the comprehensive enablement of recurring revenue models, it's best to direct resources to core competencies and outsource to proven managed service providers who have accrued the hard-earned expertise in monetizing products and services. Managed recurring revenue solutions alleviate the need for in-house developers to become experts on the myriad of recurring revenue enablement issues. Most importantly, however, outsourced solutions provide the flexibility and control needed to accommodate changes to the business, such as adding new revenue streams, growing the customer base and meeting regulatory controls.
Because of innovations over the last decade in how products and services are delivered via the Web, consumer buying behaviors have changed - forever. Today's consumers expect a broad-range of purchasing choices in industries that previously had few options. Think about how consumers used to buy music, movies, and software in the last century compared to the many options now available. "All-you-can-eat" subscription offerings have supplanted one-off transactions, providing new found convenience for customers anywhere, on any device. E-commerce has leveled the playing field for businesses - it's no longer about where they sell their products, but how. It's about offering competitive pricing, appealing promotions, superior service, and flawless execution. The reality is that if business doesn't keep their customers happy, those customers will take their business elsewhere.
Companies reaping the rewards of recurring revenue models know the importance of having a flexible billing and customer care solution working behind the scenes. Monetization, including billing and payment capabilities, has shifted from an operational necessity to the key element in business strategy, as customers increasingly demand to purchase and pay in ways that appeal to them. The requirements for a modern billing solution stretch beyond invoicing and payments; they include greater customer satisfaction, faster order-to-cash, reduced operating costs, and decreased security and compliance risks.
Once a company makes the business case to implement a solution to support recurring revenue, the first decision is whether to build or buy an on-premise solution or to outsource to a cloud-based service provider.
Many businesses don't execute recurring revenue models successfully because they try to use existing legacy e-commerce and accounting systems. These systems are often inflexible, usually designed for one-off transactions. This can make it extremely difficult to foster long-term customer relationships.
Older accounting systems are designed to look at past transactions to represent the financial condition of a business. What's required for new revenue models is a modern system to manage events in real-time and allows customers to interact whenever they like for making purchases, changing their billing options, or requesting support.
E-commerce platforms are designed to handle credit card transactions or other electronic payment methods. Rarely can they be scaled to sign up customers, turn on services, track usage and easily manage customer disputes. Companies that try to use legacy accounting systems and e-commerce platforms to support their recurring revenue initiatives typically find that the only way to resolve problems is through manual intervention, which is prone to errors, and which, in turn, can impact regulatory compliance. It's also impossible to scale.
Companies that enjoy success with recurring revenue focus on recurring customer relationships rather than just recurring transactions.
An enterprise-class recurring revenue management system is designed to manage and automate the buying experience, enabling customer acquisition, product and service delivery, management and rating of usage, financial interactions, and customer management. Companies that deploy these systems can make ongoing adjustments based on customer needs as well as the needs of their business, resulting in more satisfied customers, increased sales and recurring revenue - revenue that can be counted on for years to come.
The decision to buy software or a Cloud-based solution hinges on the strategic objectives of the business. For example, a company seeking to reduce costs and risks by automating business processes such as billing, finance, or customer relationship management should purchase a solution developed by software and billing specialists. But what's right for one organization might not be right for another. To that end, here are five factors to consider when starting the due diligence process:
With those factors in mind, here are some key questions to help determine which vendor and deployment method is the best fit for your current and future business needs:
How does the solution's provider support upgrades, provide professional services and keep the system current?
The distinct advantage for on-demand delivery of cloud recurring revenue management services is that they do not require purchasing, installing, or maintaining software or hardware, reducing IT expenses and management headaches.
Here are four additional advantages that on-demand cloud services deliver:
For those companies looking to capitalize on a recurring revenue model in an ever-changing business landscape, robust and flexible on-demand cloud-based services have many advantages over on-premise managed software. That's because businesses large and small benefit from a robust, best-of-breed solution to generate more recurring revenue with less effort. Plus, the upside is endless in terms of generating long-lasting, profitable relationships to keep customers coming back for more.
Aria Systems powers recurring revenue for the enterprise enabling market expansion, improving customer relationships, and providing more revenue predictability. Aria is used by brand name companies such as Pitney Bowes, AAA NCNU, Experian, Red Hat, Ingersoll Rand, EMC, VMware, and HootSuite to evolve their recurring revenue businesses while delivering outstanding customer experiences.