Cloud Services vs. Managed Software

Choosing the Best Solution to Enable Your Recurring Revenue Business

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.

Customers Have More Choices and More Power

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.

Legacy E-Commerce Systems Don't Fit The Bill

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.

Need to Support Customer Relationships, Not Just Transactions

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.

Key Considerations

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:

  • Experience - How much experience should a vendor have? It's important to look for expertise and experience in monetizing businesses, with an eye towards increased profitability through expanded business model options. Typically, managed software providers have solutions that have been tested by software experts. Though on-demand service providers have not been around as long as traditional software service providers, they are expected to offer the same high-quality user experience, features, and functionality offered by managed software providers.
  • Flexibility - While managed recurring revenue systems come with built-in processes based on industry best practices, they must be sufficiently flexible to accommodate the rules and processes unique to each business. Solutions must support business practices but not define them. User-friendly interfaces should accommodate native data formats and schemas so that business rules and logic are easily customized.
  • Integration - A recurring revenue solution that doesn't integrate seamlessly with existing systems is more trouble than it's worth. Software designed with open architectures accommodates emerging applications, allowing the introduction of new technologies to the enterprise. Full featured applications provide a broad range of connectivity options to various data sources such as common ERP and CRM applications, which are critical for ensuring that existing systems are in sync and up to date. Businesses may also require Application Programming Interfaces (APIs) to enable automated communication with the recurring revenue system and related functions such as provisioning, registration, and accounting.
  • Integrated Customer Care - Billing and customer care functions are interdependent and critical to each and every customer's decision to continue doing business with a company. As a result, a recurring revenue platform must provide integrated support functionality, such as user self-service and a customer care portal for account management.

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:

  • What's the typical deployment time?
  • Will the infrastructure support the volume of customers now as well as going forward? A year from today? Five years from today?
  • How will the solution integrate with existing systems?
  • Is the solution enterprise-grade?

How does the solution's provider support upgrades, provide professional services and keep the system current?

  • Will the solution accommodate existing business rules and processes?
  • What is the provider's proven real-world experience? Can the provider talk to customers and partners?
  • Is the solution compliant with the requirements dictated by the credit card industry and federal regulations? And how does the solution's provider keep those requirements current?

The Case for Cloud Services

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:

  • Faster time to market - By their very nature, cloud service providers must provide their services to many businesses at the same time, not just one at a time. And those businesses can span a wide range of industries and subsectors within industries. To survive, cloud service providers have become adept at continually updating their offerings to meet the demands of this broad and diverse market. Thus, customers of those cloud providers benefit from constantly updated features, usually without having to do anything to benefit from all those cool new bells and whistles.
  • Scale - Enterprise-class solutions are by definition scalable, allowing the business to grow as fast as desired. Unlike managed software solutions, on-demand, cloud-based billing services transfer the burden and risk of scaling to the provider. Irrespective of whether their customer base increases or decreases, companies using on-demand cloud services can get what they need without the risk of purchasing too much or too little infrastructure.
  • Low Total Cost of Ownership (TCO) -High costs are the primary drawback of buying software deployed on-premises. With no hardware or software to be purchased, companies using on-demand cloud services pay only for the functionality they need, avoiding exorbitant up-front fees.
  • Security and Compliance - Cloud delivery enables businesses to leverage powerful security and compliance controls for each and every transaction built into the provider's service. Superior recurring revenue management—including key billing and payment functions—are always up to date and certified by PCI Data Security Standards set down by the credit card vendors.


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.

About Aria Systems

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.