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Right Monetization Platform – Critical Success Factor for SaaS Offerings?

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15

Dec, 2014

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Once a company has developed a SaaS offering and working on how to launch the offering to the market, it is time to choose a right monetization platform. Whether the service providers are shifting to a SaaS model from a traditional packaged-software approach, or adopting a SaaS model from the outset, they will need to plan for the management of their services catalogs, price simulations to arrive at the optimum price, customer usage metering, and, most important, billing. Planning a business operations strategy from the beginning ensures that the SaaS provider can deliver services to its customers and also properly guides itself to monetize those services to sustain the business. A robust SaaS monetization platform will allow providers to offer flexible and varied payment and contract options – for example, a pay-as-you-go model to customers who prefer the stream of small payments with the option to leave, rather than a large up-front payment. To that end, the platform must provide access to tools and data for the proper analysis, delivery, and mediation of these varied transactions.

Vendors can build the monetization platform, but then need to carefully evaluate the “build v/s buy” options. While companies may be tempted to develop their SaaS business operations capabilities on their own, there can be advantages on relying on another provider for these services. Defining and developing the best practices of a SaaS company can be daunting if these disciplines are not part of the SaaS provider’s original core competencies. Selecting a platform that makes billing and subscription management easy can be a critical differentiator.

Expediting Business operations:

Although SaaS is intended to simplify the customer’s experience, maintaining good customer relations becomes critical for SaaS providers with the subscription-based sales model. A big difference between traditional, licensed software sales and the SaaS operations is the continuous metering and billing of customers in a subscription model, rather than requiring one payment at the beginning of the relationship followed by lump payments for maintenance and support.

Besides billing, service providers need to carefully plan how their SaaS offering will fulfil the following:

  • Easier setting up of new accounts
  • Handle dynamic pricing and rates
  • Meter customer usage and generate invoices
  • Deliver physical or electronic bills
  • Handle remittances and automated payment processing
  • Handle collections and dunning
  • Handle service suspensions and account activations/deactivations/reactivations

Best practices in business operations help a provider retain existing customers and obtain new ones, and increase the provider’s margins by speeding up payment, customer management and in increasing revenue. Feedback mechanisms such as customer usage analysis and metering data in a SaaS delivery model can be used for trending and forecasting. The bottom line is that effective business operations are critical to the success of the SaaS offering. SaaS providers for whom metering, billing, and contract management are not core competencies may benefit from outsourcing these tasks to experts.

By : Satish Garikipati

Satish Garikipati is a consultant with SURE! (a Magnaquest product). SURE! is an internationally acclaimed player in comprehensive end-to-end Subscription Business Solutions for PayTV, Broadband and Cloud Computing businesses – through deployment of Metered Billing, CRM, Service Fulfillment, Value-Added Services, and Managed Services.

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