Too often when large enterprises begin to look at number justification to move onto the cloud, many seasoned executives are struck by the limited enterprise class billing choices that the model is able to provide – Granted this is an evolving space, the urgency in getting this done can’t be understated.
Let’s look at the basics :
The Advantages of cloud are far too well known :
-Pay subscription on usage -Enables usage of the current version and focus is on continuous service -Economies of scale and anytime, anywhere, ubiquitous use
There are clear upside to the whole cloud horizon when we are able to make determinations on issues around providing options to customer /providers in terms of
-Flexible pricing – spectrum from subscriptions to pay-per-use -High Volume – Low touch sales model -Elastic scaling – ability to scale up and down
When existing business computing models gets disrupted and order of magnitude business performance improvements are looked at, paradoxically the cloud paradigm offers both unmatched opportunity and competitive challenges for software and services providers. But seen from a customer perspective, too often the thought chain gets dimmed when the actual issue of metering and billing gets reviewed by customers. It transpires that as the mindshare of cloud picks up among the IT buyers and the various players begin to align we see that too often the locus of value creation is shifting within the Cloud ecosystem and with it the balance of power between service providers and channel partners. This is huge change in the ecosystem. The reality is that successfully transition to SaaS will affect every aspect of the company, including key operational systems such as billing and payments.
The complexity in providing multiple levels of flexibility to customers in metering and billing are far too complex in real life and warrants careful determination of choices. Billing, administration and related marketing capabilities are essential in meeting the new operational challenges of a Software-as-a-Service business. More often than not the new models inject potential conflicts/role clarity amongst service providers, channel partners and in the process as Saugatuck brings out raises very fundamental questions like :
-Who owns the customer? - What is the best way to compensate channel partners? - Is the partner paid a commission for managing a customer that the vendor owns? - Or does the partner own the customer and pay a revenue share? - Can the partner up sell its own offerings and keep it all?
Obviously there are many possible answers to these questions and some answers are beginning to appear and in this direction the landmark study helps finds answers by taking a detail oriented view to evaluation options. Emergence of cloud based billing solutions reflects the fast pace at which things are evolving and the report notes that Cloud billing solutions have targeted Web providers of content, online gaming, virtual worlds, media and entertainment – primarily consumer offerings – as well as SaaS, SaaS enablement, PaaS, business media, business content and other online business solutions. On-premise solutions have moved into a variety of other verticals and segments, such as media and entertainment, financial services, transportation, SaaS, SaaS enablement and Cloud Infrastructure.
I think we will get an ideal monetization view across the cloud ecosystem in a few years from now but for early adopters we need more choices and more analyses and here’s one helping the progress.
Just came across the report from Royal Society, - the UK's national academy of science, - Hidden Wealth: the contribution of science to service sector innovation. Innovation to services and its linkage to hard sciences happens to be one of the core focus area of this report. This excellent report presents the findings of a major study on the role of science, technology, engineering and mathematics (STEM) to innovation in the services sector. One of the pioneering and comprehensive investigations of the impact assessment of services innovation in the current age . Why is service sector economy so important? Let’s look at the significance of this : Over 2/3rd of the global economy (GDP)is centered around services with developed countries seeing a greater percentage of service sector contribution to their national economies. By far the single largest employing sector in the developed world, the significance of service industry cant be overlooked. It goes without saying that the competitiveness of service sector along with government policies and implementation efficiency would to a great extent determine the competitiveness of the nation. The study revealed that STEM is omnipresent in the service sector, but, unlike the case in the industrial sector, its impact is rarely recognized. The Hidden Wealth study, points out that despite the great significance of services to global economy, their nature remains somewhat undefined and is invisible under a majority of circumstances ! Employment and economic vibrancy in developed countries hinges on service sector and hence this is an important body of study and the findings very relevant and useful to developed nations in large measures and by extension to global economy.
The report reinforces the traditionally held view about service sector :"Our main conclusion, . . . is that services are very like to remain central to the new economy, not least because we are at or near a tipping point: innovations now underway seem likely to change dramatically the way we live and to generate many services (though few can be predicted in detail at present). . . ."
"Scientiﬁc and technological developments have triggered and brought about major transformations in services industries and public services, with the advent of the internet and world-wide-web . However, the full extent of STEM's current contribution is hidden from view - it is not easily visible to those outside the process and is consequently under-appreciated by the service sector, policymakers and the academic research community. This blind spot threatens to hinder the development of effective innovation policies and the development of new business models and practices in the UK."
Services rely signiﬁcantly on external STEM capabilities to support or stimulate innovation - indeed they tend to innovate in more external and interdependent ways than manufacturing ﬁrms. This can take the form of bought-in expertise or technology and collaborations with suppliers, service users, consultants or the public science base. Through these ‘open innovation’ models, service organisations respond to the knowledge, science, and technology that they see being developed elsewhere (eg in other companies or universities), and use collaboration to solve their problems in innovative and competitive ways.” The Hidden Wealth report eloquently makes the case that most of the economic value of breakthroughs in science and technology will likely be realized through services, and thus, this is the area around which most new, high paying jobs will be created. In conclusion: “The main message of this study is that the contribution of STEM to service innovation is not an historic legacy, nor simply a matter of the provision of ‘human capital - important as the latter may be. STEM provides invaluable perspectives and tools that will help to nurture emergent service models and deﬁne future generations of services for the beneﬁt of businesses, government, and citizens.”
While trying to find answers for questions like what kinds of innovation will best help us to emerge from recession stronger than we went in, to gain market share, or to thrive in new and exciting markets, the GT report finds that the U.S. is the easiest country to create innovative products, services and business. Different geographical regions have varying degree of emphasis on innovation. Innovation in general is regarded as a top corporate priority by more executives in Western Europe (41 per cent) than in North America (33 per cent) or in Asia Pacific (31 per cent), while Asia Pacific places higher emphasis on customer led innovation . One of the key finding is the role of customers, along with the attitude of companies to their customers, emerges as a defining characteristic in the survey. The report notes "No longer simply passive recipients of goods and services, customers now help to shape the future of their own consumption." They are now the leading source of innovations globally (41 per cent), more important than anything inside companies, including research and development. Clearly, co-creation seems to be driving more value.
On innovation, the report draws four main conclusions:
- Pay more attention to what your customers say and their ideas for innovations - Consider expanding your open innovation projects and working with more third parties - Look outwards, explore new markets, rather than drawing back into your domestic market - Capitalise on the great shifts of the age, the move away from carbon-based energy and the emergence of China and India as major trading nations with huge consumer markets.
As I wrote here, in this age of contribution economy – a phenomenon that we are seeing ever since the Internet started to connect everyone to everyone else all the time, people from around the world can more easily contribute leading to exploding results - caused by the coming together of energy, ideas, and knowledge. Some of the more familiar examples of these collaborative efforts include blogs, open-source software, podcasts, and even the nonprofit online encyclopedia Wikipedia. We are also seeing customers leading the charge of innovation and the economist article on user led innovation exemplifies a new form of collaboration. The rise of online communities, together with the development of powerful and easy-to-use design tools, seems to be boosting the phenomenon, as well as bringing it to the attention of a wider audience