Is your Tech. Service Firm ready for the hybrid billing and the subscription economy?
As the cloud becomes the dominant way of deploying software and services, Technology Services Firms (TSP's) are waking up to the onslaught of the subscription economy and its impact on their internal systems. New forms of client engagement are forcing TSP's to innovate and give customers a number of options -
One time services
Milestone based delivery
Time and expense
or a combination of the above. In the past TSP's could prescribe its preferred method of working, but now customers are asking for more choices forcing TSP's to gear up to be ready for hybrid options. Unfortunately most TSP's, especially the smaller ones, are not ready - from the pricing, execution as well as the billing perspective.
Earlier delivery engagements were based on professional services billed typically as one time services, project milestones or time and material. This lead to a slew of Professional Services Automation based software applications become the primary method of execution. With the arrival of the cloud, SaaS products and subscription billing became the defacto method of engagement. Subscription billing started getting more competitive, and usage billing became a good way of diffferentiation. For each type of engagement, the pricing, contracting, execution and billing mechanisms have to also follow suite.
Most smaller TSP's were geared up to handle only one or two of these engagement types. A SaaS provider could insist on subscription billing and ignore milestone billing and time and expense billing. A software reseller could insist on time and expense only and avoid fixed bid milestone based billing or subscription billing. A system integrator could focus on milestone billing and ignore subscription and usage billing. Its now becoming clear that as a TSP, you may have to defer to your clients choice and hence be ready for any form of engagement and billing. Its no longer a nice to have hybrid contracting and billing capability, but a necessity.
In fact, smart vendors are using the hybrid capability as an opportunity to differentiate, using it to win larger deals over competition. Customers some times insist on usage based or fixed bid deals to enable predictability in their budgeting and cash outflows as they scale or downsize. Vendors who are sure of their approach are able to make commitments to sweeten the deal and win but the lack of options can lead to lost deals or lower margins.
Hybrid billing - the ability to contract, execute and bill any of of the above forms of engagement is difficult to achieve without automation. Contracts, execution tracking, billing, payment tracking and analytics - the entire revenue management cycle needs to be geared up for each engagement model. Its possible that one contract could have many deliverables, each with a different engagement model which needs to be contracted, executed, billed, paid and tracked together. A system that automates all these processes and types across is crucial to survive and thrive in the future hybrid world.
Unfortunately there are only few products which meet the above criteria. TSP's are hence forced to manually handle the contracting, execution and calculations part of the cycle. Most TSP's automate only the final part of raising invoices - primarily because their accounting system needs it and the rest stays manual. The negative impact of living with manual systems is massive - revenue leakage, lower price realization, customer disputes and dissatisfaction, delayed billing and lower working capital, high administrative costs, and lost deals.
The software products that can can do the full cycle with all combinations are expensive and only Tier 1 customers can afford it. Mid sized TSP's usually automate their processes using custom development, but often find it difficult to maintain or improve these legacy applications to make it relevant for the future. The net result is that a surprisingly large number of TSP's are using spreadsheets instead of automating their processes.
Stragiliti is a hybrid Revenue Management and Billing Software that automates any form of engagement covering all types of billing - Service, Project Milestones, Time and Expense, Subscription and Usage based. Its has a modular design enabling one to start small at a lower budget in a pay as you go model and scales up to handle complexity and volumes.Stragiliti is built on its own low code platform ensuring flexibility, scale, performance, quality and security. Its ideal for small and medium TSP's who realize that hybrid is the way to given the trends in the subscription economy. For more details visit