There is an ongoing migration of businesses away from traditional one-off product sales towards a more flexible pricing model based on subscriptions and pay per use. The subscription revolution is gathering momentum across a spectrum of industries.
We have asked senior IT professionals across a broad range of industry verticals about a clear move to digital products and services that paves the way for the delivery of subscription-based offerings. We believe there has been a distinct drop in the provision of non-digital products.
Non-digital services follow the same trend, with the proportion of companies offering digital products set to rise. Many businesses are gearing up to move to a subscriptions-based approach.
In spite of these positive trends, the sustained success of the simple subscription-only business model is not guaranteed. In fact, this model is becoming increasingly vulnerable today in what is an ever more crowded market where the simplest services are also the easiest to copy.
To differentiate their offerings, businesses will increasingly need a range of more sophisticated pricing and packaging options that address the breadth and depth of consumer and corporate needs.
Currently, many businesses are not deploying anything of the sort. We believe that more than half of all businesses today are still using either an in-house-developed system or manual processes to bill their customers.
This is not sustainable. Unfortunately, in-house systems are typically not agile or sophisticated enough to handle the transition and manual processes cannot be scaled up and down according to need.
However, new subscription-based business models can be better complemented with enterprise cloud billing offerings which can deliver flexibility and agility.
They can enable businesses to easily mix and match service and usage-based pricing, as well as quickly set up new services and start billing for them, without the need for any on-premises infrastructure or upfront licence fees.
The flexibility this provides in turn creates opportunities for resellers and other channel partners proactive enough to integrate it with their broader digital technology offering.
All the evidence suggests that the cloud billing market is about to undergo rapid growth. It is currently relatively small in the UK, with a tiny percentage of respondents to our poll using a cloud billing system or SaaS approach today.
However, some say they are using a managed service, and with cloud penetration generally on the rise, we foresee dynamic growth in the cloud billing market as businesses strive to meet the demands of the new subscription-based economy.
The ability of cloud billing to support business agility and flexibility and help companies match products to the market's demands is key to its attraction.
These characteristics are appealing even to small businesses and start-ups looking to get a foothold in the market by introducing new services quickly and cost effectively as well as to more established organisations wanting to expand into new markets or geographies. Working in the cloud provides that and any smart business should be looking to do its billing this way.
Cost savings are the biggest perceived benefit of cloud billing systems, particularly among large companies where a sizable proportion currently uses on-premise enterprise software. Many identify reduced cost as a key benefit to be derived from cloud billing.
Cost saving appears to be much less important for smaller businesses, which are motivated more by wanting to introduce a structured approach to billing and ensuring the information they need to drive their pricing strategy is easily accessible.
Resellers of enterprise applications and hosting services such as IaaS can easily add cloud billing to their portfolio with little or no upfront investment.
You can look to create more value for your customers over and above the user benefits. By providing an enterprise billing service, the channel can enable businesses in any vertical to help their customers differentiate themselves by offering more flexible billing and pricing options.
By being able to easily bolt on a billing application to an existing portfolio of hosted or managed services, any channel player can create a one-stop shop for customers. This can boost loyalty and make the relationship more valuable.
Cloud billing vendors can further broaden the opportunity by allowing their channel partners to white-label their products. Cloud billing is a fast-growing sector, bringing a wide range of benefits to suppliers and their business customers.
These benefits are likely to grow over time as the market continues to mature.
Louis Hall is chief executive officer of Cerillion
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View photos of all the winners from the 2018 Channel Awards
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