Our team has previously highlighted why today’s CFOs and finance teams are requiring their tech stack to become more adaptive and resilient. As mentioned, there is a lot of excitement in the market about modern alternatives to the standard subscription billing model, which is falling out of favor because of its systemic rigidity, lack of precision and inability to capture a true view of usage.
With a renewed focus on optimizing revenue (top and bottom line), usage-based and other modern billing models are rightfully getting a lot of attention.
And while it’s great to see companies leaning into this business model shift, all too often I see decision makers try to band-aid existing legacy technologies to support this migration.
Which brings me to my table saw.
I’m an amateur woodworker, and I was recently thinking about my first investment, a table saw. It was a relatively good quality tool, and I built some great stuff with it. But, over time, as I started to become more adept and capable, it was no longer sophisticated enough to keep pace. I kept tackling more complex projects, but I was doing a lot of work around the saw. When I finally invested in a best-in-class, professional saw I kicked myself for not making the move sooner.
I share this story because I think it is a simple way to illustrate a common problem that many organizations are struggling to overcome – they want better, more sophisticated billing and monetization outcomes – but their systems can’t keep pace.
While those systems may have been sufficient for a particular point in time, they often lack the ability to easily adapt to the changing needs of the business. Or to do so, they require a hefty investment in resources and technology to support inevitable shifts in business model or strategy.
Resourcing a system that scales
Today most billing solutions can only handle a finite number of transactions - or a limited number of service dimensions - or only a set amount of data. With built in limitations like those, it is almost certain future growth will square off against a limited technology solution.
The foundation of any modern billing system needs to go beyond the base processing ability. It needs to be built on a foundation of intelligent components so it can scale to tens of millions of inputs per day - if not per hour – to effectively drive better returns, increase automation and reduce human error.
Extracting value - it should be simple, accessible and painless
First, you shouldn’t need an advanced technical degree to understand your billing and monetization system. You should be able to ask it to do everything you want - and more - whether you’re an engineer, product lead or in the finance department.
Your entire team should be able to push data to your chosen platform, via APIs or Kafka queues, from cloud service providers, databases, graphQL, REST APIs, or files uploaded to an AWS S3 bucket for example, to just to name a few. How? With drag and drop, no-code interfaces.
The problem is that while APIs have become the building blocks of modern software and business, requiring the system to feed off an API to get your data into the billing platform usually requires custom software development. Going down this path means that the average business user cannot look inside the black box of code to understand what is happening.
My advice on what to keep in mind
I talk regularly to customers that have written thousands of lines of custom code to account for the shortcomings of their billing solution. The catch is that the code was use case specific and now they feel trapped because they invested months if not years in developing this code. Now they need to change the model to meet the needs of their business, which will take months of time and energy (again). Moreover, the engineering team has singular responsibility for these changes, as there is no interface for non-technical stakeholders.
Is this really worth the struggle?
Or is it time to make a change and jettison the heavy burden of legacy coding currently hampering the business?
Over the course of my career I have held technical and leadership roles in software design, development, architecture, sales and deployment - for companies of all sizes. And, if I had one singular principle for technology buyers to follow it would be this: don’t buy for today alone, but invest in the future. Invest in your future success.
If you mentally flash forward – 12 months, 18 months and beyond – how might your requirements change?
I’d suggest you keep a few questions in mind as you begin the evaluation process:
What is the current billing process costing the business in terms of customer satisfaction and retention?
How are the limitations of the current billing system holding our business back?
What would the cost (resource and technology) be to address those limitations on the current platform?
Are we leaving revenue on the table because we can't access all the data we need to for the purposes of billing?
Can the current system scale to meet the needs of our business in the future?
Check out our latest white paper for some additional guidance on making the move to a usage-based model: Future of Pricing Guide
Any questions, comments, or clarifying points? I’d love to hear from you. Feel free to email me at michael.bowlin@monetize360.io.