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SaaS Authors: Mehdi Daoudi, Elizabeth White, Pat Romanski, Rajeev Gupta, Christoph Schell

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Blog Post

Cloud-Based Billing vs Cloud-Driven Billing By @IanKhanLive | @CloudExpo [#Cloud]

The SaaS model has truly revolutionized the way software is being used

Building a case for the cloud is extremely easy. I can list 10 different elements of the cloud that make it the best thing since sliced bread!

The SaaS model has truly revolutionized the way software is being used. Convenient, hosted on the now cloud, without the need for IT or hardware and so many more advantages. So what is cloud-based billing? A recent piece by Gigaom helps explain why cloud billing is beneficial and how it helps vendors move all aspects of a paper-based system to the cloud. But isn't that old technology? Isn't that about generating a PDF file and sending it to your customers instead of a printed invoice? Perhaps not. Perhaps this is about a billing system that works for the SaaS software, charges customers online and they can pay online. Perfect! This is turning out to be good. Some of the items referenced in the research report talk about:

  • Why cloud-based billing works
  • How costs play a part in subscription?
  • Why security is important
  • Provide value through cloud billing
  • And other informative and interesting points

I actually think it's going to be an interesting report.

Let's move on to a completely different world now. Let's assume the subscription economy is now working with full fervor and revenues are being generated like no tomorrow. Let's also assume that for vendors and service providers, the constant revenue stream is proving to be a good cash flow engine with a steady stream of much-needed operational and profit dollars coming in. Life is good.

Fast forward a few years and take a peek at the vast number of providers that have all jumped into the subscription economy and the entire system is driven by the price point. The lower the price, the more customers that jump on to you. As an analogy take a look at the modern publishing industry. Magazine sales are driven through multiple models, including book store sales, but a majority of them through subscriptions. In fact if you look at any recent news article you will find that now (2014) magazine sales are tanking, a major portion of which includes subscription sales, and that's exactly where the cloud subscription economy is perpetually heading.

As the much-needed panache to the problem that is definitely going to happen, consider a cloud-driven billing model. This model actually works on the basis of an actual consumption of services rather than a flat rate subscription. Yes, of course, with the current subscription models there definitely is a way to charge in blocks, but what if your SaaS usage was completely flexible and offered to charge you in real time for resources you consumed in real time.

For example, if you were using a self-serviced business intelligent platform powered by this model, you would be charged on the basis of how much data you consumed, or generated or worked with. Name it anyway you like. Your billing model could also adapt to your usage and perhaps also charge customers based on the time of usage, the type of data used and so much more.

Yes it's complex but it works both for the vendor as well as the consumer. The pricing wars then become more focused on driving more value and not just the amount of SaaS resources used. This is the model of tomorrow.

This is how cloud-based revenues will be generated and how resources are going to be consumed. A true cloud-driven billing model.

This article first appeared on the Solgenia Blog at www.solgenia.com/blog

More Stories By Ian Khan

Ian Khan leads Innovation & Marketing initiatives at Solgenia, a global Cloud services provider with more than 3500 enterprise customers globally that includes Top Fortune 100 and Fortune 500 companies. An advocate of Cloud computing and a thought leader driving change within the industry, Ian is a catalyst for collaboration and Cloud solutions.

He has written for multiple industry publications, presented at various industry events worldwide, and brings more than 15 years of in depth technology experience across various industries.

Ian is a PMP Certified Project Manager, MCSE, and an Instrumentation Technology engineer.

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