The Blog

  • June 3, 2014
  • Zuora Swings for the Fences

    subscribed logoTien Tzuo, CEO of Zuora, gave the speech of his life today, one that Satya Nadella, CEO of Microsoft should study for its content if not its style.

    Tzuo’s company Zuora, started the subscription billing market back when billing was a big and the only deal that SaaS and other subscription companies had to think about. But over the last few years Zuora has built out a product line that supports a vision of a changed marketplace dedicated to the values of what futurist Jeremy Rifkin calls the “collaborative commons.” In the commons it is more blessed to borrow, share, rent, and, yes, subscribe, than it is to buy, own, and hold.

    Tzuo has been the leading proponent of an economy based on subscriptions and today’s speech will be seen as a turning point that took the subscription economy to the mainstream. If anything it was a victory speech, a time when Tzuo and his band of brothers and sisters could say, “See it worked.” But it was also a time that rededicated Zuora and its people to a greater vision of a subscription culture. Tzuo acknowledged as much even if he hasn’t used the words yet when he announced three new directions and offerings that will enable subscriptions’ glide into the mainstream.

    The three major initiatives which will be detailed in tomorrow’s keynote include a Subscription Academy to teach the basics of subscription business to anyone who wants to engage including huge enterprises and startups as well as their people; subscription business blueprints which will help conventional businesses the clear the sizeable hump that all existing companies face in getting their conventional models into subscriptions; and finally, a community of subscription ninjas who will help to do what communities do best — share ideas, how to information, and paths to success.

    Tzuo also introduced a new term for our business, RBM or Relationship Business Management that unites back office subscriptions with front office customer centricity, which has been a long time in coming. We saw a glimpse of this in Zach Nelson’s keynote at SuiteWorld a few weeks ago. NetSuite, Nelson’s cloud ERP company, is now making moves to inject back office data into the customer centricity, customer engagement mix but for my money, NetSuite is still a bit more tethered to conventional ERP, and Zuora is all about new era accounting and finance. Both get to roughly the same place given enough time but in my view Zuora might have an edge that synchronizes with ERP, even NetSuite but is not ERP.

    Regardless, juxtapose this with Microsoft and an article from yesterday’s online Wall Street Journal in which Christopher Mims offers five advice points to the Microsoft CEO under a headline of “Advice to Microsoft’s Satya Nadella: Be More Brave.” I can hear Sara Bareilles warming up right now.

    Microsoft is a company squarely in the zone Tzuo spoke of in his keynote, old by contemporary standards and more important, old by business model. Dealing with products sun setting and customers migrating away to other vendors; a company with a diverse product line that has lost its theme.

    For me the most dramatic part of Tzuo’s keynote came when he invited David Wadhwani, SVP and GM of Adobe on stage to talk about his company’s gut wrenching switch moving its wildly popular Adobe Creative Suite to a subscription model from a conventional software licensing model. Talk about being brave, Adobe isn’t even a Zuora customer that I know of, Tzuo was swinging for the fences looking for the best ideas he could find and it was a good move.

    The drama came when it was disclosed that Wall Street had an instant allergic reaction to that particular bit of Adobe news and investors began voting with their feet. Actually the drama came just after that, when the markets had closed and NASDAQ called the CEO to ask if it should suspend trading in the stock next day. That was enough to make anyone do a rethink but the answer was not simply damn the torpedoes, that would have been too easy. The answer was transparency and communication with employees, customers, and the financial press to deliver a message and a vision of a greater Adobe, one that was focused on customers and a better value chain with solid roots in the subscription culture.

    It was one of the best stories I’d heard at a keynote and I’ve been covering these things for a while. Heck, my career as an analyst goes back to the foundations of the subscription economy, come to think of it. At any rate, that’s the message Nadella and most conventional business leaders need to hear, internalize, and evangelize. It’s the message of a new economy, new ways to market, sell, and service but also, new and more collaborative approaches to dealing with customers. Every recovery is led by a new, new thing and I think the subscription culture provides that.

    Published: 6 months ago


    Discussion

    • June 16th, 2014 at 8:43 pm

      Forgive me if my comments may seem naive. I was doing a colntsuing job for a local consumer company who was using Netsuite for all their corporate functions (Back office, sales) but strangely, their Warehouse was on manual stockcards using Excel. I had a talk with their Netsuite Reseller based in California & my concern was continuity of service in the event of disasters. Since the Application software and data are stored in Netsuite’s servers, a lot depends on the functioning of the Internet Gateway to the Phils. There was a time when we lost all internet traffic because the submarine cable linking the Gateway between Taiwan and Phils was damaged due to an earthquake. If something like that should occur again or a terrorist attack on a Gateway provider to the PHils, would it be safer for my client to have the application software and his company’s data stored in his own server rather than in another part of the world? By the way, the Netsuite reseller’s reply was that there are other Gateways in the Phils to help out in such an event. That is no comfort as I know how reluctant Telecom companies are to provide service to their rival telecom’s clients. In fact, these telecom companies would rather see their rival clients suffer so that they can offer them to switch providers, isn’t it?

      • June 19th, 2014 at 7:58 am

        Excellent question. As in anything in business there is a risk/reward calculation to consider. It seems to me that an earthquake is a big and terrible thing that doesn’t happen frequently. In the event of a quake there will be other issues that take precedence over a down gateway and I therefore think that trying to stave off that difficulty by denying yourself vital automation is simply not prioritizing the risk properly.

    • June 9th, 2014 at 11:19 pm

      I watched Tien Tzuo’s keynote earlier to day and completely agree with Denis’ characterization of the event. As Denis Pombriant writes in The Blog: “It’s the message of a new economy, new ways to market, sell, and service but also, new and more collaborative approaches to dealing with customers.”
      I came to watch the video as an outsider and left 90 minutes later convinced in the correctness of Zuora’s vision and solutions offerings for the dynamics of a 21st century business model.

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