The economic troubles we are all now experiencing will serve as a boon to the on-demand market. It makes good sense that as further pressure is exerted on company budgets and balance sheets that many will look to economize by reducing IT expenses, however, those economies will take time to work their way through any organization. Translation – it was smart to begin on-demand adoption a few years ago but there’s no time like the present.
As good as all this might be for on-demand vendors – and it is good – there will be new challenges for them as they attempt to deal with expanding volume, that’s inevitable. One place where the strain of success might be first noticed for on-demand vendors is in billing and payments processing.
Almost since its inception, the on-demand (OK, SaaS) market has dealt with a hybrid solution in which companies delivered software as a service, but invoiced and collected the old fashioned way. It’s not well documented but the back office operations of on-demand companies put a great deal of stress on conventional billing systems.
Simply put, SaaS vendors demand more from a billing system. Where conventional vendors sell products now and then and invoice monthly for services, on-demand vendors bill monthly for their services. Add to that the notion that the SaaS vendor has to earn its stripes daily in all phases of the operation (not just service delivery) and you can see that billing is a tender spot.
Where there is need, innovation is never far behind and Zuora, a company founded by alumni of Salesforce.com and WebEx, has begun delivering the billing and payment infrastructure that, until now, SaaS vendors have gone without.
They’ve made do with conventional billing systems that constrict or constrain their businesses to deliver only the products that the billing system can understand. For example, a conventional billing system can blanch at the thought of billing for 20 seats of service, training for 5 and other services, only to be changed for the next billing cycle. Abetted by sometimes armies of agents helping customers to get their configurations and therefore the bills right, it has been a costly and unsatisfying struggle.
This week Zuora announced an association with PayPal. The partnership gives Zuora and its customers the ability to complete the round trip from correct invoice to payment completely electronically. It also makes it easier for vendors to offer a greater set of choices for on-demand services.
Zuora represents a new set of choices for vendors and customers who want to make the Web the focus of their computing. It is the tip of an infrastructure iceberg that I think we receive a big boost from the challenging economic times we appear to be entering.
I have to admit that it’s hard to concentrate on business with so many issues and crises swirling around lately. As if the presidential election was not enough, the financial meltdown is threatening an economic meltdown and I am forever asking myself what this all might mean to CRM.
The political pros are saying that this is a seminal year in the arc of American history, not just in politics but also in our fundamental understanding of and relationship with the world. As I look at it, even CRM is involved which I think only proves the pervasiveness of the paradigm shift. In my humble opinion all of this is reflected in how you view the business processes that CRM mediates.
For several years, people like Paul Greenberg, Brent Leary, myself and many others have spoken and written about the changing marketplace. Perhaps you have seen the same things that we have – today’s customers are better educated, experienced, richer and more time starved than any prior generation. Certainly, you have heard it before if you read this column even occasionally.
If the current situation tells us anything it is that we are at a multiple inflection point moment when, believe it or not, many things will be new again. High living and conspicuous consumption? Gone for the moment in a cloud of dust kicked up by the financial mess. Laissez-faire economics? The bloom appears to be off that rose. In their places comes a back to brass tacks imperative to get value for expenditures even if it means shopping around and saying no when appropriate.
All around us consumers – a species of human known for its high capacity for ingestion – are being replaced by customers, a wary variety of marketplace denizen known for its ability to sniff out value. For several years CRM has been slowly evolving to accommodate this new species. The tumultuous changes now taking place might just accelerate both their rise to marketplace dominance and CRM’s adjustment to that reality.
For a long time CRM has played to the demands of markets that were open ended, places where emerging categories needed to be filled by eager vendors and equally eager consumers. That era ended a few years ago and consumers began to morph into customers but the tendency in CRM at least has been to continue feeding the beast of yesteryear. Nonetheless, conventional marketing returned less and less and conventional selling became harder and harder.
Around the edges a different kind of CRM has begun to take shape oriented around the customer and using tools that focus on networking and community. While many of us have looked approvingly on their developments, these new tools have as yet seemed to be not quite ready for prime time. In the time it takes for the Dow Jones to lose 500 points much has changed.
Two weeks ago Oracle-Siebel put its imprimatur on social CRM and in one move validated the many other social CRM efforts being made across the industry and re-established itself as a serious player in the CRM market. At the same time, the economic implosion of the last few weeks is clearly defining a leaner economy ahead, one that will be a ready market for all software delivered as a service.
Finally, the morphing of consumers into customers parallels a move by vendors from selling products to a more balanced product and service mix. A key growth area for many companies will be in helping customers to realize benefits from products. It makes sense. If a customer is someone you want to see again and again then you have to ensure that they walk away happy every time.
I expect that some of the changes now going on plus some that are not as apparent, such as the tightening energy markets, will further influence companies to produce more things locally. Instead of sending orders and jobs overseas we may well see a rebirth of domestic manufacturing made possible in part by higher competitiveness and productivity that advanced software and delivery systems have made possible.
While the situation on Wall Street and Main Street might look dire, it is possible to see the outlines of recovery in the technologies that we have watched incubate these last few years. As always we have a ringside seat and the show will be mighty entertaining.