It's a tough world out there for start-ups and SMEs. Increasingly, these businesses have bought into the concept of the subscription revolution. They are either transitioning their businesses from selling products to becoming service providers or they are simply starting out with a service-based approach.
All are attracted by the prospect of vying for recurring business from existing customers in a bid to access a more predictable revenue stream based on subscriptions and create a more valuable supplier-customer relationship.
Unfortunately, for many smaller companies, it is not quite so easy to turn this vision into a practical reality. Many fledgling businesses are cash-strapped from the outset and struggle to set themselves apart from their competitors.
Keeping competition at bay
Most businesses start out with very simple business ideas, which can easily be replicated. If a rival enters the market, undercuts them on price, and develops goods or services at a cheaper location, it becomes even more difficult to differentiate.
What small businesses are crying out for above all else therefore is to find a way of quickly and easily adding more strings to their bow: of bringing new services to market. They want to add more options for their customers; more flexibility around how they price and package their services, and upsell and cross-sell new offerings.
They also want to be able to do all this while keeping overheads to a minimum. But there's a problem here.
A business model based on subscriptions and usage needs flexible pricing options - but traditional on-premise billing systems are typically too expensive or not agile enough to handle this requirement. It can take months or even years, to implement, configure and integrate a traditional enterprise billing system with other applications.
A lot of capital will be spent before business benefits can be achieved. That's likely to be an inhibitor for any SME- and for many such an approach will simply not be viable.
Cloud billing can, however, play a key role here, slashing the time taken and the cost incurred in setting up new services and giving SMEs and start-ups the opportunity to quickly turn innovative ideas into monetised solutions.
Moreover, implementation can be done in-house in a matter of days or weeks, and companies need only start paying for the application once it's being used commercially – both key benefits for SMEs and start-ups alike.
SMEs also receive new features and enhancements automatically as part of regular software updates, driving greater agility and the opportunity to continue innovating around new pricing and billing capabilities.
The approach is also highly cost-effective as businesses don't need to buy any hardware and they don't pay separately for the hardware capacity they use - it all comes as part of the service. Equally, the commercial model is based on what is used rather than on upfront software licensing and prohibitive implementation fees.
So, for SMEs and start-ups looking to play their part in the subscription revolution, there's reason for optimism. Billing should no longer be a barrier to accessing this huge commercial opportunity. Now, thanks to the emergence of cloud-based solutions, billing has become a facilitator for these businesses instead.
- Louis Hall is CEO of billing solutions firm, Cerillion Technologies