Consumers and corporates boost subscription economy. The march to the cloud and subscription style consumption is gathering pace as consumers and corporations shy from big one off outlays. Why buy the CD when you can listen to the tunes on Spotify? Why buy a car when you can sign up to GoGet? At least that’s the gospel according to Tien Tzuo, founder and chief executive officer of Zuora which develops systems to support the back office functions of managing commerce, billing and finance for what Mr Tzuo describes as “the subscription economy”.
“Two, five, ten years from now you don’t have to own anything any more. Why IT shouldn't buy into the 'subscription economy' In case you hadn't heard, ownership is out. Instead, it's all about the "subscription economy" -- if the latest in a long line of extrapolations from a very small number of data points is to be believed. The theory is simple. Whereas before we liked to own things, we don't anymore. What we want instead is to pay less money right now in exchange for the right to pay again next month -- or not, at which point whatever it was we used to need goes away. [ Find out the 10 business skills every IT pro must master. | Get expert advice about planning and implementing your BYOD strategy with InfoWorld's 29-page "Mobile and BYOD Deep Dive" PDF special report. | For more of Bob Lewis' continuing IT management wisdom, check out his Advice Line blog and newsletter. ] 3 Key Metrics That Matter in the New Subscription Economy.
Zuora, a dominant player in cloud-based payments systems, presented at last week’s All About the Cloud Conference, hosted by the Software and Information Industry Association (SIIA).
The company's founder and CEO, Tien Tzuo, spoke about the dramatic shift in the way both consumers and companies are doing business. "Today," Tien explained, "People would rather subscribe to products and services than buy them outright. " products. It's happening everywhere and is having a dramatic affect on your business. Zuora calls this "The Subscription Economy. " Instead of single large purchases, the model is built on sustained customer relationships. Salesforce.com is a terrific example of this type of consumption. Making the Web's Subscription Economy Hum.
As Web businesses embrace subscription business models to sell consumer goods, the benefits are clear: reduced customer acquisition costs, predictable inventory requirements, and steady cash flow.
Last year research firm Gartner (IT) calculated that by 2015, more than 40 percent of media and digital-products companies around the world would use subscription services for their fulfillment, billing, and renewals. The challenges in relying on subscription models include controlling customer churn, managing credit-card charge-backs and delinquent payments, and ensuring the security of customers’ financial data.
That’s why small businesses that are pioneering membership models or adding subscription options to their existing sales efforts often outsource billing and other chores to service providers. Common subscription models may be fixed-term, which establish an end date with optional renewal, or evergreen, which keep the subscription in place until the customer cancels. 10-Questions-To-Ask-About-Billing-Subscription-Services.pdf. The subscription economy is here. Are you ready? Editor’s note: This story is part of our Microsoft-sponsored series on cutting-edge innovation.
10 Reasons for Entering the Subscription Economy. By: James Gagliardi, Vice President, Product and Innovation A recent Gartner Inc. research report issued a strong recommendation for businesses selling online: If you don’t offer subscription plans already, you need to make this popular offering a top priority.
The report, “Building a Strategy for the Subscription Economy,” makes a compelling case for why every digital and media content business – and even some high tech and life sciences companies – should add subscriptions to their online strategies. On-Demand Demand Consumers can’t seem to get enough of on-demand content. The explosive popularity of tablet devices and smart phones has only fueled consumers’ desire for immediate access to the content, products and services they want.
Higher Revenue Moving from a one-time sales model to recurring subscriptions can increase revenue. Footnote: *Building a Strategy for the Subscription Economy, Gartner, Inc., April 11, 2011 Like this: Subscription business model. The subscription business model is a business model where a customer must pay a subscription price to have access to the product/service.
The model was pioneered by magazines and newspapers, but is now used by many businesses and websites. Membership fees to some types of organizations, such as trade unions, are also known as subscriptions. Not only media - the ‘Subscription Economy’ is growing. Cloud Computing Drives New 'Subscription Economy' Deploying Applications in the Cloud While there's more talk than actual use of cloud computing in the enterprise, a Zeus Technology survey looks at the beginnings of a major shift under way.
Clear expectations and planning can improve your experience and near-term success. Once upon a time, the whole application integration concept was nothing short of daunting. But as application integration increasingly becomes a service in the cloud, it's becoming a lot easier to quickly cobble multiple applications together to dynamically drive a new business process. The latest example of this capability is an alliance announced today between MuleSoft, provider of the iON application integration service in the cloud, and Zuora, a provider of a transaction processing engine used widely in subscription and billing applications.