Zuora is an interesting vendor -- founded by one of Salesforce's earliest executives, Tien Tzuo, the company was set up to deliver upon the promise of the so-called subscription economy. Tzuo is a long-time subscription economy prophet and, listening to him over the years, it would be easy to assume that in the future every possible transaction will be based on a subscription paradigm.
Of course, it isn't quite that simple and many organizations are more than happy to continue using their traditional billing approaches, but what is true is that increasingly it is a general requirement from organizations that they will have increasing flexibility about how they package and price their products and services.
The broader space is particularly interesting with a number of pure billing vendors (joining Zuora are Aria, Vindicia and Monexa among others) as well as vendors who tick of this functional space as part of a broader contract management solutions -- vendors like Icertis, Apttus and SteelBrick. if that wasn't enough competitive tension, we also have the enterprise resource planning (ERP) vendors stepping up and suggesting that they, too, fulfill this need -- in particular cloud-based vendors FinancialForce and NetSuite have been singing from this song sheet for awhile.
And then, just as we were starting to get our heads around the way the ecosystem works, Salesforce comes along and acquires SteelBrick, causing no end of pain to Apttus (who, like SteelBrick is/was a strong Salesforce partner). Zuora was also caught in the crossfire of the SteelBrick deal and many of us were waiting to see how the company would respond.
Which is why it is particularly interesting to be watching the conversation at Subscribed Zuora '16, the company's annual conference. At the event, Zuora is announcing the latest release of its product, which it includes within the broader space of relationship business management (RBM).
Particular highlights of this release include unified subscriber insights, a pricing engine that supports any monetization model, and capabilities for managing complex global organizations with multiple locations and business entities with diverse revenue streams. The release also includes "subscription economy dashboards," visualizations that blend traditional and customer-centric business health metrics.
“We are seeing a once-in-a-century shift happening where digital transformation is giving rise to a whole new set of subscription-based business models,” said CEO Tzuo. “The most successful brands in the world today are those harnessing digital technology to deliver new sources of value for customers, and the winners will be those who pair digital innovation with subscriber-centric business models and hyper-agile business practices.”
Tzuo goes on to justify his perspective on why these new subscription tools are becoming so critical. "New business models create new challenges that legacy order-to-cash systems were not designed to address," Tzuo believes, “Established enterprises today are running on legacy systems developed for a pure-product era. These systems can’t support subscriber-centric business models and don’t easily adapt to the rapid iteration and innovation required in today’s market.”
And Zuora seems to be delivering. The company has raised a quarter of a billion dollars in funding and used that cash to fuel over 600 employees spread across 15 offices. All of those resources have seen Zuora pick up over 800 large enterprise customers and seen 6 times growth in the value of transactions being pumped through their system (a metric that admittedly does more for the ego than the bottom line, since it doesn't really indicate Zuora's own financial standing). The company is also releasing a piece of research that it commissioned from MGI Research that suggests there is a $102 billion total addressable market for the variety of software tools tailored for the subscription economy. Of that, Zuora's total addressable market is predicted to be around the $15 billion mark.
There is a massive amount of positioning going on in this space and Zuora is a well-funded and well-regarded vendor. Whether that translates into long-term success is going to be an interesting thing to watch.
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