We're seeing a huge move toward consumers buying products on a subscription basis. It used to be just electricity, phone lines and magazines, but now everything from underwear to razors, auto usage and software can be bought by subscription. The "subscription economy," as one player named it, really changes the way organizations do business.
Indeed, a new survey from CFO Magazine has revealed that 70% of CFOs say more than half of their revenue now comes from services, which includes professional services, subscription-based services, service-level agreements, managed services and usage-based contract. Almost a third (28%) of the CFOs surveyed indicate all of their companies revenues are services-related.
It's a big opportunity, and one which has attracted a number of players and some very deep pockets.
The space is also interesting since there are many different players trying to enable this move to a subscription basis. There are the pure-play subscription services -- the most well-known being Zuora, and its charismatic CEO (he who coined the "subscription economy" line) Tien Tzuo, but it is also joined by Aria, Vindicia and others. Then there are the ERP vendors who suggest that subscription pricing is (and should be) a part of their platforms. Cloud ERP vendor NetSuite, after short flings with both Zuora and Aria, went out on its own and announced subscription functionality a few years ago.
Around the same time, FinancialForce did something similar.
FinancialForce, as the name implies, is an ERP system built on the top of Salesforce's Force.com platform. FinancialForce is a younger player, founded in 2009. Notwithstanding its relative youth, the company has leveraged Salesforce's well-developed platform and ecosystem to built a product, an ecosystem and a customer base in short order.
It's also been a small, but annoying, thorn in the side of NetSuite (which, coincidentally, has just been acquired by Oracle, whose founder and CTO, Larry Ellison, was the first investor and largest shareholder in the company). FinancialForce was the company that coined the term "Frankencloud" -- a blatant critique of what it suggests is NetSuite's strategy of gluing together disparate products to create a quasi-suite.
For FinancialForce, the key benefit of building on top of Force.com is that it can be part of a broader ecosystem with commonality around user interface, customization and code-base.
Anyway, back to that subscription thing. FinancialForce, after talking about it for quite some time, is finally introducing Billing Central, its take on subscription and usage-based commerce. Somewhat gilding the lily, FinancialForce breathlessly claims that its product is "the only cloud application that unifies billing, revenue management and accounting operations on one single platform, building seamless processes and providing end-to-end visibility across the customer life cycle." Some vendors might argue with that assessment but, whatever.
In terms of the functionality that FinancialForce is delivering, as expected from a solution like this, it is both deep and broad in terms of integrations with key adjacent systems:
- Consolidate billing sources across multiple customer contract types
- Support tier and volume-based pricing
- Unified with Salesforce CRM for 360-degree customer visibility
- Visualize the entire customer life cycle -- from opportunity to renewal
- Leverage real-time cloud reporting for revenue and customer analytics
- Gain full audit and control of revenue sources on one platform
- Avoid duplication of data and objects in Salesforce CRM
Key to FinancialForce's claim of being the pre-eminent vendor is its platform story. Managing customer billing on the same platform that sales, services, customer support and customer success staff are using allows for complete customer life cycle visibility, from opportunity through to renewal.
As FinancialForce says, operating from one platform provides a single source of business truth, improving accuracy and efficiency and reducing the dependence on integrations to make data available to other business applications. That's a valid story, and one which the Force.com play helps to deliver (even if it potentially created some technical hurdles for an ERP vendor in the early days).
It would have been great to have seen FinancialForce deliver its product earlier, and there may be some customers smarting that it has taken awhile, but notwithstanding the timing, this is a key move for the company and its customers.
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