Software Monetization Featured Article

What You Need to Make XaaS Work

July 02, 2018

Businesses are increasingly moving away from buying boxed software and network appliances, and toward consuming software-, unified communications-, platform-, and infrastructure-as-a-service offerings.

This growing migration toward cloud-based services enables businesses to pay for only what they use, when they use it. That lowers their upfront costs, and can make their recurring costs more predictable.

Moving to XaaS models can be tricky for solution providers at first. But it’s where things are going.

And in the long run it can be good for suppliers because it allows them to build stronger, longer relationship with their customers. And it is a source of recurring instead of one-and-done revenue.

 “Subscriptions are exploding because billions of digital consumers are increasingly favoring access over ownership, but most companies are still built to sell products,” says Zuora (News - Alert) CEO and co-founder Tien Tzuo. “They’re not set up correctly for the next hundred years of business. As a result, huge opportunities are up for grabs. If you’re not shifting to this business model now, chances are that in a few years you might not have any business left to shift.”

Tzuo expressed this sentiment in his new book “Subscribed: Why the Subscription Model Will Be Your Company’s Future – And What to Do About It.”

Zuora is an 11-year-old company that provides cloud-based technologies that help companies manage and grow their subscription revenues. The company went public in April, with shares up nearly 43 percent on the first day of trading, and a market cap of about $2 billion. Such companies as Caterpillar, Delta Air Lines, DocuSign, Ford (News - Alert) Motor Co., HBO, and NVIDIA rely on Zuora technology.

This customer list emphasizes the fact that businesses in many verticals need new tools and systems to provide authorization, intellectual property protection, tracking and billing, and more to support their new subscription- and usage-based business models.

Edited by Maurice Nagle