Providers Are Moving Billing to the Cloud: The Time Is Now

As I said in my last post, the cloud has dramatically changed the playing field for service providers. Competition is mounting from Google to Microsoft to nimble upstarts. By holding on to the past, many service providers are risking becoming a relic of the 20^th century. Service providers today need a new generation of technology to help them succeed. The time has come for billing in the cloud. Let’s look at profiles of three providers that have already made the shift to the cloud to examine how they are succeeding in this new market reality.

Tata Communications: (Real) Time to Market

Tata Communications is the $2.4 billion telco arm of the $67.4 billion Tata Group. As Tata Communications wanted to expand the delivery of elastic server clouds, it recognized the need to outpace and outflank its competition. Tata knows that its customers want to work with service providers that can offer a broad portfolio of services, and that Tata needs to be able to deliver new services and adjust to customer demands and competitive moves quickly. Changes need to be recognized in days or even in real time. Not weeks, months or years – those days are over.

Telco billing systems do a great job of supporting traditional data and voice plans, but that’s the past. They aren’t flexible enough to support the mix and match of voice, data, messaging, cloud computing, content and other services that consumers and corporations require. That has made it nearly impossible for many providers to efficiently bring their offerings to market.

Tata had to find a way to price, meter and bill its cloud services including storage, usage, bandwidth and operating-system licensing. It needed an enterprise metering and billing platform that would allow it to quickly go-to-market with its new cloud service offering, InstaCompute. More specifically, Tata wanted a system that supported multiple currencies for its international markets, could scale and support more than 30 locales and provide customers easy sign-up and self-service online.

By going with a cloud billing strategy, Tata deployed an enterprise subscription metering and billing system in only 60 days, reducing the overall time to market by 50 percent. It can now automatically generate region-specific invoices and bill in four currencies across 32 different locales with a pay-per-use charge model. And customers are 100 percent self-service, including a way to view compute and storage usage 24/7 online in real-time.

Below is a video to learn more about Tata’s InstaCompute strategy. Another video is here.

Elevate:  Experimentation Drives Optimization

Elevate is a premier digital services provider with an array of IP and wireless residential services. Elevate offers literally hundreds of configurations of residential services tailored to the needs of each individual residential customer, including broadband service up to 10 mbps; IP-based TV and satellite TV service offered in cooperation with DirecTV and DISH Network; mobile and digital phone services; and a fully integrated suite of home security and automation services. With an aggressive plan to rapidly roll out its innovative subscription services across the U.S., Canada and Puerto Rico, Elevate knew that a cloud billing solution was key to meet its time to market needs.

But more important than speed, Elevate needed extreme flexibility. It recognized that with the move to elastic server clouds, service providers need to offer a range of voice, data, cloud computing and other services to a spectrum of different customer segments. In this new reality, one thing is certain: No one will nail the right price or the right service bundles the first time. So service providers like Elevate must be able to efficiently test, experiment and measure bundles for different markets, audiences and users over time.

Elevate’s billing solution can support agile service bundling, pricing configurations and frequent changes required to meet diverse and fluid customer requirements. And that means Elevate can execute at a more rapid clip than competitors who are held back by decades-old, on-premise technology.

Do you find it painful to make a single change to your current billing system? Now consider the exponential problem you face in the world of broad, flexible service bundles that change regularly. This shift could (and will) literally break some service providers if they attempt to stick with their legacy billing system.

Qualcomm: Agility to Offer New Services

Qualcomm is best known for designing the radio chips inside many Android smartphones and Apple’s iPhone. Those devices have helped launch a revolution in new mobile services, and inspired Qualcomm to think about how it can expand its own offerings. The first such offering, from Qualcomm subsidiary Snaptracs, is Tagg , an attachment for pet collars that uses a GPS chip to track an animal’s whereabouts. If a pet leaves a designated area, the service alerts owners with an e-mail or text message. By tapping into cloud billing, Snaptracs was able to rapidly launch Tagg, even though they never had a billing platform before.

What’s more interesting is that Qualcomm doesn’t expect Tagg to be the next billion-dollar sensation or that consumer services like Tagg will displace its lucrative business as a chip supplier. But they do see Tagg is part of a broader effort to build demand for mobile radios and processors outside traditional telecom gadgets and provide more subscription-based services. And Qualcomm sees that products as diverse as electricity meters, cars and medical devices could all benefit from a cellular connection. The company is also developing a mobile personal emergency response system for the elderly to let users monitor elderly family members.

As I’ve said before, Google, Microsoft, Netflix, Amazon, Facebook and a host of other companies you haven’t even heard of are your most lethal competition. And traditional product companies too are exploring a whole new world of services. And all of them want to own the customer relationship directly, instead of through a traditional carrier. With cloud billing platforms, they can deliver new services almost overnight to millions of users across devices and platforms.

Think about it this way: In the old world, customer acquisition was the battle ground. How many can you land in x amount of time, and how much could you bill before the customer churned. Today, the key is monetizing long-term, recurring customer relationships, from initial subscriptions to upgrades to renewals and more. And customers want to drive that relationship. They expect to be able to subscribe anytime on any device, upgrade when they want and manage everything online. This new breed competitor lives and breathes this reality, and is a click away from your customers and prospects.

Service providers need to move to cloud billing to gain the agility that’s required to compete with this new breed and those that follow them.

One Final Thought

I think it’s obvious to anyone in the communications industry that cloud billing is an iterative transition. I can’t see anyone unplugging millions of dollars of investment tomorrow. But as the market demands continue to call for greater flexibility, service providers will want a solution that provides them a measured migration strategy. Because as things continue to shift – and make no mistake, change will be swift quick – that legacy billing app won’t look anything like your business does.

Tien Tzuo is CEO of Zuora, a subscription-billing company based in Silicon Valley. Previously, he was the chief strategy officer and chief marketing officer at Salesforce.com.