In the 1700s, an Englishman named James Hargreaves invented the spinning jenny—a loom of sorts.
This led to the First Industrial Revolution, when a tremendous move was made to manufacturing processes. The world has since had second and third industrial revolutions, and is now experiencing what many consider the fourth; humans and machines are becoming ever more entwined.
Not only has the Internet of Things (IoT) provided tools to create “smart” objects which react to human commands, entire municipalities are transitioning into “smart” cities.
The term doesn’t mean that an entire city can turn on and off with a voice command, like smart lightbulbs tied to a hub in your home. Instead, a smart city wraps its operations around big-data analytics to improve efficiencies for the government and citizens. The data is collected by IoT sensors, and transmitted to hubs where the information is then analyzed.
That data might be in the form of:
- descriptive analytics, which highlight where an incident is occurring, or just occurred
- predictive analytics, which use current data to predict what is going to happen in the future
Gone are the days of looking for an empty parking space only to find “lot full” signs at the entrance of every lot and parking garage. With data-driven technology, drivers can use an app to locate available spaces.
From the perspective of the governing body, there are many applications for this technology. Emergency personnel can use real-time data to reroute around congested areas to reach a scene faster. Sewer and water divisions can be alerted to, and mitigate, problems within their infrastructure before those issues erupt and impact thousands of people.
In other words, by delving into smart technology, cities can provide services faster, safer, and at a lower cost to taxpayers.
With estimates that 70% of the world’s population will live in cities by 2050, the push to digitize both infrastructure and other conveniences is here. The industry is ripe for savvy companies to monetize these opportunities.
Monetization in high technology sectors
In the area of high technology, or cutting-edge technology such as devices adopting IoT integration, businesses monetize by detecting market trends and marketing their products to capitalize on demand. If done correctly, the end result yields higher profits for a business.
Getting to that point, however, is not as clear-cut as retooling or developing a new product to meet an emerging market need. There are other aspects to consider in the monetization process, including:
- Marketing
- Sales
- Customer support
- Finance
- Billing
These areas cannot be treated as individual units and processes; they are a cohesive part of the monetization plan. This is why the term “monetization” reflects a discipline rather than a focus on a single product or service.
Another aspect of monetization includes the need to be agile; that is, to have the capability to grow at a rapid pace. Growth helps a business stand apart from slower-moving competitors who lack the ability to deploy new features quickly. Just how fast is “fast”, though?
With proper support, a new or enhanced feature might be deployed in weeks or days, rather than the months a legacy monetization ecosystem would require.
The pitfalls of un-agile monetization
There are right ways and wrong ways to approach monetization. For example, consider challenges from the perspective of payments and collections, a vital component of the monetization process engine.
To really embrace the power of monetization, a business should consider transitioning to an agile billing approach for payments and collection. This solution empowers customers to make changes, such as package upgrades, and allows businesses to explore pricing models, make plan changes, update catalogs, and change prices.
Implementing an agile billing solution can seem daunting. However, when a business has outgrown the limitations of a billing system, investing in a new system that can automate billing becomes necessary.
A key element of monetization is to scale quickly by deploying new features or innovative pricing models. This needs to be supported by a progressive, agile billing system. On a legacy system, businesses may have:
- Delays in going to market.
Keeping the competitive edge often means that new or updated features need to be released quickly. Without the overall billing support of a robust, agile system, it might take months to get that feature into the marketplace. Meanwhile, competitors are tempting away customers. - Difficulty updating information.
Often, startups opt to keep their billing in-house, hiring developers to create a homegrown system. This can include tracking customers on Excel spreadsheets. It might work for a period of time, but imagine the headache of making changes. A few updates might be manageable, but if a business is looking for rapid deployment, spreadsheet tracking is counterproductive and is going to bog a system down fast. - Problems tracking inventory.
Bringing in new products and features means changing product catalogs. Tangible products are assigned SKUs, or Stock Keeping Units, which are crucial for inventory management. If these SKUs are monitored haphazardly, inventory may start to pile up, which increases the overhead to house that inventory. On the other hand, if a business doesn’t realize how fast inventory is being depleted, they may run out of stock, frustrating customers. - Catalog confusion.
Additionally, without a robust billing platform, businesses may find they are working from multiple product catalogs. If departments across the board are not getting valuable updates in real-time, the product support team may not be aware of features, so upsell or cross-sell opportunities are missed. - Pricing confusion.
Different catalogs may also equate to inconsistent prices, which can quickly lead to customer frustration, billing disputes, and costly refunds or chargebacks. - Deployment bottlenecks.
Then, there is the billing side. When a billing platform is unable to support agile monetization, oftentimes, the entire billing system needs to be recoded. This creates a significant bottleneck and prevents rapid deployment. - Difficulty managing pricing exceptions.
One often-used sales and marketing strategy when deploying a new feature is to combine the new offering with a limited-time discount. This allows the customer to try out the new feature with little perceived risk. If a business relies on manual processes to turn on or off discounts, there is always the risk that the price change isn’t restored at the end of a trial period. - Revenue leakage.
When a business neglects to “turn off” pricing exception, extended underbilling—or worse, no billing, in the case of a free trial—significantly contributes to revenue leakage. Revenue leakage can come from issues with expenditures or revenue, but it often refers to not billing, or billing less than the agreed-upon amount. This hits the financial bottom line.
Monetization requires agility; a legacy system simply isn’t going to provide the support a business needs to quickly respond to changes in the marketplace. Yet, these issues can be easily resolved by deploying an agile billing system.
RELATED: Building a Single Customer View for Your Recurring Billing Revenue Engine
Supporting monetization with agile billing
“When people come to us,” explains Tyler Eyamie, founder and CEO of Stax Bill, “they are struggling to keep up with the demands of monetization.” While businesses look for a solution to address billing friction, he said, getting to know the ins and outs of an agile billing system such as Stax Bill uncovers multiple pain points that can be addressed.
As mentioned earlier, monetization impacts many different departments, from development to sales to billing. Each of these departments has different challenges. For example, the sales team often works in a customer relationship management (CRM) system to track leads through the sales funnel. If there is a change to a customer’s status, they need to communicate that change to the billing department.
An agile billing system integrates communication between different departments, such as operations, finance, collections, etc. It can integrate with CRMs to pull information into the billing platform, while also pushing information back into the CRM.
This is just one example of how an agile billing platform can streamline the monetization process.
An agile billing system also interfaces with the General Ledger, or GL, to track subscription changes such as upgrades or downgrades. Tyler points out the headache of trying to prorate payments with subscription changes.
“What do you do with all the math behind that?” he asks. Without agile billing, “It’s simply unmanageable. With an agile billing system, though, this information is backed by the GL and is controlled in real time.”
With an agile billing solution, product catalogs are stored in one place, easily accessible, and easily changed. Changing the product catalog by adding new or enhanced products, services, or features, is simple but accurate. This allows rapid scaling without the pain many businesses experience with growth spurts.
Along with real-time cataloging, pricing updates are just as seamless. And again, they are visible to any department who requires that information, from sales to billing, quotes, and contract management.
Whether you’re a business in the e-commerce industry, or one hoping to tap into the opportunities created by smart cities, monetization is not always a seamless process. An agile billing platform is the single source of truth (SSOT) solution a business needs to react to market changes and competitive pressures.
For those challenged with the rapid responsiveness driven by monetization, a robust recurring billing system provides practical and effective ways to support businesses in hyper-scale mode.
