Confidential and Proprietary Information. Do not distribute beyond intended audience.

Four Key Challenges in the Shift to Digital Recurring Revenue

W e b i n a r w i t h Z u o r a a n d S a u g a t u c k T e c h n o l o g y

Brian BellChief Marketing Officer

Mike WestResearch Fellow

Joe AndrewsSr. Director, Marketing

Moderator Featured Guests:

Agenda

1. Context – the enterprise business shift

2. Research – the four key challenges in making the shift

3. Relationship Business Management – a system of

innovation

4. Learning from companies who have made the shift

Slide 4 − Zuora Confidential, not for distribution beyond intended recipient

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The Subscription Economy takes the changes wrought by the SaaS model and applies them to companies in every industry.

We call this the Subscription Economy

Monetize RelationshipsShip Products

The Shift To Models Built on Relationships

CONSUMER BUSINESS

4 out of 5 businesses believe their customers are switching to new consumption models. “ ”

PearsonZendesk HPDellConnect America KaplanSPH

Reed Elsevier

Intuit American ExpressNCRTripAdvisor GoodMouthTouring Car Suisse

ServCorpQualcomm InformaticaDocuSignCarfax MindBodyFinancial Times

Customer Preferences Have Changed

High Tech

Cloud Infrastructure

Internet Of Things Education

Healthcare

SaaS

Communications

Creating Business Model Innovation In Every Industry

51% of companies have changed or are in the process of changing the way they deliver goods and services“ ”

Media

Copyright 2014 ǀ Saugatuck Technology, Inc. ǀ All Rights Reserved www.saugatucktechnology.com

Mike West

Research Fellow

Saugatuck Technology

Retooling for the Digital Economyand Recurring Revenue

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The Challenge:How can you make these changes happen cost-effectively and with the least disruption?

The digital imperative

Presents new technology challenges…

recurring revenue and monetization

new business partners

new systems

integration

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recurring revenue and monetization

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“Used to be 90 percent broadcast, but today it’s over 50 percent digital products. It’s everything from pure ad revenue to content reach on online platforms we monetize, but the bigger piece is in the shift to digital downloads and other ways of distributing video-on-demand in a combination of a la carte and subscription….”

Copyright 2013 ǀ Saugatuck Technology, Inc. ǀ All Rights Reserved www.saugatucktechnology.com

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new business partners

“We’ve been happy with ability to deploy faster, increase the speed at which we are moving, by partnering and adopting an agile approach…

…especially with a complex solution involving multiple partners. We are dependent on our infrastructure provider, our billing provider, on our Cloud platform for scaling to meet demand and need.”

new systems

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“Need to make sure you’re not just bringing the old stuff and adding a few things…”

“New systems are necessary, whether billing or revenue recognition or go-to-market, catalog, or social channels in customer care. New tools mostly but sometimes just the same tool implemented differently.”

integration

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“We have a need to hook ERP environments into third party APIs, doing handshakes for exchanging sales keys -- If it’s not automated, you can’t scale -- for monitoring customer experience and for monetization performance”

summary

Meeting the four key challenges:one recurring revenue and monetization

two new business partners

three new systems

four integration

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How can you make these changes happen cost-effectively and with the least disruption?

closing

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“We are always surprised where innovation comes from. As we deploy new capabilities in the Cloud to make things easier for the business, it lets the business focus on innovation.”

summary

Meeting the four key challenges:one recurring revenue and monetization

two new business partners

three new systems

four integration

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How can you make these changes happen cost-effectively and with the least disruption?

Innovation Requires Agility, But…As An Enterprise, You Have A Unique Challenge

A system that is not sufficiently flexible to meet changing business demands is an anchor, not a sail, holding the business back, not driving it forward.

“”

You have invested heavily in your ERP application

But your ERP system doesn’t help you innovate in an agile fashion

BUY NOW SUBSCRIBE

Recurring Revenue(Long-term, adoption, loyalty)

New approach to growth

Sell One-Time Units

Fixed, SKU Based

One-Time Transactions

Backwards Looking Metrics

Flexible, Plan Based (Editions, Bundles, Usage)

Recurring(upgrades, add-ons, renewals)

Forward Looking(ARR, MRR, Churn,

Renewals)

You require a completely different approach

New approach to pricing

New approach to commerce

New approach to finance

Innovationin Pricing& Packaging

Complexity in Commerce

& Order Management

Complexity in Billing

Complexityin Payments

Complexityin how youMeasure

Innovation in one area of your business causes complexity in other areas

Without a system that can manage this complexity, business model innovation is hard

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Confidential and Proprietary Information. Do not distribute beyond intended audience.

You Need

Relationship Business Management

RBM Is Your

System of Innovation

ERP Is Your System Of

RecordBuilt For

Monetizing Products

Built For Monetizing Relationships

The Relationship Business Management Difference

Plan-Based Catalog

Multi-channel Commerce

Lifecycle Orders

E-Commerce CPQ Engines RBM System

Relationship CommerceBilling Engines

Recurring Billing & Payments

ERP

Recurring Billing Automation

Recurring Payment Automation

Recurring Revenue Mgmt

Accounting Close

Revenue Recognition

Subscription Metrics

It integrates with your existing enterprise ecosystem

Systems ForCustomer Engagement

Systems OfRecord

Relationship Business

Management

CRM

Website

ERP

Financial Applications

Systems Of Innovation

“NCR rivals Paypal as Square’s scariest competitor.”

The Business Model Shift:• NCR Silver represents NCR’s first foray into

selling POS solutions to individuals and small businesses

• NCR Silver is NCR’s first iPad base POS solution

The Challenge:• Needed the ability to launch flexible pricing

models and iterate rapidly to compete in a crowded market of over 300 providers like Square

• Needed to be launch in 2 months

The Solution:NCR chooses Zuora as the commerce, billing and finance management platform for NCR Silver.The project is delivered in 61 days, with web self service sign ups, integration to Salesforce, and summary journal entry updates to Oracle. NCR uses Zuora to rapidly launch new pricing models, automate high volume billing and collections, and manage subscription lifecycle events.“NCR missed the transition to digital,” said CEO Bill Nuti, “and it hasn’t been engaged with small business owners since 1971. But NCR wants a new relationship with small and medium businesses, and today it’s about to start. And it’s going to do it via Apple’s iPad. Today marks the launch of NCR’s first new division aimed at small businesses in 50 years.”

“Touring Club Suisse replaces AS400 with Salesforce ,Zuora.”

DiginomicaThe Business Model Shift:• A business that counts half the population of

Switzerland as its customers needed to stay relevant in an increasingly competitive market

• TCS needed a way to engage with a younger, digitally engaged demographic

The Challenge:• TCS had been running its operations on a

AS/400 computer for over 20 years• Making changes was an expensive and time

consuming process• TCS was unable to offer anything other than

annual memberships on its current platform

The Solution:TCS rebuilt it’s IT infrastructure with 6 cloud native apps. At the heart of this new infrastructure are Salesforce and Zuora. Salesforce is the core CRM environment used by sales agents in the call center, and Zuora is used for subscription management, billing for almost 3 million subscriptions. Zuora is also integrated with SAP for consolidated financial management.

“Easy pricing, easy billing is absolutely key. We have built an environment now where the system adds a lot of value …With Zuora we do get that kind of flexibility where we manage the whole payment cycle [separately] from managing the subscription.” Ernest Gmunder, CIO, TCS

“Acxiom’s Audience Operating System could reinvent data driven marketing.”The Business Model Shift:• AOS is Acxiom’s most important business

initiative in 30 years• The launch of AOS represents a pivot from a

low volume of large 7 figure, high touch perpetual license B2B sales to a high volume of B2Any subscription sales in new markets.

The Challenge:• Needed flexible subscription based pricing

and packaging for the success of AOS• Needed seamless integration to Salesforce

for front office and PeopleSoft for back office• Needed to be live in less than 6 months

The Solution:Acxiom chooses Zuora as the commerce, billing and subscription management platform for AOS.The project is delivered in 159 days, with integration to Salesforce, PeopleSoft. Acxiom uses Zuora to experiment with new pricing models, and sign on new AOS clients that represent new markets and the next phase of growth for the company.“We are at an inflection point and starting the next chapter in our journey,” said Acxiom CEO Scott Howe. “We are a new company. Over the past two years we have worked to build a better business and to drive innovation. While it’s early, we are pleased with our launch of the Acxiom Audience Operating System and the resulting customer reaction and support.”

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