establishing & managing recurring revenue model - optimizing the revenue opportunity

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Establishing & Managing Recurring Revenue Model - Optimizing the Revenue Opportunity Robert Harden Jon Gettinger

Former Director, SVP, Marketing,

Global Billing Solutions, Aria Systems

Experian



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The Recurring Revenue Market Landscape



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From One-Time Sales to Recurring Revenue

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By 2014, streaming media is expected to hit $70B

137%Online movie streaming is up from 2011

Companies that are not offering subscription options as part of their product mix should put a priority on assessing the value of developing a subscription strategy. — Gartner 2011

47%of U.S. Businesses

have adopted or are considering adopting a

recurring revenue business model

$857The average consumer spend in monthly subscriptions

$6BExpected 2013 global virtual

goods revenue



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Recurring Revenue

35% of Global 2000 companies with non-media digital

products will generate incremental revenue of 5% to 10% through subscription-based services and revenue models.Source: Gartner, Inc., Building a Strategy for the Subscription Economy, April 11, 2011

Source - IDC The Case for SaaS-based Subscription Billing and Management, Dec 2012

. . .will grow at 35% CAGR 2012-2014

. . . projected at $485 M in revenue in 2014

Cloud Billing . . .



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Recurring Revenue Drives Cloud Billing

5

Drivers Here’s WhyMarket ExpansionAccess new markets, take expensive one time purchases and offering them on subscription/usage basis.

Lifetime ValueOffer existing customers new ways to purchase goods and services aligned with department purchase cycles.

Competitive DifferentiationRecurring revenue offerings stand out from the crowd and enable businesses to attract new customers.

InnovationRecurring revenue is the foundation for the “sharing economy” and enables innovative new business models.

Consumer PreferenceEnabling customers to pay over time, or pay for what they use, recurring revenue offerings are perceived as more friendly.

Recurring RevenueDeployments

Wall StreetFriendly

“Cloud billing market will grow at 35% CAGR 2012-2014”*

*Source - IDC The Case for SaaS-based Subscription Billing and Management, Dec 2012



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Recurring Revenue Model Options

Subscription Usage Subscription + Usage

• Fixed payment for a good or service over a specific period of time — a day, a month, a year

• Charges per use or per unit of service

• Combines fixed subscription for service level, with “overage” billed as extra charges



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Looking at Business Differently



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Then and Now



#CFOD13• Sell products

& services• Online storefront• CRM integration

• Provision services• Customer

communication

• Track & manage usage• Respond to

customer inquiries

• Calculate charges & create invoices • Process payments• Dunning

• Reports• Dashboard

Billing in a Recurring Revenue World

Acquire & Expand

Track & Respond

Calculate & Bill

Analyze & Report

Activate & Notify



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. . .Gets Complex Quickly

Acquire & Expand

Track & Respond

Calculate & Bill

Analyze & Report

Activate & Notify

• Services Activated• Communications• Frequency• Product Add-on’s• Upgrades• Pricing Tiers• Regional & International

• Multi-tier Usage• Thresh-holding• Accumulation• Pooling• Overage• Rating Controls

• Proration• Co-Termination• Charge Alignment• Credits & Refunds• Ad-Hoc Invoicing

• MRR• Delta MRR• TCV• DSO• Uptake• Churn Rate

• Event Notifications• Terms• Change Quotes &

Orders• Entitlement

Management

• Sell products & services• Online storefront• CRM integration

• Provision services• Customer communication

• Track &manage usage• Respond to customer inquiries

• Calculate charges & create invoices • Process payments• Dunning

• Reports• Dashboard



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Case Study



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About Experian

Leading global information services company providing data and analytics tools to clients around the world

Revenue: US $4.7 bnEBIT: US $1.25 bn In top 50 of FTSE-100Employees: c. 17,000Offices in 40+ countriesLargest markets: US, Brazil, UKCorporate headquarters: Dublin



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A New Opportunity

Business expansionExperian to open a new credit bureau in Australia and potentially other markets outside the U.S.

Expand existing operations in other markets outside the U.S.

Products to be definedNew product delivery platform, in design stage

Monetization models to be defined

Constraints:Support existing business while facilitating new business

Support existing business processes while standardizing across BU’s and regions



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Business ChallengesLow cost to serve

Limited start-up investment

Minimize ongoing IT costs – cost certainty

Low touch processes

Shared services approach?

Rapid time to marketAccelerated ramp-up

Additional products / services

Reach un-served or underserved market segmentsNew products / services

New monetization models?

Maintain existing market segments



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Business ChallengesIntegrate with existing systems (CRM / ERP)

Don’t leave money on the tableProducts for markets

Monetization modelsRight pricing for subscriptions / usage

Up-sell / cross-sell?

Reduce churn

Identify revenue recognition rules

Capture relationships, not orders“Foot in the door” opportunities

Maximize customer value over time



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Cloud Based solutionBillingCRM

Cloud-based integration tool

Manage client provisioning from CRM/Billing

Out of the box analytics

Integrated with Oracle ERP

Recurring revenue models wherever possible

Subscription (with overages)

Annual to reduce churn

Usage

Prepaid where practical

Flexibility

Solution



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Benefits of a Cloud Based Solution

Cost benefits:Eliminated up-front hardware/software deployment costs

Predictable ongoing costs

Low touch processes

Share technology risk with vendor

Vendor manages technology, we manage business

Improved time to marketInitial ramp-up

New products / services / plans

Repeatable solution

Scalability



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Needed to Transform Billing

Business Driver

Client Centered Approach

Standards & Processes

Out-of-the-Box Technology

Measuring Success

Strategy first, not systems

Improve client experiences

Enforceable standards, Executive buy-in

KPI’s measure strategy success

Eliminate the C-word



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Consider A Solution That Can . . . Let’s you innovate and experiment

Quickly respond to changes/opportunities

Get your recurring revenue business to market in weeks/months

Delight customers over time, all the time



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