new business models and strategies for leveraging technology · saas considerations up front...

1

New Business Models and

Strategies for Leveraging

Technology Paul Baguley, Principal, Contract

Compliance Services, KPMG

New Business Models & Strategies for Leveraging Technology

Paul Baguley,

Principal,

Contract Compliance Services

KPMG

3 © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International.

KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does

KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Introduction

This Talk will:

Summarize future revenue growth areas

Highlight models to leverage cloud, virtualization and IOD

Explain why back office transformation & integration is so important




Changing Business Models

Mainframe Mini

Client Server Internet Cloud

IT for Automation Virtual Business Virtual Society

Extensive

centralized

automation

Centralized

affordable

automation

Technology

enabled

business

Office

Automation

Personal

Productivity

Big Irons

Networking

Terminals

PCs, LANs,

Servers

www,

Telecom/

WANs

Outsourcing,

SOA, Mobile,

IOD

Interface to

virtual world

Connected

world

eCommerce

Virtual

society

New

business

models

IT

Transforms




Moving to Cloud Business Models

Gartner forecasts that the market for applications,

application infrastructure, and systems infrastructure

delivered as public cloud services will reach $43 billion in

2015.

Creating the right operating model to build a successful cloud

business is not an easy task due to

- operational complexity

- switch to a services based business

Software and hardware companies must move from being a

product-centric company to being an “as-a-service” provider.

This is a significant challenge, especially in the highly

demanding enterprise space.

Where will the

Revenue Come

From?

© 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent

member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Methodology and Demographics

7

KPMG’s 2014 Technology Business Outlook reflects the viewpoints of 100 senior executives

in the United States. The web survey was conducted from March to April 2014.


member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 8

Revenue Growth Drivers

Which do you believe will

be the biggest drivers of

your company's revenue

growth over the next 24

months*?

Q

Up to three responses allowed

*Note: in 2013 the question was based on the next one to three years.



Cloud Revenue Trends

9

Which best describes your cloud revenue in the last year? Q

May not equal 100% due to rounding



Mobile Revenue Trends

10

Which best describes your mobile revenue in the last year? Q


member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 11

Which product/ service is the main driver of your mobile revenue? Q

Mobile Revenue Trends

May not equal 100% due to rounding

What will the revenue model/s look like?




• Software apps provided in the cloud on a subscription basis

SaaS

• Platform as a Service – virtualized application development platform

PaaS

• Business Process as a Service – provided to companies on a subscription basis

IaaS

BPaaS

7 16

• Infrastructure as a Service – computing power on an as needed basis

XaaS = anything as a service

The Main Cloud Business Models




Changing Business Models

Core Business

Model

Growing Business Model Examples

Hardware

Manufacturer

Infra as a Service (IAAS)/

Managed Service Provider

(MSP)

Cisco

Dell

Software Publisher Software as a Service Provider

(SaaS)

Microsoft

Adobe

Communications/Infr

a

Provider

Managed Services Provider

(MSP)

BT, Rackspace

Consumer

Electronics Producer

Content and services Provider Apple, Sony

IT Enabled Company Cloud Services Provider Amazon




Changing Revenue Models – Example

SaaS

Partners

Appliances

Consulting

Software

Maintenance

Support

Eco-

system




One-Off Perpetual License

Annual Maintenance

Complex licensing metrics

Reliance on customer self reporting

Separate reporting tools

Low safeguards against piracy/non compliance

Low touch customer support

Sales incentives on big deal

SaaS Considerations

Up front revenue recognition recognition

Pay for what you use

Monthly Usage Billing

Transparent Usage Based Metrics

Automated In-Built Reporting

In-Built Reporting

Built-In Safeguards

High Touch ongoing support

Incentives on ongoing customer sat.

Amortized revenue recognition

OLD NEW




Old World v New

Product Centric/

Engineering innovation

One off – big deals

Limited service

provision

As a Service

Ongoing subscription

Full service provision

Why will the back office be so important?




The Back office can no longer be the poor

stepchild..




Cloud Capabilities

Successful businesses will be those who can provide an integrated front

and back office to meet customer demand

Continuous Customer Focus

Continuous Reporting & Analytics

Sales Pricing &

Contracting

Metering &

Billing

Financial

Manage-

ment

Portfolio

Manage-

ment

Provision

-ing

Product

Dev

Services

& Support

Channel

Manage-

ment




Old World v New

Front office is king!

Back office makes do

Customers manage the

software (entitlements

& deployments)

Balanced business

model

Integrated front and

back office

Vendor/Provider

manages the software

Full usage metering –

feeds billing




Learning from Telcos….

Source: Telemanagement Foundation (TMF) – OSSP and BSSP Summary Diagram

Conclusion


member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 10/21/2014 24

• Prioritize the customer experience (focus on service

and support)

• Build the operational capabilities for XaaS offerings (a

huge undertaking)

• Invest in processes, tools and organizational

capabilities

• Integrate front and back office tightly (business models

map to operational models)

Those who under invest in this integration will at best see

declining margins, others will just not survive in the cloud

world.




Paul Baguley Partner, Advisory Services KPMG LLP Email: [email protected] Phone: 408-367-7608

mailto:[email protected]

new business models and strategies for leveraging technology · saas considerations up front...

Documents