By Joshua Cliff, Director, Product Operations, Cloud/XaaS, Carousel Industries
There are a lot of reasons that, by 2020, more than 80 percent of software vendors will change their business models from traditional license and maintenance to subscription, according to Gartner. For ISVs, usage-based subscription models provide flexible options for software monetization, such as pay-as-you-go and concurrent licenses, support a more agile deployment cycle and deliver faster time to value while ensuring uniformity of software versions across all users. Additionally, subscription-based pricing gives customers the flexibility to scale up and down according to their actual usage with minimal upfront risk and cost.
As the world moves toward consumption-based models for all IT products and services, channel and IT leaders are facing questions about how these differences affect their businesses. A slightly complex, two-part question I get often is, “How are we supposed to manage an ever-growing portfolio of subscriptions, and what does ‘managing’ subscriptions mean anyway?”
To begin, let’s consider part one, about managing an ever-growing portfolio of subscriptions. For your customers, this brings up the “multiples” challenge:
- Multiple technology vendors (some sold direct, some through partners)
- Multiple endpoints (portals) for service (changes, trouble tickets)
- Multiple sets of entitlements to manage
- Multiple bills to review and pay
- Multiple contracts to process and renew
While this list might seem “business as usual” for IT and partners, it’s important to think about these elements in relation to the ebb-and-flow nature of the consumption model. A blessing and a curse of subscription-based delivery is the potential for month-to-month fluctuations as product features are added or activated, seats go up and down, and suppliers adjust pricing and billing amounts. Unlike the old practice of “truing up” with a software provider once or twice a year, the bill can change every time a product is updated, a seat is purchased or dropped, or a data limit is hit.
This creates a dynamic environment that requires more than traditional technology management. There are daily, monthly and annual administration requirements, all of which typically require vendor-specific awareness, cross-vendor or technology-area coordination, and an operations management skill set. In fact, for many customers, just tracking and managing the transactional elements of a subscription or annuity life cycle could be a full-time job. For partners, it probably already is. And remember, this is before vendors migrate even more products and services to subscription based models — products that are both cloud and non-cloud in nature.
That brings us to the second part of the question: “What does subscription management mean?” Is it only about the software vendors, changes, support, entitlements, billing and contracts?
Well, probably not. As an IT leader in this ever-changing world, your CIO customers need …