Subscribed 2017: The 6 Engines Of The Zuora Platform
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Running a subscription business is completely different from running a traditional product-centric business, from how you price to how you recognize revenue. From its inception, Zuora was built especially for subscription business models. In this session, we’ll discuss the challenges intrinsic to a subscription business model, from quote to cash. And, through a live demo, you’ll discover how the 6 Engines of the Zuora platform work to manage all subscription order-to-cash processes.
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Subscribed 2017: The 6 Engines Of The Zuora Platform
- 1. 6 Engines of Zuora Gregory Gamp Senior Sales Engineer
- 2. The modern business is centered around ongoing customer relationships OLD WORLD NEW WORLD events events events events events events
- 3. OLD WORLD ORDER-TO-CASH Product-centric, siloed, serial, linear CRM ERPquote order fulfill invoice collect recognize A Product ? ?
- 4. NEW WORLD ORDER-TO-CASH Subscriber-centric, event-driven, dynamic, interconnected quote renew order provision invoice collect measure recognize CRM ERP
- 5. Businesses needs a single Subscription Management Hub for their dynamic order- to-cash process quote renew order provision invoice collect measure recognize CRM ERPSubscription Management Hub
- 6. AR / Collections E-commerce General Ledger Revenue Recognition Companies choose Zuora as the hub for their dynamic order-to-cash process CRM ERP Gateways Provisioning Quoting Tax Subscription Relationship Management Hub
- 7. The Zuora Central Platform is driven by 6 core engines
- 8. CHARGE MODEL PROMOTIONS CURRENCY Flat fee Per unit By volume By tiers Blended % of discount Fixed discount Free trial VIP discount Promo codes USD EUR HUF GEL + more OTHER PRICING FACTORS Price uplift Tax inclusion Tax exclusion BILLING FREQUENCY Per month Per year Per quarter Per week By term Issue based Specific weeks Specific months BILLING TRIGGERS Upon Sign-up Upon Fulfillment Upon Activation BILLING TIMING Batch in-advance Batch in-arrears Ad-hoc USAGE RATING Overage charge Tiered overage Overage smoothing Overage rollover Pay as you go Prepaid drawdown Multi-attribute Minimum commitment Pricing Engine Create new pricing in minutes, without having to re-code or re-engineer your rating and billing processes
- 9. Future-dated Event Subscribe Consume Upgrade Downgrade View Subscription Early or Late Invoice Renew And more RECURRING BILLING AD HOC BILLING FUTURE BILLING SIMULATION ● Automatic proration & taxation ● Easy billing batches to segment customers by billing date, payment type, and other settings SUBSCRIPTION EVENTS FLAWLESS BILLINGRATING ENGINE Real-time Charge Calculator Taxation Service Usage Ingestion Service Time-based Invoice Generator ● On-demand rating and charge calculations for real- time invoice generation ● On-demand rating, charge calculations, and invoice generation for future-dated events ● Trigger-date billing ● Simulate future billings to better forecast billing and cash ● Simulate billing over and beyond the entire lifecycle of a subscription to keep a customer informed Rating Engine Flawlessly bill customers at scale for any monetization or account model
- 10. Customer Inc. Customer EMEA Customer N.Am Customer West Customer East Reseller A Reseller B Your Company Old World: Hierarchy Customer Inc. Customer EMEA Customer N.Am Customer West Customer East New World: Network Today’s systems were designed for rigid account hierarchies, not networks of relationships
- 11. OwnershipAssociation Payment Responsibility Who “owns” the subscription? What family of companies, units, or people is the subscription associated with? Who is paying for the subscription? ● Ownership & payment responsibility are not always contained in a single hierarchy ● These can change over time The Challenge: There’s 3 concepts when it comes to managing subscription relationships
- 12. COMPAN Y A SUB. 1 SUB. 2 DEP T 1 DEP T 2 COMPANY B INVINV OWNERSHIP ASSOCIATION PAYMENT RESPONSIBILITY Subscription 2 Department 2 Company A Company B In other systems, the invoice for Subscription 2 can’t be sent to Company B unless it belongs under the same hierarchy as A Unlike systems with rigid hierarchies, Zuora decouples ownership, association, and payment responsibilities. This lets companies easily change account relationships over time. Designed to let you manage a network of subscription relationships
- 13. INV: Motor Trend and Surfer Mag Bill To: California Use Case Example 1: Gifting in B2C Relationships Example of a subscription that spans 2 family associations TEN: Motor Trend Subscription TEN: Surfer Magazine Subscription TEN: Super Street Subscription INV: Super Street Subscription Bill To: New York Use Case Description Dad pays the bills for his kids Grandpa, who lives in New York, gives his grandson a subscription as a gift and pays for the first 6 months TOM TAMMY GRANDPA DAD
- 14. INV: Motor Trend, Super Street, and Surfer Mag Bill To: California Use Case Description After 6 months, the son decides to keep the subscription The payment responsibility transfers ownership to the dad Use Case Example 1: Gifting in B2C Relationships Example of a subscription that spans 2 family associations TOM TAMMY GRANDPA DAD TEN: Motor Trend Subscription TEN: Surfer Magazine Subscription TEN: Super Street Subscription
- 15. Digital Service Start Date: 2/1/17 Term: 12 months HW + Maintenance Start Date: 1/1/17 Term: 24 months Use Case Description Customer buys hardware and value added maintenance through the channel Customer buys digital service direct from vendor INV: $170,000 Hooli HW+Main. Piper HW+Main. INV: $5000 Service Period: 1/1/17 - 3/31/17 Hooli CDW Use Case Example 2: B2B Cross-Channel Commerce Modern enterprises are now engaging the channel differently due to the proliferation of digital services
- 16. Use Case Description Customer’s departments all have different buying preferences Some departments even purchase from different resellers Use Case Example 2: B2B Cross-Channel Commerce Which becomes more complex with multidivisional Enterprises Hooli Marketing Hooli Support Hooli Digital Service Start Date: 2/1/17 Term: 12 months HW + Maintenance Start Date: 1/1/17 Term: 24 months Digital Service Start Date: 2/1/17 Term: 12 months HW + Maintenance Start Date: 1/1/17 Term: 24 months INV: $25,000 Hooli Subscription Piper Subscription INV: $70,000 Marketing HW+Main. [____] HW+Main. INV: $100,000 Marketing HW+Main. [____] HW+Main. CDW Ingram
- 17. Saudi Arabia Exploration Company Dubai Geological Exploration Truck 1: Device + Software Activation Date: 1/1/17 Term: 12 months Truck 2: Device + Software Activation Date: 2/15/17 Term: 12 months Truck 150: Device + Software Activation Date: 6/1/17 Term: 15 months Truck 1: Device + Software Activation Date: 12/1/16 Term: 12 months Truck 2: Device + Software Activation Date: 1/15/17 Term: 12 months Truck 100: Device + Software Activation Date: 5/1/17 Term: 15 months Use Case Description Oil company has two vehicle fleets who are subscribing to remote monitoring devices Each device is activated separately with it’s own term and billing frequency INV: All active trucks Bill To: Saudi Arabia INV: All active trucks Bill To: Dubai Use Case Example 3: Connected IoT Device Movement A subscription moves from one association to another
- 18. Truck 1: Device + Software Activation Date: 1/1/17 Term: 12 months Truck 2: Device + Software Activation Date: 2/15/17 Term: 12 months Truck 149: Device + Software Activation Date: 5/1/17 Term: 12 months Truck 1: Device + Software Activation Date: 12/1/16 Term: 12 months Truck 2: Device + Software Activation Date: 1/15/17 Term: 12 months Truck 100: Device + Software Activation Date: 5/1/17 Term: 15 months Use Case Description Truck 150 from the Saudi fleet is reallocated to the Dubai fleet, changing subscription ownership Dubai company pays for remainder of service on Truck 150’s device subscription Truck 150: Device + Software Activation Date: 6/1/17 Term: 15 months Saudi Arabia Exploration Company Dubai Geological Exploration INV: All active trucks Bill To: Saudi Arabia INV: All active trucks Bill To: Dubai Use Case Example 3: Connected IoT Device Movement A subscription moves from one association to another
- 19. $100 CREDIT CARD $25 CHECK/PO €75SEPA GLOBAL COVERAGE Multiple Methods, Multiple Gateways DUNNING Smart Retries Collection Workflows BATCHING Payment Runs Global Payment Engine Maximize recurring cash collections at scale $200+ Currency Conversion RECEIVABLES CASH
- 20. Subscription Orders Engine Manage the subscription lifecycle and automatically recalculate billing, payments, and revenue for every customer event 2017 2018 2019 Jan 1, 2018 Add Product Add Services MRR: $1,000 2020 BILLING PAYMENTS METRICS REVENUE Jan 1, 2017 Create Subscription MRR: $500 Jan 1, 2019 Remove Service MRR: $750 PROVISIONING AND NOTIFICATIONS
- 21. Subscription Accounting Engine Audit-ready revenue management without sacrificing business agility REVENUE MANAGEMENT - + x = ÷ ∞ ± ≅ ≈ ≤ ≥ $ ¢ £¥ €invoice allocate distribute recalculate recognize MODEL Per unit pricing Tiered pricing Volume pricing Ramp pricing Usage pricing Pay as you go Overage rollover Multi-attribute Pre-paid drawdown and more! calculate audit account analyze record post verify Consume Upgrade Downgrade Add-On Remove Rextend Resume Renew EVEN T
- 22. BUSINESS METRICS BEHAVIORAL METRICS PREDICTIVE SCORES MRR, ACV, TCV, Bookings, Billings, Cash Usage Intensity, Contracted Utilization Churn probability, Engagement Score FINANCIAL, BEHAVIORAL AND DEMOGRAPHIC DATA SOURCES INTERNA L INGESTION TRANSFORMATION QUERY ANALYSIS METRICS & SCORESMETRICS & SCORING ENGINE Subscription Metrics Engine Instant insights into business performance and customer engagement
- 23. Monetize with any model Combine one-time, recurring and usage- based charges to design strategic and tailored pricing plans Sell one product many ways Leverage different pricing levers such as different billing frequencies, different currencies, different billing triggers, different time periods, and more Automate downstream impacts Apply billing and revenue rules to each pricing plan to trigger the Rating and Subscription Accounting Engines Pricing Engine Price and package in minutes without having to re-code back office systems
- 24. Subscription Orders Engine Manage the subscription lifecycle, and automatically recalculate billing, payments and revenue for every customer event Manage any customer event Capture customer events, such as when subscribers consume, suspend, resume, renew, downgrade or cancel their subscriptions Trigger backend automation Translate customer events into easy to understands bills, timely collections, accurate revenue recognition and up- to-date subscription metrics Keep the customer informed Automate service provisioning, trigger customer notification, and ensure subscription information is accurately represented across all channels
- 25. Rate for complex account relationships or pricing models Rate for complex charge calculations, hybrid monetization models, distributed billing, and changes in account relationships. Rating Engine Bill customers flawlessly at scale for any monetization or account model Rate usage in real-time Ingest usage and rate for recurring or ad hoc charges in real-time. The same service can simulate future billings to better forecast billing and cash. Bill for anything Generate tailored invoices for any pricing model ad-hoc or on a recurring basis. Trigger billing for individual subscribers or groups of subscribers.
- 26. Global Payments Engine Maximize recurring cash collections at scale Enable Global Payment Options Connect to 30+ pre-built payment gateways, 10+ global payment methods, and 100’s of currencies Enable Efficient Payment Operations Allow subscribers to pick their preferred payment dates down to the time and batch them into groups for optimal processing times Minimize involuntary churn Dunning settings such as payment retry rules, collection workflows, and payment method updaters prevent unnecessary revenue leakage 31 Pre-built Payment Gateway Integrations
- 27. Subscription Accounting Engine Audit-ready, automated financial operations for maximum business agility Automate revenue recognition Leverage pre-configured rules and logic to calculate, distribute and recognize revenue for any pricing model or change in the subscription lifecycle Optimize efficiency for accounting and finance teams Pre-built functionality for FX conversion, GL connectors, GL segmentation rules, AR Aging, AR Roll-forward, and more Enable financial compliance With audit trails of financial changes, accounting period lock-down capabilities, and user permissions and controls for multi-entity enterprises
- 28. Blend financial and behavioral metrics Ingest data across multiple sources to blend financial metrics (like contract utilization) with behavioral metrics (like product usage intensity) Compute key metrics in real- time Calculate subscription metrics like MRR, TCV or Net Retention across quotes, subscriptions, orders, reports and other areas of the application Subscription Metrics Engine Instant insights into business performance and customer engagement Predict future outcomes Use machine learning algorithms to understand which subscribers are most likely to renew or churn and take preventative action
- 29. Platform Infrastructure Gives businesses the agility they need with a secure, scalable, and open and extensible microservices platform Integration framework Easily integrate with Zuora’s object mapping, notifications service, batch or real-time sync, data transformation and other services Enterprise-grade scalability Scale your business on infrastructure that handles - 1B API transactions per month - 99.97% uptime reliability - 29.89ms API response times - Micro services architecture Application marketplace Accelerate your pace of innovation with 100+ prebuilt apps that offer - 3rd party data sync - Bespoke charge models - Custom rev rec rules - Custom dunning flows - Pre-built integrations - Geo specific compliance Secure & Compliant Highest standards of certification ✓ PCI DSS ✓ SOC 1 Type 2 ✓ SOC 2 Type 2 ✓ ISO 27001 ✓ HIPAA ✓ FIPS 140-2 Encryption ✓ 2-Factor Authentication ✓ IP Range Restrictions
- 30. CHANNELS WEBCRM Zuora Quotes Zuora 360 TAXATION Sales Team Support Team Online Users Partners GL 3RD PARTY PAYMENT GATEWAYS API Based Integration Manual Out of the Box Integration Zuora fits within a wider ecosystem Notification Engine/Callouts