Getting ready for everything as a service

Owning or buying stuff is, well, so last-century.

I have piles of old CDs and DVDs gathering dust at home but haven’t owned a DVD player for years and my latest computer doesn’t even have a CD/DVD drive. My iTunes library is empty except for a couple of films and CD titles I bought years ago. Now, I just rely on streaming subscription services like Spotify or Netflix for my entertainment.

I’ve always hated owning cars. Now, I can skip around Paris and other cities using a multi-modal mix of public transport and transportation services delivered by Uber, Zipcar, Autolib, Vélib, Cityscoot etc. I no longer have to worry about residual value, parking, theft, insurance and all the strictures that go with car ownership.

In the business world, IT infrastructure, platforms and software is now delivered as a service. Assets are disappearing from the balance sheet and are being replaced with usage or subscription-based contracts that provide flexibility for businesses to respond more effectively to demand.

Worldwide adoption of these new digital services has been astonishingly rapid. Uber has delivered more than 2 billion rides since it was founded. Netflix and Spotify have respectively 83 million paying subscribers and 30 million paying subscriber worldwide. Amazon Web Services is already a $10 billion business. The Internet of Things, which will transform dumb devices into a plethora of connected self-monitoring objects, is estimated at $1.3 trillion in 2019 by IDC.

The scale of change raised by rapid adoption of these digital services has raised the fear of « uberization » (think of tire-burning taxi drivers in Paris) but the likelihood of stalling the momentum of change is slight.

Who will succeed in this new world of digital services, of everything as a service?

Obviously having a great execution, a strong value proposition and awesome customer service will be important but having powerful monetization systems will also be crucial.

In this new, real-time transactional economy, bloated, complex ERPs will no longer do the job since this new service-driven economy require monetization systems that can provide:

• Big data capability: New service-based businesses will need to be aggregate and rate trillions of transactions once they start scaling their business. Processing this deluge of data will require the ability to consolidate huge quantities of data into intelligible, financial transactions.
• Pricing model complexity: Business models will become much more complex. Digital service operators will need to be able to price at a granular level for multiple events and to clearly summarize this data on a unique invoice.
• Agile marketing solutions: Successful businesses will need to be manage their pricing dynamically in order to react to fast-changing market conditions. Marketing and product teams expect to be able to segment/iterate sophisticated service offers rapidly without needing to go through IT change orders.
• Cloud scalability: As businesses move to the cloud, their monetization systems will need to follow and be able to provide flexible and scalable solutions. Keeping your billing on premise makes no sense if you’re moving everything else to the cloud.
• Adapted metrics: The old world of shipping product and recognizing revenue is gone with service-driven business. Systems now need to be dissociate billing from revenue recognition that will occur over time.

So how does your current system stack up? Are you ready for the digital service economy?