The document provides information to help make the case for adopting a subscription business model to a board of directors. It discusses how a subscription model can grow revenue through recurring payments, improve customer satisfaction through flexible options, and cut costs. The presentation walks through assessing business operations needs, proving the value proposition, managing usage, and addressing key questions the board may have about readiness and metrics. Adopting a subscription model is positioned as beneficial for both the business and customers.

1. Copyright
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2013
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LLC.
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rights
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Making
The
Case
for
Subscrip5on
Business
Model
with
your
Board
of
Directors
Andy Main
Global Customer Solutions Leader
Deloitte Consulting LLP

2. Copyright
©
2013
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LLC.
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rights
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In The Next 60 Minutes,
You Are Going To
Rethink How You Do
Business With A
Subscription Model
and have a great story to take to your Board of
Directors.

3. Copyright
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2013
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It’s Always Good To Show The Board
That You Followed A Process.
Business
Strategy
Business
Results
Business
Operations
What do we need to do to position our business operations?
Technology
What technology solutions and architectures do we need?
Organization
How should we structure our organization?
Issues
What business problem are you trying to solve?
What is the business model?
þ þ
þ
þ

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Now, Get the Attention of your Board!
What is Subscription Business?
4
Rather
than
selling
products
or
services
individually,
a
subscrip7on
model
sells
periodic
use
which
builds
brand
loyalty
into
a
long
term
recurring
revenue
streams
Grow
Revenue
Diversify
Business
Cut
Costs
Improve
Customer
Sa5sfac5on

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Then What Do You Say To Them?
Tell Them Where To Chase The Money.
5
Chase
The
Money
Role
of
the
Subscrip5on
Model
Grow
revenue
Enable
scalability
–
Subscrip7on
solu7ons
increase
total
addressable
market,
leading
to
increased
transac7on
volumes
to
grow
revenue.
Improve
customer
sa5sfac5on
Customer
Targe5ng
and
Ease
of
Access
–
Subscrip7on
solu7ons
significantly
increase
customer
sa7sfac7on
as
they
are
more
flexible
and
configurable
towards
the
specific
needs
of
a
customer
and
enterprise
Cut
costs
Costs
–
Leveraging
Subscrip7on
technology
is
also
a
key
enabler
to
shiM
CAPEX
costs
into
OPEX
cost
Accelerated
5me
to
market
–
Subscrip7on
model
enables
the
rapid
development
of
solu7ons,
that
can
be
released
to
market
in
waves
-­‐
much
shorter
7me
to
market
for
new
business
areas
Business
Diversifica5on
Zuora’s
Nine
Keys
to
Subscrip5on
Success

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Continue To Make the Case
It’s Great for our Business and for our Customers
+ Business
Predictable and constant
revenue stream
Provides payment in
advance
Revenue stream from
recurring subscriptions is
considerably greater than the
revenue from simple one-
time purchase
Higher average customer
lifetime value,
Greater potential for
upselling and cross-selling
+ Customer
Convenient by buying a
product on a regular basis to
save money and time.
Shift CAPEX costs into
OPEX cost
Subscription pricing makes it
easier to pay for expensive
items, since it can be paid
for over a period of time
Access to communities with
similar interests
Ongoing product updates
available in the subscription
Data Center
Consolidation
Consolidate and
standardize your
data center and
network
components
Virtualize
Moving
produc5on
applica5ons
to
efficient
capacity
Automate
Pre-­‐provisioned
plaMorms
such
as
Applica5on
Servers,
Web
Servers
Platform
Host
basic
applica5ons,
web
applica5on,
intranets,
legacy
systems
Business
Applications
Providing
business
applica5ons
to
enterprise
customers
A
COMPANY
WHO
GOT
IT
RIGHT
§ #
Users
–
Named
/
Concurrent
§ #
Transac7ons
/
Type
§ #
Hours
§ #
GBs
§ Square
Feet
§ Kilowa3s
Consumed
§ #
Transac7ons
managed
§ #
Calls,
#
Minutes
WHAT
YOU
CAN
SUBCRIBE
TO
Selling
capacity
Selling
the
pla_orm
Selling
soMware/
solu7ons
SERVICES
OFFERED
.

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2013
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So You Think You Got Them?
Start To Tell Them What is Different
7
BUY NOW SUBSCRIBE
Rela5onships
(Long-­‐term,
adop7on,
loyalty)
Sell
Units
Fixed,
SKU
Based
One-­‐Time
Transac5ons
Backwards
Looking
Metrics
Flexible,
Plan
Based
(Edi7ons,
Bundles,
Usage)
Recurring
(upgrades,
add-­‐ons,
renewals)
Forward
Looking
(ARR,
MRR,
Churn,
Renewals)
Growth
Model
Pricing
Model
Commerce
Model
Financial
Model

8. Copyright
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2013
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Do
you
have
evidence
that
customers
will
pay
for
our
products/services
via
a
subscrip7on
model.
What
will
we
sell
this
way
and
to
whom?
Are
we
ready
to
move
to
the
high-­‐touch
customer
engagement
model
that
goes
with
subscrip7on?
How
are
you
going
to
provide
an
acceptable
cost
to
serve?
Can
we
accurately
monitor,
meter,
rate
and
bill
what
has
been
consumed?
Can
we
get
to
the
lowest
level
of
granularity
to
reflect
that
in
our
value
proposi7on?
USAGE
MANAGEMENT
PROVING
VALUE
CUSTOMER
ENGAGEMENT
VALUE
PROPOSITION
What
are
the
metrics
and
KPIs
we
need
to
keep
an
eye
on?
Here’s the type of questions they’ll ask on Business Operations
YOU

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©
2013
Deloi3e
Consul7ng
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rights
reserved.
Do
you
have
evidence
that
customers
will
pay
for
our
products/services
via
a
subscrip7on
model.
What
will
we
sell
this
way
and
to
whom?
VALUE
PROPOSITION
Get Ready
SampleAnswers Subscription Model
• Customers are demanding
usage based pricing from us
• We have tested this with our
customers
• Our customers will pay upfront
for the service on a monthly
basis
• We are offering bundles,
configurable options, and tiered
pricing
• We have created a new
subscription services delivery
platform from a company called
Zuora and it does everything
from the subscription order to
monthly billing and collecting
from the customer

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Can
we
accurately
monitor,
meter,
rate
and
bill
what
has
been
consumed?
Can
we
get
to
the
lowest
level
of
granularity
to
reflect
that
in
our
value
proposi7on?
USAGE
MANAGEMENT
Get Ready
SampleAnswers
Subscription Model
• Yes we can monitor usage vs. the limited
visibility we have of usage data
• We will collect usage metrics and unlike
today where we don’t know installed
base, we will have full knowledge of how
our customers use our products and
services
• We are doing usage based pricing on
different subscription plans to give our
customers options – one time buys, by
the user, by the minutes of consumption
– we can get really granular

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How
are
we
going
to
manage
our
customer
rela7onships
with
this
Subscrip7on
Model?
CUSTOMER
ENGAGEMENT
Get Ready
SampleAnswers
SUBSCRIPTION MODEL
• We’ve factored into our subscription
pricing and margins, the additional cost in
our contact centers to handle customer
inquiries
• Good news here is that the renewal
cycles generate net new opportunities,
vs. our one-off services today that limit
customer interaction
• It frees up more selling time for net new
customers
• Unlike today, we will get early warning on
attrition based on usage trends and take
actions to retain our customers
• We are using social communities to have
our customers talk to one another, share
their stories on how they are getting
value from our services– this will create
longer term customer loyalty

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PROVING
VALUE
What
are
the
metrics
and
KPIs
we
need
to
keep
an
eye
on?
Get Ready
SampleAnswers
SUBSCRIPTION MODEL
This is going be very healthy for our
business:
Improved Forecast Accuracy
Increase Total Addressable Market and
New Customers
Increase In Length and Profitability of
Customers Relationships
Increase in Annual Recurring Revenues
Increase in deals At or Above Margin
Thresholds
Reduced SG&A as % of Revenue
Faster Quote Turn-A-Round Time
Vastly Improved Cash Conversion Cycle

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Technology Architecture
Show Them How YouAre Mixing Clouds To DoAll Of This
PaaS
based
cloud
integra7on
layer
delivering
middleware
and
API
connec7vity
between
the
components
of
the
proposed
cloud
solu7on
vendors.
Campaign
Management
Contracts,
Configure,
Price,
Quote
Order
and
Subscrip7on
Management
Invoicing
&
Billing
Sales,
Service,
Marke7ng,
Custom
Apps
Sales
Social
Business
Customer
&
Partner
Portal
Cloud
Glue
The
stack
bundles
pla_orm
independent
leading
SaaS
applica7ons
providing
complemen7ng
capabili7es
Sales
Planning
&
Compensa7on
Human
Resource
Salesforce.com
is
the
leading
provider
to
act
as
hub
for
cloud-­‐
based
opera7ons.
Service
Marke5ng
Force.com
and
App
Exchange
Social
Business
CLOUD MIX TM
Zuora
as
the
leading
provider
of
Subscrip7on
Management
Solu7ons

14. Copyright
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2013
Deloi3e
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LLC.
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rights
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Organizational Change
Is Everyone Ready To Do This?
• Is everyone lined up and ready to go? Employees need to know how they
contribute to the Subscription Business Model
• Leadership challenge is to get everyone headed in the same direction, with a
shared purpose
The ultimate proof is seen in employees actions
Subscrip5on
Model
Business
Readiness
Playbook
Develop metrics to
gauge adoption and
benefits of how the
business is trending
Adjust/develop
business processes to
fully utilize the
underlying
Subscription Model
technologies
The buy-in activities to
secure support for the
Subscription Model
Business Value
and
Measurement
Business
Processes and
Systems
Deliver information to
employees, set goals,
set roles, and train
people on how to run
the Subscription
business
Organization
Readiness,
Communication
and Training
Leadership
Alignment and
Stakeholder
Enrollment

15. Copyright
©
2013
Deloi3e
Consul7ng
LLC.
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rights
reserved.
What To Do Next…
Hope
you
Took
Good
Notes…
Give
it
a
Shot!
Contact
Andy
Main
for
advice
or
help.
amain@deloiAe.com
1 2 3

16. Preparing for the Board Room:
Subscription Metrics
Pete Khanna
CEO

17. Agenda
TrackVia Overview
Connecting the Dots
4 Key Essentials in the Subscription Economy
Wrap Up & QA

18. TrackVia Overview

19. TrackVia Overview

20. Big Picture
Culture People
1 2
Growth
4
Capital
3

21. The Nine Keys to Subscription Success
$
PRICE
ACQUIRE
BILL
COLLECT
NURTURE
ACCOUNT
MEASURE
ITERATE
SCALE

22. ACQUIRE NURTURE MEASURE ITERATE
Foundation Building
S u b s c r i p t i o n S y s t e m s
Business
Alignment
Flexibility
Customer
Focused
Predictability

23. Success Cycle
Vision
Reality
React
Scale

24. You Can’t Make Bricks without Clay
Engagement
Rate
Conversion
Rate
Cohort
Growth
CAC
Payback
Customer
Feedback
LTV
Renewal
Rate
Feature
Usage
LTV/CAC
Churn
%
UV
to
Trials
Growth
Time
Compe77on
Organic
Growth
Rate

25. Connect the Dots
Growth
Time

26. Summary
Measure React
Innovate Scale
Operating
DNA
Product
Mentality
Inclusive Proactive

27. Q&A
Thank You!