The document discusses the shift from a manufacturing economy to a subscription economy and the challenges this poses for business software. Specifically:
1) Traditional on-premise software and ERP systems were built for the manufacturing economy and do not work for the subscription economy, which involves recurring billing, usage-based pricing, and flexible plans.
2) A new type of software is needed to manage the complexities of subscriptions, including product catalogs, flexible pricing, billing, usage tracking, and integration with CRM and finance systems.
3) Zuora was founded to build subscription management software to help businesses manage this transition to the subscription economy. It has experienced rapid growth, signing $1 billion in committed transactions in one quarter
The move to a Subscription Economy: Lessons from Zuora
1. The move to a Subscription EconomyLessons from taking Salesforce.com from zero to $1 Billion and trying to do it again with Zuora tientzuo, ceo, zuora Life in Industry Seminar 2010 June 26 www.zuora.com 1
11. Example: Zuora Product Team in 2008 Past World 7 developers 1 PM 1 product 0 live customers Future World 20 developers 2 PM’s 3 products 10 live customers 11 The things that made us successful in the old world no longer apply What does it take to succeed in the new world?
12. 12 Change: Question: Existence of a Ubiquitous Network What Happens to Business Software ??
19. 19 Initial Subscription Promotion: Free Trial Subscription Customer 1 Product Monthly Recurring Usage Monthly Billing Term 12 Months 1 Month Free Trial Change Order #1 (Add Product) Renewal Order (+ Upgrade) Add 2nd Product Co-Term Renew 3 years Upgrade to New Plan Change Order #2 (Upgrade)
20. 20 “CMRR” Committed Monthly Recurring Revenue “Cash Flow” “Churn” “CAC” Customer Acquisition Cost “CTLV” Customer Total Lifetime Value
21. 21 ERP SYSTEMS: Unit X Price SKU-based No concept of product catalog No rate plans, no charge models Single Order No recurring element No concept of change orders No concept of terms No Usage No concept of usage No concept of rating/billing No concept of bill cycles for usage ERP Systems were built for a Manufacturing Economy!