Recurring Revenue Adoption Reaches Tipping Point in 2016

tipping-point

The demand for recurring- or usage-based services reached a tipping point in 2016. According to a Gatepoint and Aria survey of executives, 52 percent of respondents cited use of consumption and usage-based models, while many are turning away from one-time transactions. In addition, 43 percent plan to move towards cloud-based billing to enhance their subscription or recurring revenue billing capabilities. In the bellwether software industry, Gartner reports a much higher number. A recent Gartner report said by 2020 more than 80 percent of software vendors will change their business model from traditional up-front license plus maintenance to a subscription model, regardless of whether the software resides on-premises or in the cloud. Not surprisingly, the billing market, which helps manage these recurring revenue models, is also expected to explode. MarketsandMarkets forecasts the billing market will triple to $16.59 billion in 2021, up from $5.68 billion in 2016.

As part of this trend, an increasing number of brand-name enterprises are moving towards recurring revenue models to fundamentally transform their businesses—optimizing every revenue moment and maximizing their customer lifetime value.

Underscoring this success, Ventana Research presented Pitney Bowes CIO Joseph Schmitt the 2016 Ventana Research Business Technology Leadership Award for Cloud Computing for its Commerce Cloud implementation. The Fortune 1000 company chose Aria as the key billing and monetization component of its new digital commerce platform, which helps clients identify customers, locate opportunities, enable communications, power shipping from anywhere to everywhere, and then manage payments.

In accepting the award, Schmitt said, “With Aria, we are able to quickly respond to our customers’ needs in terms of product and service offerings at a speed that was once unthinkable with traditional technology.”

With Aria, enterprises bypass time-consuming hard coding to quickly create offerings and elegant account structures in limitless variations. End customers get more products sooner and are afforded greater choice to match their purchasing and consumption preferences. Customers pay how and when they want—versus conforming to constraints and frustrations imposed by outdated billing technologies.