Selecting a Billing Solution Vendor: Separating Pretenders From Contenders

This is part four of a six-part series explaining why billing, as commonly practiced, is broken, why a more comprehensive monetization strategy is necessary for future success, and how to prosperously make the transition from billing to monetization. Part One: Those That Monetize Will Thrive focused on today’s changing market economy and the necessity of a comprehensive monetization strategy for success. Part Two: Five Signs Your Billing System is Broken focused on the warning signs that your existing billing system is broken. Part Three: Requirements for Successful Monetization covered the system requirements for successful monetization. In part four, we focus on selecting a billing solution vendor to support monetization.

The boom in recurring revenue has led to a spike in market demand for cloud billing solutions, as companies learn that their existing systems have come up short on the features needed to successfully monetize recurring revenue opportunities. This increased demand has led to a corresponding rush to market by billing software vendors looking to cash in.

Today the market for monetization solutions is full of contenders and pretenders – how do you separate the two? Here are some things to consider when evaluating vendor solutions.


Tradeoffs – Agility vs. Functionality

Start your search with a reality check. If you’re looking for a solution that meets 100% of your requirements and wish list items, it doesn’t exist. A reasonable target is a solution with an 80–90% fit that can pass a proof-of-concept against a robust set of use cases – demonstrating flexibility and agility in the process.

However, selecting software always involves tradeoffs. With billing software, the most common tradeoff is between agility (adapting to market conditions and customer preferences quickly) and functionality (offering a range of options to serve customer needs). Traditional big box on-premise software systems tend to pack loads of functionality, but lack agility. New generation software-as-a-service (SaaS) billing systems might lack some of the bells and whistles of on-premise solutions, but tend to be more agile, allowing them to adapt more quickly to rapidly evolving business needs.

In today’s hypercompetitive environment, agility can be the difference between gaining a first-to-market advantage with a new service and missing an opportunity altogether. Recent findings from MGI Research indicate that in selection of billing systems, agility is king.

“…in moments of market dislocation and intense competition, a premium is placed on agility. Organizations are trading absolute functional depth for solutions that offer business agility.” – MGI Research

Contenders focus on business agility while pretenders focus on bells and whistles that increase complexity and slow you down – making you less competitive.

Characteristics of Modern Billing:

As discussed previously, a modern billing system must provide a minimum set of functionality to support monetization:

  • Extensible product catalog
  • Monetization and pricing flexibility
  • Proration and non-sale transactions
  • Data security
  • Robust integration support

Contenders easily satisfy these requirements, while pretenders come up short on product catalog, pricing flexibility, and integration support.

But that’s just the minimum of what’s needed. For long-term success, you should also look for three key system characteristics when evaluating a billing solution vendor:

Configurable (vs. codeable)

Modern billing systems are configurable. Configurability increases efficiency by allowing business users to control settings, manage interfaces with other systems, schedule processes, build workflows, and manage products and pricing. Look for a solution that doesn’t waste time and tap resources on IT intervention or writing custom code.


Modern billing systems provide the building blocks that allow business users to create an unlimited number of monetization options for their services. Invoicing, payment processing, dunning, and customer communication should all provide flexible options to cater to individual customer preferences. Flexible solutions don’t break under the pressure of constantly changing customer needs.


Sustainable billing systems offer the ability to quickly introduce and test new products, bundles, promotions, and price plans. Agility is a major competitive advantage – adapting quickly in response to changing markets, evolving customer preferences, and competitive pressure keeps you steps ahead of the game.

Contenders demonstrate these attributes without breaking a sweat, while pretenders will try to lock you into a one-size-fits-all solution.

The Last Word – Choosing a Partner

As you evaluate vendors, keep in mind that you’re not just selecting a piece of software – you’re selecting a business partner who will stand with you as you grow your recurring revenue business. You want to build your business – you need to know that your vendor has the same priority. Look for someone who can demonstrate they understand your goals and can work with you to solve inevitable problems. Not all software vendors share this perspective, so it’s up to you to find one that does.

Choosing the right billing system gets you further along in your road to monetization. Next comes the actual deployment, which we’ll talk about in our next installment.