The end of another year is approaching, bringing with it the usual reflections and prognostications. In a year marked by continuing global economic and societal challenges, we examine the landscape for subscription companies and their billing and monetization vendors and humbly offer our top five predictions of trends and themes emerging or continuing in 2022:
1. Consumer Subscription Models Will Simplify
Consumers have been gobbling up subscription services of all kinds, a trend that accelerated during the pandemic thanks to a subscription’s inherent “set it and forget it” appeal. But as the number of subscriptions a consumer has increases, their tolerance for billing complexity (e.g., usage-based bill variability, tangled product catalog structures, etc.) is going to drop. To address this trend, consumer subscription providers will simplify subscription offerings even while they introduce a broader array of payment options to retain as many customers as possible.
2. B2B Subscriptions Will Increase in Complexity
On the other side of the equation, enterprises that offer subscriptions will be faced with increasing demands for more creative, usage-based billing arrangements dictated by actual service consumption. Many large organizations only want to pay for what they use and will become more discerning in evaluating their subscription engagements to avoid overspending on unused capacity. B2B service providers will react by adding ever more sophisticated discounting structures to their pricing models as an incentive for customers to continue to prepay for reserved capacity. This will further make B2B subscription models more complex in nature. Unlike consumers, enterprises have the systems capable of managing these more sophisticated subscription and billing arrangements.
3. Enterprises Crave Industry-Specific Capabilities and Expertise
When evaluating billing vendors, enterprises will place a greater premium on those that possess an increased level of industry knowledge and offer industry-specific modules and plug-ins. A purely horizontal, one-size-fits-all approach to a billing solution is rarely acceptable for insurance companies, publishers, manufacturers, financial services providers, telecommunications carriers and a range of other vertical industries that want billing capabilities that cater to their specific businesses. This remains true even when companies want to start benefiting from digital transformations offered by leaner and more modern solutions. To bridge this gap, enterprises in several verticals will expect billing vendors to have the toolkits and subject matter expertise necessary to solve more complicated, industry-specific challenges.
4. Greater Emphasis on Collections and Revenue Recovery
Here’s the good news: financial analysts are bullish on the prospects for global economic recovery in 2022, even as we brace for the winter of Omicron. Rosy expectations see growth driven by the end of the pandemic and relaxation of the inflationary and supply chain issues driving up costs. However, today’s challenges are likely to persist for at least several months into the new year, forcing enterprises and consumers alike to belt-tighten and monitor costs more closely. For enterprises, greater attention to the bottom line means increasing the focus on collections, dunning and revenue recovery. In addition to introducing new services and accelerating recurring revenue growth, enterprises will expect their billing systems to automatically identify and chase chronically late payers to ensure every possible dollar is collected.
5. The Demise of Point-to-Point Connectors Will Accelerate
With increased frequency, larger enterprises will eschew point-to-point connectors as a means of integrating new business support solutions. For organizations with growth aspirations and a continuously evolving product line, P2P connectors are inflexible, inhibit the introduction of new products and services, and are difficult to manage and maintain in a growth environment. While P2P connectors may be suitable at the SMB level, larger, digitally enabled enterprises will turn to enterprise service bus (ESB) systems with greater frequency. The ESB approach offers a more seamless and modern way to implement the capabilities that support next-generation service delivery and billing models.