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Latest IDC MarketScape Underscores the Disparate Subscription Management Needs of Large Enterprises and SMBs

Michael Carrell

8 February 2023

With a keen recognition of the critical link between subscription management, billing platforms and recurring revenue success, award winning analyst firm IDC keeps a watchful eye on trends and vendor solutions in the subscription industry. The latest IDC MarketScape – which once again names Aria a Leader – identifies some of the themes impacting and driving behaviors in the broadening subscription ecosystem:

Larger enterprises can gain a competitive advantage by avoiding best of suite solutions

In its examination of the market for subscription and usage management applications, IDC now sees a clear distinction between the needs of larger enterprises and small-to-medium-sized businesses in relation to the type of application each should procure1. Large enterprises, naturally, bring more complexity and maturity, from the services they offer to their integrations with partners and neighboring vendors within the technology stack. Larger companies are further along in terms of product development, volume of subscribers, and segment penetration, so they require a more sophisticated platform than that required by smaller businesses with limited ecosystems and a more simplistic approach to product development, pricing, and customer engagement.

In establishing a line of demarcation between the two organizational groupings, IDC recognizes that the suite solutions that might serve the needs of SMBs in need of more basic subscription management support may not be suitable for larger enterprises that would benefit from a best-of-breed approach. For larger enterprises, the best-of-breed path offers technical advantages that will enable them to stay ahead of innovative, scaling startups, while better managing their own growing corporate complexities. This evolution in IDC’s thinking will help companies more easily identify the best fit for their organizational size and stature.

Recurring revenue ambitions continue to transform business models

The popularity of subscription services has been a pervasive topic within both the consumer and business environments for some time, and IDC believes enterprises will continue to transform their business models in pursuit of recurring revenue. The emergence of technology-enabled services, the shift from license-plus-maintenance fees toward subscriptions that combine hardware, software and professional services into a recurring offering2, and the switch to selling products as services are a few of the pivots IDC predicts will impact the subscription marketplace. Amid new challenges, heightened competition, and changing spend appetites among subscription users, IDC maintains that enterprises will continue to see recurring revenue as a reliable pathway to generating scalable and predictable revenue.

Automating the entire customer lifecycle

In deploying a successful recurring revenue business, ensuring satisfied customers requires suppliers to focus on the totality of the customer lifecycle. Earning and expanding fruitful customer relationships means automating as many processes as possible. Sure, billing is a major component of the customer lifecycle, but it is far from the only one. Pricing, provisioning, usage management, and collections are just a few of the elements that must be orchestrated harmoniously to manage churn, collect payments, settle with partners, and maintain good standing with the customer. As we have already discussed, the larger the business, the more elements that require orchestration, extending the overall complexity of the ecosystem beyond the capabilities of a one-size-fits-all suite solution.

From simple subscription to consumption and usage

Finally, and as Aria addressed in a recent blog post, IDC sees an increasing movement toward usage and consumption business models within the broader subscription marketplace umbrella. This is particularly pronounced among SaaS and software providers, 35 percent of which plan to offer consumption pricing in the next two years. That said, more than half of those queried by IDC believe their current platform is unable to adequately support their existing or future consumption billing ambitions3. As business subscribers continue to demand usage-based engagements, which will take many different forms, enterprises will need a sophisticated platform with high-performing, robust features to manage real-time usage data and preserve an enhanced customer experience.

Read the full IDC MarketScape here

1IDC MarketScape: Worldwide Enterprise-Focused Subscription and Usage Management Applications 2022 Vendor Assessment, by Mark Thomason, September 2022, IDC #US48786022

2 IDC Worldwide Software Business Model (Subscription and License) Forecast, 2022–2026, by Mark Thomason, July 2022, IDC # US49344622

3 IDC SaaSPath 2022, May 2022, Doc #US49357722

Michael Carrell

Director of Product Marketing, Aria Systems. Mike has 20+ years of experience in the enterprise software industry, including 6+ years in SaaS billing, and 4+ years at Aria Systems. In addition to creating customer-focused content and interacting with customers to hear their unique business challenges, Mike leads Analyst Relations and Competitive Intelligence efforts at Aria.

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