What the Heck is Cloud Billing Anyway?

Written by on April 8, 2013 in BillingViews, Opinion with 3 Comments

A few weeks ago, we began trying to define all of the different terms that revolve around the concept of “cloud billing.” Several experts chimed in on the discussion. In some cases, we’ve made progress on drawing out better definitions. In others, we’ve uncovered more areas that need definition. There isn’t much agreement on what cloud billing is, though there seems to be some agreement on what it is not. So, here’s a shot at refining our initial definitions. Now that we’ve introduced open commenting, please feel free to add your thoughts right here.

Cloud Billing

Those who commented publicly or privately agreed that there needs to be a distinction between billing that is run out of the cloud and billing for cloud services. While the latter can be run out of the cloud, it isn’t necessarily. So we need to be clear here that we are talking about billing solutions that are operated from “the cloud.” Whether they bill for cloud services is a separate issue and really doesn’t have any impact on our definitions.

Next, there’s the question of how one defines “the cloud” and whether “SaaS” is actually a subset of “cloud.” As I’ve sorted through comments from various experts, a few threads stuck with me.

Andy Tiller, VP of corporate product marketing for AsiaInfo-Linkage, argues that billing-as-a-service (BaaS) would be “run in the public cloud by the vendor but accessed by multiple operators…all enabled by multi-tenancy.” Similarly, Dominic Smith, marketing director at Cerillion, offers that “with a genuine Cloud Billing system, everyone is using exactly the same software.”

It seems safe to say that a solution that supports multi-tenancy, is run in a public cloud, and does not offer customization to each client is, indeed, a cloud biller. Geoff Coleman, VP product strategy and marketing for Transverse, adds that in a public cloud scenario, the “compute resources are paid for on a usage basis” and the solution is often offered on “a month to month basis” rather than a long term contract.

That said, Vincent Fung, director of product marketing for MetraTech argues that the “billers” on the low end of the sophistication spectrum – those that tend to focus only on subscription based billing – should not be considered billers at all. “This category is very broad and vague,” Fung says, because it includes variety of eCommerce and payment vendors who “can generate an invoice based on the transaction.” They otherwise focus on features “like payment services, simple shopping cart orders, and check-out services,” Fung says, “but billing is not part of their core.”

Hosted Billing

It might be easiest to distinguish hosted billing from cloud billing, based on our commentators’ thoughts. Smith notes that there are many examples where vendors offer “a traditional billing system which just happens to be hosted in the cloud but may still be customized for each client.” He argues that this is a hosted service, not cloud billing, because once you “go down the route of customizing a Cloud Billing system it then goes into a private cloud environment and is basically back to being a hosted billing system again.” Coleman adds that with hosted billing “in some cases the iron (compute resources) is paid by the customer,” and that hosted solutions are provided not month to month but typically on “a longer duration contract for the service (i.e. 5 year deal).”

Members of MetraTech’s technical staff, whose comments Fung solicited, define a hosted billing solution as “enterprise software that is configured for each specific customer.” They make the excellent point that “upgrades to new releases must bring along these customer-specific configurations.”

So, there seems to be wide agreement that once customization becomes a feature of off-premises billing solution, it is generally going to be operated in some kind of private cloud environment, but should be termed a hosted solution.

SaaS (or BaaS) Billing

As we get into SaaS, things get a bit murkier. Tiller argues that in a SaaS or BaaS scenario, “the operator is still hands-on, running the system, with the BaaS provider hosting and maintaining the software in its data center.”

MetraTech staffers argue that customers choose a SaaS biller “when they are content to use the software provided with very few changes,” are “content to use new releases as they appear,” and “are content to be part of a multi-tenant environment.” Fung says, however, that he “would not be so bold as to say that a SaaS biller is the kind of platform that would support a small telco.”

So, there is some disagreement over how to apply the term SaaS and whether it should be used to describe a telco-capable biller or not. It’s also not clear whether a SaaS biller is necessarily distinct from a cloud biller. This will require more attention. I would like to continue to argue that we should use the term SaaS, or BaaS, deliberately to differentiate between less robust cloud billers – many of which may not be billers at all, as Fung argues – and more sophisticated billing solutions that can support telco-grade requirements but are not operated and customized in the same fashion as hosted billers.

Managed Service

In regard to the term Managed Services, Tiller rightly pointed out an error in my original post when he wrote, “You propose that the Managed Service model is entirely outsourced, but what about the model where the vendor runs the system at the operator’s premises.” Tiller is right. The term Managed Service should refer to these scenarios where operators hand over the staffing and management of their billing environments to vendors. This is a completely different form of outsourcing that has more to do with accounting and accountability than the semantics of public and private clouds, customization, or multi-tenancy.

Coleman adds that the managed service model “can often be associated with the BOT (build, operate, transfer) model – in some cases where the T just never happens.” The only difference in these two managed services scenarios is that, in the former, the vendor takes over management of an existing solution which it did not necessarily develop itself. In the latter scenario, the vendor builds or implements the solution, but runs it on site for the operator.

Conclusion?

It seems like we know what Hosted and Managed Services scenarios are. We still need more definition, however, in the distinctions between cloud billers and SaaS billers or BaaS. But the root of the problem ultimately resides in how the terminology is used. So long as solution providers misuse terms for marketing purposes it will create confusion among buyers in the marketplace. It’ll be up to us, hopefully with cooperation from our peers in the analyst community, to categorize solutions properly according to agreed definitions. We’ll keep working on it. We certainly welcome our readers’ comments on thoughts here because this is an issue the entire billing community faces collectively.

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Edward Finegold

About the Author

About the Author: Ed Finegold is CSO for Validas, a company that specializes in personalized user experiences that leverage analytics-as-a-service to simplify mobile buying, selling, pricing & billing. Ed has been a regular contributor to BillingViews. .

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  1. Avatar Bill Mumford says:

    Perhaps a differentiation between SaaS Billing/BaaS and telco grade Cloud Billing would be seen by looking at the level of functionality or complexity of the service being offered?
    My own view is that there is a scale from payments processing as a service (eg PayPal) through more complicated product, price and payment management to the complex rating for multiple product sets seen in typical telco billing systems.

    I agree that to be considered Cloud billing it should be multi-tenant, with a single code base shared by all, configurable by data for the different products each tenant is selling; modifying the code moves us into a hosted model. Cloud billing would have capabilities for much shorter contracts, perhaps governed by the economics of the cost of set-up of the new tenant and their tariffs.

    Another aspect is whether the service offering can cater for the real-time service logic needs that are seen in telco prepay services and in 3GPP for data services, where the rating needs to provide an answer in milliseconds before the event or transaction can be allowed to continue. My conclusion, based on past discussions with leading telcos, is that to achieve the low latency that this would require leads one down the path to co-hosting the rating and balance management with the network signalling, leading to the host network providing some network facilities and session control, beyond just Billing as a Service.

    However, the above does lead me to the question: Is it Cloud Billing if the service offered is only Rating, or Rating and Balance Management, without the rolling up to an invoice and the feeds to accounting?

    Bill Mumford
    Billing Consultant (previously with BT and HP)

  2. Avatar Paul Jardine says:

    I think the main criteria for whether Billing is considered as ‘Cloud-billing’ are:
    – Elasticity (essentially no limits on volumes of processing, PAYU )
    – Ubiquity (ability to have equal access to the data and processing functionality from anywhere)
    You could also add in Resilience, although I’m not sure it’s directly related to the cloud.
    The implications of only the 2 items above could be huge in terms of, say, call centres in Asia and telco infrastructure distributed in multiple countries

  3. Avatar Andy Tiller says:

    Might be worth clarifying “[with BaaS] everyone is using exactly the same software” – of course, with multi-tenancy everyone is using the same instance of the software. However, different users can still have their own business processes as well as their own data – that’s what multi-tenancy can do for you. This is especially useful for a private cloud environment, where different business units or Opcos want to control their own operations supporting local variations. If you want to call these local variations in business logic/processes ‘customizations’, then the above definition says the system is ‘hosted’, rather than ‘BaaS’. But I’d argue it’s still ‘BaaS’ – we need to expand the definition of BaaS to allow for customization / localization of business processes within a single software instance. More details here (http://www.asiainfo-linkage.com/insights/index.html) and at this upcoming webinar (http://webinars.telecoms.com/webinar/the-case-for-centralizing-bss/)

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