What is cloud billing, as opposed to SaaS, hosted, etc?

Written by on March 7, 2013 in BillingViews, Opinion with 0 Comments

There’s no governance for use of the term “cloud billing.” It has become so nebulous that it is tough for those seeking billing solutions to determine what it even means. Here’s a first attempt to drive better definitions for all flavors of “off-site” or “externally managed” billing offerings . Please accept that this is my opinion…today…and that we are certainly interested in dialogue (preferably agenda-free) on this topic.

Cloud Billing: When I think of clouds, I think of light, fluffy things without a whole lot of substance to them. There is a whole universe of “cloud billers” out there – we’ll quantify them in future, no worries – who exhibit characteristics we now associated with other mainstream cloud-based offerings (like TurboTax, Pandora, and Gmail). These cloud-billers tend to be available through online sign-up; billed on a monthly basis at a pretty low price; offer a bit of configuration, but virtually no customization; and generally revolve around subscription-based billing models. They come equipped with the ability to facilitate credit, debit, and PayPal payments; offer some simple invoicing, mostly electronic; and allow users to create promotions and discounts around relatively simple products. Some possess a basic product catalog, but not all. Most have some kind of analytical reporting, but largely canned. Some have a customer care component, but not always.  Generally speaking, they are high on user-friendliness but low on sophistication to match their low cost. These are great for companies with relatively simple products who want to drive online revenue.

SaaS Billing: I tend to think of SaaS billers as being more sophisticated and scaleable than Cloud billers. You’re more likely to contract for a SaaS biller than sign-up online for a flat fee. They’ll support a lot more customization and integration to other business applications. They have more robust, sophisticated, and detailed product catalogs. They tend to provide more process automation as well, covering the order-to-cash cycle, for example and incorporate more vertical-industry specificity. They exhibit cloud characteristics, like multi-tenancy; open APIs; and the ability to scale via virtualization; but they are more likely to be operated from private, or at least more secure and robust, cloud environments (i.e. data centers where the SaaS provider has genuine control over its platform). SaaS billers typically have a pretty robust customer care or CRM component, or at least a more robust ability to integrate with a larger CRM and call center environment. They also will have capabilities like real-time rating and charging, so they can support more sophisticated services as well as hybrid pre-paid/post-paid service models. They support more complex taxation capabilities, either natively or via integration to services like Vertex. And they may integrate other components, like POS systems, to support businesses that have a real-world (not just online) presence. They also tend to offer more sophisticated analytics tools that can generate wholly customized reports and dashboards. A SaaS biller should be the kind of platform that a smaller telecom operator or utility can build a business on and be relatively certain that it will scale as they grow or introduce more complex products that require more usage and analytics processing.

Hosted Billing: A hosted billing environment will share many characteristics with SaaS billers. The terms might even turn out to be interchangeable. But, a hosted biller might include more hands-on operational support from the vendor. One could envision a billing vendor having a more hands-free SaaS offering as well as a more hands-on hosted offering, the difference being the level of day-to-day involvement in the clients’ business operations. It would seem to make sense that a hosted biller runs out of its own data center(s) and is ultimately responsible for things like security, site diversity, disaster recovery, data back-up, and so forth.

Managed Service: A managed service is something we tend to see with very large scale businesses. In this scenario, the business outsources the operation and maintenance of its billing environment to an external vendor. The people running the applications are re-badged, but many stay in the same jobs in the same place. We may see “hosted” applications called “managed services,” and hybrid scenarios are highly likely. What seems to characterize managed services, however, is that the business is saying “I’m going to make my billing (and related) operations someone else’s problem, put all of the expense on someone else’s income statement, and end up with ‘one throat to choke.'”

Service Bureau: This term is pretty old-school at this point, but I suspect that if we dig under the covers, we’ll find more businesses running on service bureau-based billing platforms than one might think. This is really the old hosted billing model that said, “send us your data, we’ll generate and send your bills.” Service bureaus traditionally do not play nicely with other systems and aren’t great at supporting on-demand reporting. I’d tend to think that many older service bureaus have been upgraded with wrappers that present some APIs for reporting and external integration at this point. But if we’re going to call something a service bureau, that’s probably because it lacks sophistication in terms of the kinds of rating it can perform, product models it can support, and the speed with which it can be modified (likely coded rather than configured) to support new services or customer models. When I think of a service bureau, I think of terms like “hard-coded,” “old iron” and even “data held hostage.”

What do you think?

If you’d care to chime in, please join the BillingViews group on LinkedIn and contribute to the discussion we’ve opened there (to join the group, click here).

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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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