IDC MarketScape IDC MarketScape: Worldwide Subscription Relationship Management 2017 Vendor Assessment Jordan Jewell Eric Newmark THIS EXCERPT PREPARED FOR: GOTRANSVERSE IDC MARKETSCAPE FIGURE FIGURE 1 IDC MarketScape Worldwide Subscription Relationship Management Vendor Assessment Source: IDC, 2017 Please see the Appendix for detailed methodology, market definition, and scoring criteria. November 2017, IDC #US43172417e
IN THIS EXCERPT The content for this excerpt was taken directly from IDC MarketScape: Worldwide Subscription Relationship Management 2017 Vendor Assessment (Doc #US43172417). All or parts of the following sections are included in this excerpt: IDC Opinion, IDC MarketScape Vendor Inclusion Criteria, Essential Guidance, Vendor Summary Profile, Appendix and Learn More. Also included is Figure 1.. IDC OPINION This IDC study represents the vendor assessment model called IDC MarketScape. This research is a quantitative and qualitative assessment of the characteristics that explain a vendor's current and future success worldwide. This study assesses the capability and business strategy of many of the most prominent subscription relationship management (SRM) software providers. This evaluation is based on a comprehensive framework and set of parameters expected to be most conducive to success in providing SRM software and services today and in the future. A significant and unique component of this evaluation is the inclusion of buyers' perception of both the key characteristics and the capabilities of these providers. Key findings include: Clients generally have a positive outlook on the capabilities of their providers, particularly in supporting technical requirements, domain expertise, and support for the baseline rating requirements of most subscription organizations. Companies differentiate themselves based on their rating engine, microservices architecture, ability to support ASC 606 requirements, and subscriber life-cycle management capabilities. This study is centered on the depth and breadth of SRM functionality and includes providers of SaaS SRM as well as on-premises solutions. At the same, a key requirement for today's SRM is that the solution can be quickly implemented, includes key functionality out of the box, and has strong configuration capabilities. The heavily customized, hard-coded solutions of yesteryear do not meet the needs of today's fast-moving digital enterprises. Clients also identified common areas for improvement by market participants, including improving support beyond initial implementation, fine-tuning pricing models, and strengthening communications with customers on topics such as product/service differentiation and future road maps. IDC MARKETSCAPE VENDOR INCLUSION CRITERIA This research includes analysis of nine software providers that offer SRM solutions. While this study does not include a market sizing or share, IDC believes that the providers included in this study generate most of the revenue in this market. The last sizing that included this space was Worldwide Subscription Billing and Payment Software Forecast, 2015 2019 (IDC #US40676315, December 2015). Our inclusion criteria favor solutions that are "packaged" or "one to many" versus heavily customized solutions requiring expenditures in professional services that exceed software costs. This assessment is designed to evaluate the characteristics of each firm as opposed to its size or the breadth of its services outside the set of capabilities included in SRM. This evaluation should not be considered a "final judgment" on the firms to consider for a particular project. An enterprise's specific objectives and requirements will play a significant role in determining which firms should be considered as potential candidates for an engagement. 2017 IDC #US43172417e 2
ADVICE FOR TECHNOLOGY BUYERS The SRM market includes aspects of billing, revenue management, customer life-cycle management, pricing and packaging, sales, and support. This technology is essential for companies that are monetizing digital products and services. For many companies, the shift from physical products to digital services is "make or break." In IDC's January 2017 Digital Business Models Survey, 60% of providers of digital products and services are developing subscription business models to give customers more ways to buy. However, only 20% have the right systems in place to support this. Further advice: Carefully evaluate the market participants and consider a range of SRM providers. While innovation in this space is concentrated in cloud offerings, a packaged on-premises system may be preferred depending on the circumstances. In addition, some of the providers included focus on subscription relationship management and integrate with other key financial and commerce capabilities while others provide a single source for an entire suite. Establish success metrics and performance indicators to drive each investment and help: Provide focus for strategic and process improvements that support subscription models. Create an analytical base for decision making. Maximize executive attention on "what matters most." Balance SRM spending with subscription business model outcomes achieved. Guide execution performance, evaluate progress, and create incentives to drive supporting behaviors. Keep customization to a minimum. Customized workflows can add a layer of complexity and can hamper your ability to be flexible and adapt to changing requirements. In addition, sometimes customization results from a desire to retain existing legacy business processes that might hinder your subscription efforts. Your SRM provider should provide business process expertise and underlying technology that supports your subscription success. Clearly define business process requirements, in terms of both current capabilities and future requirements. SRM provider selection should include alignment between subscription business process requirements and your existing application suite. For all subscription initiatives, have clear intentions and well-defined business, technology, process, and operational outcomes and measurements for each. Design the use of your SRM system to track and report on these outcomes and measurements. Selection of SRM is not just about subscription billing, although rating capabilities should be key evaluation criteria. It is important that the provider offers a system that supports the customers' subscription journey with you and the ability to do so starts with that providers' understanding of the way that relationships evolve and grow. Pricing and packaging, subscriber life-cycle management, and analytics and reporting are all important components of supporting the business of subscription relationships. When the system supports a transformation around the subscription business model, recognize that this transition involves the entire organization and lay the groundwork for organizational support from leadership, innovation teams, divisions, and corporate and IT functions. This IDC MarketScape should be used as one of many tools to shortlist vendors for subscription relationship management services. Your organization's needs are unique, so you should focus on your 2017 IDC #US43172417e 3
specific requirements and use this document as the top-level starting point of a discovery process that will then take you into more detailed examination of vendor offerings that go beyond this study. VENDOR SUMMARY PROFILES This section briefly explains IDC's key observations resulting in a vendor's position in the IDC MarketScape. While every vendor is evaluated against each of the criteria outlined in the Appendix, the description here provides a summary of one vendor's strengths and challenges. gotransverse According to IDC analysis and buyer perception, gotransverse is a Leader in the IDC MarketScape for SRM software worldwide. The company is headquartered in Texas with physical offices in the United States and Germany. The company's global partnerships provide access to 180+ countries around world. gotransverse has 35 customers, with 7 invoicing more than $100 million through their system. The company's customers represent 13 industries, with the top 3 being software, communications and media, and companies that participate in the IoT. The gotransverse SRM solution is called TRACT. TRACT in an intelligent billing platform that covers the entire spectrum from sophisticated pricing, customer hierarchy, product catalog, invoicing, and accounts receivable through revenue recognition. TRACT includes a full Accounts Receivable subledger with native rules-based engine supporting complex revenue recognition. TRACT's native rating engine supports any number of attributes for multivariate rating and pricing of events. This includes the ability to perform support table lookups for data augmentation and rate table lookups. TRACT includes the ability to rate high volumes of usage-based transactions in near real time. The rating engine supports complex rules, allowances, entitlements, tiered and tapered rates, and pass through rating. According to gotransverse, it is not uncommon for TRACT users to configure rating rules that perform many decision comparisons to determine a final rate. gotransverse customers can leverage Microsoft Excel to build, test, and configure complex pricing rules. The Excel serves as a familiar customer interface where complex pricing rules are converted into compiled Java code so that customers can rate and price billions of events on the platform with elastic cloud scale. The standard pricing structure offered by gotransverse for TRACT is an annual subscription charged in advance in most cases plus usage for high-volume use cases. gotransverse is a wholly owned subsidiary of a private multinational German family of companies. Strengths TRACT was designed to be an application that is supported through configuration and not custom coding. Because of this, almost any pricing rule or scenario can be configured by the end user. The TRACT implementation team builds templates for each customer based upon its use cases. Customers cited gotransverse's strength and domain expertise in the billing domain as a key strength. The ability to rate near-real-time events and support rapid decision making was cited. The company's solution has a competitive advantage for customers that value both time to revenue and cost to serve. 2017 IDC #US43172417e 4
Challenges Credit limit monitoring is not native; however, microservices can be created to monitor a customer's current balance and compare that current balance with an externally stored credit limit. The ability to run multiple sets of books in parallel is a near-term road map item. APPENDIX Reading an IDC MarketScape Graph For the purposes of this analysis, IDC divided potential key measures for success into two primary categories: capabilities and strategies. Positioning on the y-axis reflects the vendor's current capabilities and menu of services and how well aligned the vendor is to customer needs. The capabilities category focuses on the capabilities of the company and product today, here and now. Under this category, IDC analysts looked at how well a vendor is building/delivering capabilities that enable it to execute its chosen strategy in the market. Positioning on the x-axis, or strategies axis, indicates how well the vendor's future strategy aligns with what customers will require in three to five years. The strategies category focuses on high-level decisions and underlying assumptions about offerings, customer segments, and business and go-tomarket plans for the next three to five years. The size of the individual vendor markers in the IDC MarketScape was determined by considering the total number of SRM customers of the provider, the total number of customers invoicing more than $100 million, and the percentage of the SRM solution provided via SaaS. IDC MarketScape Methodology IDC MarketScape criteria selection, weightings, and vendor scores represent well-researched IDC judgment about the market and specific vendors. IDC analysts tailor the range of standard characteristics by which vendors are measured through structured discussions, surveys, and interviews with market leaders, participants, and end users. Market weightings are based on user interviews, buyer surveys, and the input of IDC experts in each market. IDC analysts base individual vendor scores, and ultimately vendor positions on the IDC MarketScape, on detailed surveys and interviews with the vendors, publicly available information, and end-user experiences in an effort to provide an accurate and consistent assessment of each vendor's characteristics, behavior, and capability. Market Definition The subscription relationship management market includes aspects of billing, revenue management, customer life-cycle management, pricing and packaging, sales, and support. This technology is essential for companies that are monetizing digital products and services. 2017 IDC #US43172417e 5
LEARN MORE Related Research Market Analysis Perspective: Worldwide Digital Business Models and Monetization, 2017 (IDC #US42975517, August 2017) Worldwide Software as a Service and Cloud Software Forecast, 2017 2021 (IDC #US42014217, July 2017) Worldwide Software License, Maintenance, and Subscription Forecast, 2017 2021 (IDC #US42825517, July 2017) How to Build a Comprehensive Digital Commerce Platform: The Foundation of Digital Transformation (IDC #US42786917, July 2017) Business Models Best Practices Series: Product to Services Transition (IDC #US42319117, February 2017) Seven Ways to Wrap Your Digital Business Model Around Your Customer (IDC #US42058716, December 2016) IDC MaturityScape: Subscription Business Model Management 2.0 (IDC #US41312816, June 2016) Synopsis This IDC study uses the IDC MarketScape model to provide an assessment of vendors participating in the subscription relationship management market. "For many companies, the shift from physical products to digital services is 'make or break.' The subscription relationship management market includes software that automates aspects of billing, revenue management, customer life-cycle management, pricing and packaging, sales, and support. This technology is essential for companies that are monetizing digital products and services and is a key component of their broader digital commerce platforms." Jordan Jewell, research analyst, Digital Commerce and Enterprise Applications 2017 IDC #US43172417e 6
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