Zuora, a software-as-a-service (SaaS) provider of subscription-billing offerings, named a Rising Star in the 2009 CRM Market Awards, has had a busy year. With quite a few big announcements, including a couple of product releases, a partnership, and a perspective about the end of buying, Zuora is accelerating faster than you can say "subscription economy."
Earlier this year, Zuora announced the release of Z-Commerce for the Cloud, allowing cloud providers to automate metering, as well as pricing and billing for their products. Z-Commerce for the Cloud, which took a year of development with Cloud Central, EMC, IC&S, Nu-b, Sun, Tata, and Zetta, will now enable many on demand providers to bring their offerings to the cloud market.
Despite the $3.4 trillion technology industry, many companies have been choosing cloud computing over the convention of owning and up keeping servers of their own. But the missing link has always been a pay-as-you-go business model, as cloud vendors require a different business model.
Four different versions of Z-Commerce for the Cloud provide flexibility depending on the needs of the enterprise using the cloud model. The Service Provider Editions allows the most flexibility to any number of usage-based pricing models, and provides the quickest route to the market. The Embedded Editions provides an "in-a-box" service to ISV or reseller partners who require their own cloud commerce solutions. The Marketplace Edition connects buyers and sellers of cloud-based services. The Private Cloud Edition allows companies who use private clouds to implement charge-backs for transparency and cost allocation.
Zuora's Z-Commerce for the Cloud charges users per terabyte stored, gigabyte transferred, IP address, CPU instance, and application user. Currently, there are over 20 new cloud-pricing models, which include on demand, reservation, location-based, and off-peak pricing.
"Zuora is touting a new idea called the subscription economy," wrote Denis Pombriant, founder and principal analyst of Beagle Research, on his blog "Beagle Research Group, LLC." "Z-Commerce for the Cloud targets the growing market for all things delivered by subscription rather than through the common ownership model. For decades we've been moving to a subscription economy starting at least with leasing cars and getting our cell phones and services in monthly increments. The trend accelerated ten years ago with on-demand and later SaaS and Cloud Computing."
"Zipcar is the way the world is going," said Tien Tzuo, founder and chief executive officer of Zuora, referring to his company's subscription billing and payments platform. "The business model of the 20th century was built on building products and shipping them out.... The business model of the 21st century is transferring to service. Why not have a service matched with a way buyers use your service? It just makes more sense."
Tzuo cited a few reasons for the move towards the subscription economy, a term he is proud Zuora has coined. Aside from a subscription economy being more environmentally conscious and better for the economy, Tzuo also says his objectives to further flexible billing are more or less straight business: "[Zuora] think[s] all companies are going to go this way," he asserts. "Buying less and less and subscribing "
Pombriant commented that the shift towards a subscription economy is a part of sustainability efforts. "Subscriptions help organizations take cost out of delivering products and services to customers," Pombriant adds. "This is important because customers have more demands on their limited resources -- such as escalating energy and travel costs. So anything that helps stretch a buck will be very important. Subscriptions can also lower the cost of acquisition so that more people can afford things."
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