In a previous blog focused on the topic of enterprise cloud adoption we touched on Cloud Service Brokerage (CSB). I promised to return briefly to the topic of CSB monetization. The term CSB can refer to both the activity of brokering cloud services, or to the software application (or suite of applications) used to manage that activity. The activity of brokering cloud services can be carried out within an enterprise, as an internal support function, or performed as a paid-for service by a third party. So just to be clear, the discussion in today’s blog is all about the monetization of CSB as a service when provided by a CSB service provider.
The scope of CSB need not be limited to software-as-a-service (SaaS). To provide a complete cloud service, a broker might also offer IaaS and/or PaaS. The CSB service might also include desktop tools to help the customer, and also some good old-fashioned consulting.
The CSB may be a reseller of cloud apps and utilities, or may provide a sales channel to the OEM and receive flat rate or scaled sales commissions. The price structure for the cloud services themselves can vary widely, containing elements of one-off payments, periodic charges and usage-based charges. Across the portfolio of services offered by a cloud services broker, every “product” can have a different pricing structure, and a different reward formula for the broker as reseller or agent.
And then there are the tools and/or services related to integration and customization. For some products these might all be delivered by software tools, some of which might be provided by the software or platform vendors, and others provided by the CSB itself. Does the CSB collect from the vendor or from the customer? That depends on the vendor’s product capabilities and pricing model, so the answer is probably both, depending on the product.
How about access management, administration tools and so on? The customer will probably pay for those, either explicitly, or as part of a bundle. And speaking of bundles, CSBs have an opportunity to create rich bundles from multiple OEMs, and set interesting prices to attract more customers. (They also have the opportunity to make everything so complicated that customers will be more confused than if they had tackled the challenge of cloud unaided!)
There are more layers of complexity that could be added, some of which will be driven by OEM business and technical decisions, others will be controlled by the CSB itself. Suffice it to say that the management of pricing, commissions, invoicing and collections will be as complicated as for any other service provider. One of the challenges today, is that the exact nature of this business has yet to emerge, and even when things become clearer, it will continue to evolve in response to the way customers and OEMs respond.
But to monetize anything, you need to be able to bill and settle with partners. So how do you choose a billing system when you can’t exactly define what your requirements will be?
There is no point in waiting until the CSB industry is “mature” so you can choose the latest best-of-breed CSB billing system. And using an intricate set of spreadsheets will quickly become frustrating and tedious. The only way is to select a billing platform that has been designed to easily take on board any service or product you can define, now or in the future. And one that can also bill for any event that can be captured, handle an infinite range of discounts and custom plans, and manage settlements for third parties too.
If you’re planning to get into the CSB business, or are already in it, you probably want to be able to collect some revenue for your efforts. CSB will become a complicated business. Don’t forget you need a monetization solution that can handle that complexity without making your life more complex than it needs to be.