Scalability is a common factor to fast growing and profitable service businesses. It is not only about the ability to manage changes in volume. It also calls for capabilities to quickly respond to market changes with service content and pricing flexibility. And it is also about lowering unit costs when volumes grow. In my blog post Why Scalability Matters in Service business I talked about scalability and what it means. This time I will share some best practises you should consider when moving towards automated monetization.
How to Increase Scalability?
In order to scale your service business, you need to respond to changing demand fast, both in terms of volume and scope. How to increase the level of flexibility without ruining profitability? How to introduce new services and business models quickly? How to deliver efficient and smooth service experiences consistently yet considering the customer specific requirements?
Based on our experience, you need to:
- Ensure your service operations is implementing automation to cope with increased volumes and to decrease average costs when demand rises
- Aim for flexibility to adjust end-to-end service experience yet automating middle and back-office tasks.
- Implement practices and solutions which enable launching new business models or new pricing schemes end-to-end within days - instead of months or years.
Why is it so hard for a service business to scale?
Many service businesses have a scalability issue due to lack of proper service business support systems to manage service monetization end-to-end.
Today, many companies try to manage their service catalogue, digital contract life-cycle, usage-based pricing and recurring billing with unsuitable systems. - Such as legacy ERP systems, which are originally designed to manage physical product sales and deliveries.
Unsuitable systems and custom-code do not give flexibility to respond to market changes. Customer-specific needs cannot be handled efficiently without suitable software.
Manual work is needed to patch disconnected data and processes. Service-coordinators and billing admins may have to combine data from several sources each month and investigate what has been agreed in each contract to derive a justified invoice amount. New customers add more manual work load. Costs do not scale without automation.
Not only is this approach very slow and costly, but also highly error-prone causing substantial revenue leakage, typically up to 5-10% of net sales annually!
Who wouldn't rather book this amount to income and EBIT?
Modern monetization platform helps gain flexibility to scale
When choosing a monetization platform to support your company's growth, I recommend you to look for the following:
- Support for data-driven revenue models with easy service catalogue management
- Ability to apply customer and contract level prices and pricing models
- Price management through digital contract life-cycle
- Possibility to automate even the most complex contract specific billing rules and schedules
- Automation of service event data capture from multiple sources
- Mediation of service event data for rule-based automated pricing and billing
- Orchestration capability to enable service fulfilment and provisioning automated
- Automation of recurring billing, revenue recognition and accounting
- Ability to manage and automate ecosystem monetization and settlements
- Smart integration with front-office CRM and e-commerce, and with back office Service Management and Finance Systems
Scalability is a common characteristic for successful service businesses. In order to scale, you need automation. You also need flexibility, and therefore you need intelligent automation.
My recommendation is to look for modern service monetization solution.
Ensure that your solution will rest on dynamic data model, enables flexible combinations of different pricing and charging models, integrates easily with other relevant front-office and back-office business systems and offers full automation of usage/value -based pricing, recurring billing and monetization for the entire service ecosystem.
We at Good Sign have helped many service businesses to manage and automate their service monetization process end-to-end.
Take a look at how we helped Technopolis’ service ecosystem with automated customer onboarding, pricing and charging for coworking services:
More about Technopolis story
Feel free to contact us and have a chat with our experts on scalability or discover how our customers have benefitted from choosing the Good Sign Solution as their service monetization engine.