Rapid Pace of Innovation is the New Norm in the Subscription Economy

 

By Cheng Zou, CTO & Co-Founder

At one time, developing applications on a subscription business model used to be incredibly difficult. Seven years ago, I was at WebEx managing a team of 30 developers building our billing system. Despite this big team, we were never able to keep up with quickly evolving market requirements.

It was a hot time for web conferencing and competition was fierce. We were forced to respond quickly to threats but speed was a challenge. For example, it took us 11 months of development work to support a free trial model in our prosumer market and we were too late to have an impact.

 

We were also slow to deploy routine things like pricing configuration change. It took four teams coordinating across two releases and multiple system syncs to implement a simple price change. We also were hit with scalability limits in our rating system and we could not handle the exponential volume growth of teleconference usage data. As a result, it took close to 24 hours to process a single day’s usage.

 

For billing & payments at WebEx, we built a dedicated operations team focused on the tedious task of processing production usage data, producing invoices and processing payment files through the CyberSource gateway (via our own integration that we built). At one point, this team grew to 7-8 people and was still barely able to keep up with all these manual operations tasks to satisfy our internal needs.

 

Later on we added customer account management (yet another isolated application) to the puzzle and had to sort out the myriad of issues and integration challenges. FInally, we struggled in producing business intelligence reports for our product management team and sales to upsell our most promising customers and to prevent others from churning.

 

Fast-forward to today, where subscription businesses have exploded in almost every industry and these once heavy-lifting operational requirements are shared by all. This opportunity is what inspired me to co-found Zuora. Now, as a company enabling over 600 customers to be successful in the Subscription Economy, we have learned to win ourselves by developing a monthly innovation cycle that delivers increasing value to our cusotmers. This has not been easy given the diverse requirements across a diverse set of customer industries, sizes and business models.

What are the keys to our development success? Our development systems and processes have to be comprehensive, adaptive and agile to deal with these challenges. But most importantly, we have to be really responsive to customers. Many of our most popular features came directly from customer feature requests.

 

Just a few of my favorites (hard to choose from 50 releases):

• We added support for tier 1 payment gateways Paypal and Cybersource because our customers wanted Zuora to handle the downstream business operation of payment collections in an integrated way.

• Our Saleforce integration, which initially solved the need for mid-market customers who wanted to sync their back office data from Zuora back to Salesforce so they could have a complete view of their business. We then built the Z-Force product that is built natively on force.com with a 360 sync capability.

• REST APIs. We responded to customer requests for an API that is use case based (to complement our SOAP APIs) to help them easily integrate their web service front-end to their Zuora back office. We produced 22 REST based APIs that addresses the need end to end.

 

Responding to customer requests quickly is the benefit or outcome of our ever improving, and now highly predictable and reliable development process. Through this monthly cycle of continuous innovation, we have built & improved our engineering delivery model on multiple fronts.

 

Here are some highlights worth sharing:

• First, we have become agile. We have to align our project management practice and release operation seamlessly to enable us to release every month (and in on-demand fashion if there is an urgent fix to deploy). This involves managing multiple release projects in parallel and cohesive coordination across product management, engineering, QA, documentation, tech operations, and customer care.

• Second, we have become truly automated. We have to set up a continuous integration environment for our build and testing operations so that we can run through 50,000+ test cases every few hours and ensure there is no regression introduced in the check-in code. Have I mentioned that deployment and migration script verification is also a part of this automation?

• Third, we have become operation aware. All project team members must understand the production and non-functional impacts a new feature or a bug fix will have and they must address those concerns and risks in their design and implementation, while our QA team must define adequate test plans too. In addition, to support these non-functional requirements, we developed performance lab and various API sandbox and staging environments to ensure the quality of our code in production like environment.

• Last but not least, we have become quality minded. We adopted the MECE framework in our testing design and made significant investment in developing test automation infrastructure. Now we have more than 50,000+ automated test cases covering UI, API, batch operations and scenario tests. Every code check-in requires passing of baseline test and full regression test runs twice every day. When dealing with customer reported bugs and escalations, we have a well-defined process to identify root cause, review solutions and add test cases to ensure we don’t make same mistake twice.

 

I’m incredibly proud of what we have accomplished in 5 short years at Zuora, impacting not one customer but close to 600 customers around the world. Today’s news is a wonderful milestone and is a product of the ingenuity, passion and creativity of our world-class team. I want to thank many employees of Zuora around the world, each of whom have put in countless hours to deliver on our commitment to customers.

 

Faster Time to Commerce? Check Out Our New REST APIs

By Ben Wu, Sr. Director of Product Management

 

Hello World!  Today, Zuora announced availability of a new set of REST APIs to enable faster storefront integrations.  I'm proud and excited to have been part of the product development team at Zuora that helped deliver them.

I've been both a product manager and developer throughout my career, and have even dabbled with both the Google and Facebook REST APIs in recent years.  Compared to earlier in my career, I've been amazed by how fast it is nowadays to build compelling applications that integrate with value-added third-party apps in the cloud.

So when I joined Zuora a few years ago, I was a little disappointed to see we only offered SOAP APIs that required a relatively detailed understanding of the underlying Zuora object model.  Not really like Facebook's or Twitter's APIs, right?

Yeah, I get it.  Our SOAP APIs are super powerful, and particularly within the IT departments of our large enterprise customers, there have been no issues with SOAP or the requirement of learning the Zuora object model.  They gladly embrace a bit of learning curve for the complete power and flexibility that these existing APIs provide.

 

But I'm really a start-up guy at heart, and in my interactions with this segment of Zuora customers, I saw some challenges with our SOAP APIs.  These companies had smaller development teams already familiar with REST, not SOAP.  And they typically had very specific demands from our APIs, all of which were focused on integrating their websites with Zuora quickly.  In short, they were asking for faster time to commerce with our APIs.

 

Well that's what has come this month.  Zuora has introduced 22 new REST API calls focused on enabling website commerce integrations.  The APIs are use case-based, so they hide the complexities of the Zuora object model -- in other words, one logical API call can often "do it all" by solving an entire integration use case.  We've also provided sample code, SDK libraries, docs, and a developer test console.

Sure, many of our customers will continue to thrive with our SOAP APIs, and we'll continue to embrace and extend those.  But these new REST APIs will be a fantastic complement, and I'm excited to start seeing our customers grow their subscription businesses with them.  Happy coding!

 

A Connected App Strategy Leads To Stronger Customer Relationships

By Tien Tzuo, CEO

Salesforce.com was started with a simple premise: why couldn’t enterprise apps be as easy to use as buying a book on Amazon?  In the last 14 years, this simple question has exploded into the trend we now call the “Consumerization of IT.”

 

But what if you have multiple apps?  More and more, in the consumer world, the applications you use talk to each other. Your restaurant review on Yelp is automatically posted to Facebook. The Nike+ Running app tweets your latest run stats. Spotify shares what you’re listening to on Facebook and Twitter.

 

Contrast this with your business applications.  Many of you reading this blog have experienced the pains of trying to connect business applications together. After investing significant time and money some of you probably gave up and bought a monolithic business applications suite, only to suffer through generic, subpar applications from legacy enterprise software vendors.

 

But there is a new age of business applications emerging - interconnected business applications centered on hubs. Salesforce.com pioneered this model and today has become the CRM hub, with many integrated third-party apps that extend its functionality. Similarly, Workday is the hub for human capital management, Intacct for GL, and Zuora for subscription lifecycle management. 

 

The evolution to connected business applications is important and this evolution is disrupting the traditional business software market. Consumers of business applications today demand the same ease of use and ease of connectivity they experience with consumer applications. Business application vendors should consider a connected app strategy as critical to the success of their product. Here are just a few benefits that result from pursuing a connected app strategy:

 

Stronger Customer Relationships

The connected app model provides the foundation for something very exciting: The potential for creating stronger relationships with your customers. Salesforce.com created a strong partner application hub centered on the AppExchange. A number of business application vendors are following suit and fostering their own application hubs. Marketo is a good example of this. Marketo makes it easy for it’s customers to add their favorite apps to the Marketo hub application such as an analytics app, or event management app, data cleansing apps and more. Connecting apps to the Marketo hub enables customers to get more value out of the product and develop a sense of loyalty. These types of interactions help establish a valuable and longer lasting relationship between the company and its customers.   

 

Increased CustomerReach

Business application vendors can reach a more diverse set of users in different markets, thanks to the connected app model. For example, DocuSign understands that its customers use various platforms to conduct their business and obtain signatures. So the company has developed apps for a variety of different hubs: Salesforce,  Microsoft Outlook, Google Apps, as well as mobile signature apps for iOS and Android. In each case, the DocuSign app is connected to the hub, right out of the box. In addition, each app is priced and packaged differently, depending on the market it serves. As a result, DocuSign’s technology reaches customers it might not have had otherwise.

 

Reduced Barriers to Adoption

As usage of legacy desktop software declines, savvy enterprises are setting up their own app stores to make it easy for users to download the connected SaaS-based and mobile apps they need to be productive. This trend is one reason why IDC predicts SaaS and mobile app usage will increase 200 percent by 2015 [Source: http://bit.ly/YXS28M]. Considering this trend, business application vendors that pursue a connected app strategy and make it easy for their apps to connect to other apps without requiring an army of consultants are most likely to be successfully adopted within an enterprise.

 

All these benefits have one thing in common. Each benefit is realized by pursuing a hub-centered, connected enterprise app strategy to develop deeper and more valuable relationships with as many customers and as possible, and accomplishing this while still delivering one unified customer experience.

 

This last point is key, because success in business today isn’t about delivering the best product at the best price and hoping customers return for more. Now and into the future, business success is aboutowning your customer relationships.

 

The next time your Yelp review flows to your Facebook timeline, think about how you might connect your enterprise apps in a similar manner. Look for ways to use connected apps to build direct access to your customers and deliver a variety of valuable goods and services in a way that’s transparent to them. The customer wins in this scenario. And so will you. 

The Opportunity for Media to Reinvent Itself

By Tien Tzuo, CEO

 

Today, Zuora is thrilled to announce the launch of Z-Business for Media, a solution focused on helping media companies transform their business to the Subscription Economy.

Most people are aware that the past decade has been a tumultuous one for the media industry. The digital age and the explosive growth of online content has driven advertising revenue off a cliff and caused many premier publishing titles to severely lower print circulation or cease production altogether. Larger publications such as The New York Times have introduced paywalls in an effort to stabilize balance sheets and stem the bleeding. Yet, many publications are still online and free.

Today, there is a great opportunity to reinvent and rebuild the media industry. There are signs of hope. So where should media companies go from here? Beyond survival, the secret to future success lies in moving beyond simple paywalls and developing a clear strategy that enables them to own, monetize and maintain customer relationships.

We call this strategy Paywall 2.0. It is focused on implementing 5 key capabilities to help extend and monetize customers’ subscription value over time. As media companies shift their business model to support this strategy, they must consider upgrading their systems and operational processes, since their legacy systems are not capable of supporting this transformation. These companies will need robust and capable technological power to keep their billings and subscription plans running at their maximum potential.

 

Zuora Z-Business for Media is a relationship business management (RBM) solution that enables companies to deliver a Paywall 2.0 strategy and support critical business processes across commerce, billing and finance. It is production-proven in large media companies like Fairfax Media, News International, and Pearson, who have begun the transformation to Paywall 2.0.

 

We at Zuora are honored to play a role in the media industry’s quest to reinvent itself and are optimistic about its future. Often regarded as the “fourth estate,” journalism needs to continue to exist and thrive as a backbone to a democratic and just society. We’re at the early stages of this revival, and Zuora stands ready to do our part. The time is now.

 

 

To learn more about our recurring billing, commerce and finance platform, please click here. 

Subscription Economy is Thriving - New Data Shows Opportunities for Services and Consumers

 by Joe Andrews, Sr. Director Product Marketing

 

Are consumers facing subscription fatigue? A survey highlighted in TechCrunch last week sought to understand the implications of the growing number of subscription services on consumers. The hypothesis that consumers may be saturated by their subscriptions – and looking to curtail their monthly spend, could mean potential fallout for popular services like Dropbox and Spotify.

 

Fortunately for those of us embracing the Subscription Economy, the answer seems to be the opposite, at least directionally; that there is, in fact, upside for services that use a recurring revenue model. Some may contest the survey methodology that clearly biases for an early adopter profile; however, we believe the results are meaningful.

 

Here are the findings we were excited to learn, and the opportunities to consider for those companies looking to implement subscription models:

 

1)   There’s headroom for subscription services revenue growth – specifically, consumers are budgeting 240% of what they actually spend. And 86% plan on increasing their spend.

 

2)   Consumers are willing to pay for free services like Gmail and Wikipedia, suggesting an opportunity for companies to build additional value on top of major consumer platforms that can be monetized, e.g. Gmail plugins like Boomerang, and supporting more use of the freemium model to hook in new subscribers.

 

3)   Recommendations from friends and family are the most important drivers of influence during the purchase process (more important than business contacts and expert bloggers), suggesting opportunity to more fully incorporate and invest in social influence capabilities in paid services.

 

Despite the directional nature of the survey, it supports the notion that there’s a real upside opportunity for paid subscription services and for value-add services that build on existing free platforms.

 

We at Zuora support further study into subscriber behavior and preferences that will help the vendor community better deliver value to our customers and enable us to thrive in the Subscription Economy.

A Million Dollar Blog Without Ads? Subscriptions Aren't Just For Big Publishers

by Joe Andrews, Sr. Director Product Marketing

 

Just a few years ago, no one thought that readers would pay for online content. Then the media industry woke up and realized "free" was not a sustainable business model. The NY Times and WSJ put up paywalls. Readers did start to pay, but, as many titles closed their doors, the myth propogated that only the largest publishers could charge for content. Today, some independent publishers are proving that customers will pay for worthwhile content – as a result, subscriptions are emerging as the future model of success.

 

Andrew Sullivan, the pedigreed former editor of the New Republic, decided this year to leave the mainstream media behind and publish The Dish with paid subscriptions as its sole source of income. Sullivan has written a commercially successful blog, The Daily Dish, since 2000 and it’s resided on prominent publishers such as Time, the Atlantic Monthly, and The Daily Beast. Why did he make this switch to a subscription-only model?

 

Sullivan said he reached a point where he had to stop being beholden to advertisers. “It was either quit blogging or suck it up and become a businessman,” he told NPR in an interview story published last week. He now charges readers $19.99 a year to get full access to his content. This new business model funds a staff of eight who can focus the content on topics they believe appeal most to its readers. His posts range from light social commentary to meaty political essays.

 

Sullivan’s strategy seems to be working for both editorial and business. He has noticed a surge in clicks to subscribe on his longer posts. His monetary goal is to reach a million dollars in paid subscriptions by the end of the year – and he’s just over halfway there after 2 months. According to Metro.uk, The Dish ranks in the top 10 ten of money making blogs and is the only one that does not have paid advertising.

 

Yet, there’s a tradeoff and calculated risk – he says he tracks thousands of readers who hit the paywall and leave without subscribing. However, his readership is more focused and loyal than on an advertising-based site. He’s banking on this loyalty to build and maintain a healthy subscriber base over time.

 

They key to subscription success is building customer relationships. Instead of wringing their hands over whether they should build paywalls, publishers should focus on delivering content that readers covet and surprise, they will pay. We at Zuora applaud Andrew Sullivan for embracing the Subscription Economy and wish him future success.