It may have escaped many people’s attention in the raft of Cloud products released by Oracle in the latter part of 2017, but within those releases was a new Cloud application, Oracle Monetization Cloud. This application is aimed at targeting companies who are looking to focus their activities in managing subscription-based service offerings and products to customers.

Oracle has provided a subscription-based service solution as part of the Oracle Service Contracts E-Business Suite application for some time now, but until the latter part of last year, and the release of Oracle Monetization Cloud, it had relied on customers adopting a number of  E-Business Suite back-office applications. These include Advanced Pricing, Accounts Receivable, Advanced Collections and General Ledger as a foundation to the solution. However, as strong as the EBS solution was, transaction-based systems, such as those offered by Oracle, struggled to support the move from physical goods to service offerings as well as the transition from simple charging to more complex charging models.

With the release by Oracle of Oracle Monetization Cloud in Q3 2017, organisations providing subscription-based products and services can now adopt a cloud-based solution which will allow them to manage the full subscription-based lifecycle from defining subscription and consumption-based products and services to generating billing revenues, chasing customer debts and accounting for revenues in their ledgers.

What is a subscription-based service?

In simple layman’s terms, a subscription-based service is a business model where a customer pays a subscription price to access a product or service rather than purchasing or leasing the physical product providing that service for themselves.

The subscription-based service model was pioneered by magazines and newspapers where customers subscribed to regular publications paying a discounted fee upfront in return for which they would be entitled to an agreed number of deliveries of a publication each year. Since then, the same model has been adopted by a range of businesses offering products or services over fixed regular terms. These include software providers, such as Oracle, who offer cloud-based software services to their customers or organisations such as trade unions, fitness clubs or even charities, such as the UK’s National Trust, who offer access to their facilities over an agreed period for a regular payment of membership fees.

The benefit to vendors of offering such a model is that they are assured a predictable and constant revenue stream from subscribing customers for the duration of the subscriber’s agreement. This greatly reduces any risk to the enterprise but also, with many payments for services being made in advance, provides revenue to the vendor to help deliver the products and services to the customer. The model also provides much greater revenues to vendors from recurring subscriptions than the revenue generated from simple one-time purchases whilst also providing vendors with detailed knowledge on their customer base with subscriptions typically involving customers signing contractual agreements.

Of course, there are also benefits to the customer from such a model. Customers often find subscription-based service models convenient when they plan to buy products on a regular basis. This benefit is strengthened as such long-term subscriptions often save the customer money over and above purchasing the products or services on an ad-hoc basis. Further, with the ability to pay for what may often be expensive items over a period of time, it can make these products or services seem more affordable to customers.

Why adopt a subscription-based service?

In 2016, the average adult in the UK spent approximately £18.49 per month on subscription-based services. In 2017, the average monthly spend had increased to roughly three times that figure. An estimated 58 million UK citizens now subscribe to such services, that’s around 90% of the British adult population. A recent YouGov survey reveals that 9 in 10 UK citizens choose to subscribe to their favourite brands and services instead of making ‘one-off’ purchases – that’s an 11% increase from last year. This uplift in subscription-based service adoption has driven the UK adult population to now spend on average £56 per month on subscription services.

This rise in subscriptions has been reflected against businesses covering nearly all industry sectors which offer recurring services.  According to the Subscription Economy Index, an index dedicated specifically to the Subscription economy, this shows that subscription-based businesses have grown revenues nearly nine times faster than S&P 500 businesses over the past year.

Subscription services have therefore moved beyond media and entertainment and have expanded to include shopping services, software applications, beauty subscriptions and healthcare. The trend is set to continue with an estimated one in four UK adults expected to be subscribing to more services over the next five years.

Key to this growth of services is that businesses can sustainably maintain relationships with their customers and move away from a product-centric mentality to creating long-term brand affinity based around flexible subscription services.

How can Oracle Monetization Cloud assist?

Oracle Monetization Cloud provides a SaaS service enabling subscription-based enterprises to define flexible service offerings for their customer base and manage these through the full subscription cycle from the definition of service offerings to the generation of customer billing, debt management, financial accounting and reporting.

The SaaS service supports the full lifecycle of subscription services from on-boarding subscribers, to launching and modifying service offerings. Services can be defined and bundled for rapid deployment including regular, one-time and flexible subscription and consumption-based charges. Innovative offerings incorporating non-currency based resources such as loyalty points can also be included in the service offering definition.

Alongside the definition of services, comprehensive pricing rules embedded within the application allow flexible rates to be defined against subscriptions with discounting, consumption-based rating and measurable usage metrics such as events, durations, clicks and downloads all to be included.

Subscriber on-boarding is managed through the service with service offerings able to be personalised based on selections, through the use of intuitive user interfaces, which also provide details of customer balances, entitlements and access to full billing and accounts receivable history.

The Oracle Monetization solution also forms part of a full CX and ERP cloud platform that spans the customer journey from engaging on social channels to tracking a sales lead to creating and offering innovative services to on-boarding subscribers, fulfilling their subscription orders and generating subscription revenues.

Oracle Monetization Cloud offers full billing service functionality including the ability to bill subscribers on multiple frequencies including monthly, quarterly, annually or even on a custom frequency both on an advance and arrears basis. Further, non billing cycle billing can be handled via ‘bill-now’ or on-demand billing functionality while bill on first usage functionality allows clients to introduce trial periods.

Revenue can be managed through the service including complete accounts and receivable actions such as: adjustments, payments, refunds, disputes and write-offs allowing service providers to manage their customer delinquency positions. The service also provides full integration multiple front and back-office systems through REST APIs including integrations with payment gateways and compliance with Payment Card Industry (PCI) standards.

An extensive collection of pre-designed financial reports and analytical tools are available to inform decision making each of which can be customised as necessary. These allow clients to gain a real-time view of customer behaviour enabling data driven decision making and an ability to respond quickly with new service offerings.

Summary

The subscription-based service sector has become a significant growth sector both in the UK and abroad. Key to being able to capture Customer market share within the sector is for vendors to accelerate their product life-cycles, provide an ability to manage the full subscription lifecycle, ensure superior customer experience, intuitive user interfaces and provide real-time views of customer activity.

In providing the Oracle Monetization Cloud service, Oracle has enabled companies to accelerate their subscription-based service provision model and create flexible service offerings, generate and recognise new revenue streams, and deliver superior experience to their customers, all whilst being able to analyse their services in real-time and protecting their customer data with world class security.

If you would like to get further information about how Claremont can help you to implement Oracle’s Monetization Cloud, please visit our webpage (www.claremont.co.uk) or contact us on + 44 (0)191 206 4152

By Author

Ian Monaghan

Director

As Principal Functional Consultant, Ian is primarily responsible for designing and implementing tailored functional client solutions relating to the Service, Contracts and Financials business areas. He has extensive involvement in functional presales.

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