What Are the Biggest Billing Challenges for IT Services Companies?
IT Services Billing Has Evolved
IT Services companies face several challenges when it comes to billing.
Even though the IT Services industry often pushes the boundaries of digital transformation, the industry still faces many pitfalls without the right billing solution. It takes robust billing capabilities to fully address and alleviate hurdles related to pricing innovation and recurring revenue.
Here, we discuss some of those hurdles in detail to help prepare leaders who want to differentiate how their products and services are priced for clients.
Complex Pricing in IT Services
IT Services companies have the opportunity to offer highly tailored and unique pricing because of the nature of their offerings. They can charge access to as-a-service products and cloud-based applications in numerous ways. For example, they can meter usage in multiple ways--bill per user, per time unit, or per activity, depending on how clients use their services.
However, this flexibility comes with additional complexity. Without the right billing solution, deploying and managing multiple pricing tactics can quickly overwhelm a finance team. Evaluating the performance of different products or studying customer segments is near impossible if IT Services companies don’t have complete control over their pricing.
Sophisticated billing solutions dramatically reduce the burden of supporting complicated tactics, such as formula-based ratings or usage-based billing, through automation, configurable revenue recognition, and advanced account management. Those who wish to take full advantage of IT Services innovation must invest in a powerful billing system.
Inflexible Billing Systems Hinder IT Services Companies
Many of today’s leading IT Services companies started with subscription billing back when SaaS models were first gaining popularity. Out-of-the-box, industry-specific solutions were capable of enabling such pricing without much custom coding.
Over time these industry specific systems grew outdated because more innovative companies implemented more personalized pricing that began attracting customers with flexible and compelling business models that offered them more choice. Inflexible, out-of-the-box billing systems prevented many from adapting to emerging trends as needed, causing them to lose customers in a rapidly evolving global market.
Today, the world is moving faster than ever. Disruption is around every corner. IT Services providers that still rely on legacy billing systems have little chance of keeping pace with the competition. Not only should billing solutions support the popular pricing tactics of today, such as those enabled by native mediation, but they should also enable those not yet in existence. In other words, modern billing platforms should be future-proof.
Insufficient Expertise within IT Services Billing
Even if an IT Services company were to integrate a next-gen billing application into their financial ecosystem, it takes significant expertise to optimize pricing without proper guidance. Finance teams must understand every facet of billing, from product pricing and packaging, revenue recognition to invoicing. Additionally, they should understand the nuances of billing within IT Services.
Many IT Services companies lack the experience to make the most of their pricing strategies through real-world implementation. They leave financial opportunities on the table and maintain inefficient practices that hinder long-term growth.
Limited Capacity among IT Services Companies
Finally, even if IT Services providers have the modern billing solution and talent, they may not have the capacity to invest in innovation and billing management. They don't have time to understand the ins-and-outs of their application to maximize performance. Finance teams can’t take advantage of workflow automation or build insightful reports that track key billing metrics.
There is a lot more to billing in the IT Services space than installing a high-powered solution and letting it run. Leaders need to ensure their teams have the time to make the most of modern systems.
While the most robust billing solutions on the market minimize these billing challenges, they can’t solve all current and future limitations. It takes a future-proof platform in addition to a talented team with capacity to optimize IT Services billing.