Usage-Based Billing

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March 04, 2020

We asked 300 finance executives at US-based companies what they are most excited and concerned about in 2020. We learned how enterprises are approaching today’s dynamic markets and tech disruption. The overarching theme we discovered is that finance leaders are prioritizing revenue innovation. They want to create new sources of growth without deploying massive amounts of capital. Interestingly, “innovation” implies different growth strategies for different companies.

In 2020, many expect to release new offerings — 60% plan to release new products or services and 56% plan to institute disruptive business models towards the same end. Additionally, one-third anticipate using creative pricing to achieve revenue growth.

Half of the finance leaders we surveyed reported that they’re increasing budgets this year. From a macro perspective, we feel this lines up with the concept that enterprises see operational systems as a barrier to agility and innovation – that in order to transform digitally, legacy systems and processes need to evolve as well. The survey revealed 71% of executives list outdated systems, infrastructures or applications as their top technical priorities for 2020.

The Year of the Adaptive Enterprise

Supporting our own findings, Forrester recently released a report highlighting the importance of organizational flexibility. Forrester defines these organizations as Adaptive Enterprises — businesses that shift their value propositions so they flex to meet evolving market needs.

According to Forrester, adaptive enterprises generate 3x revenue growth compared to their slower-moving peers. In 2020, technological disruption and competitor dynamics will continue to create uncertainty for companies of all sizes. Those who can’t adapt will struggle to keep pace and grow. Adaptive Enterprises, however, will innovate where others fail to succeed.

Our 2020 Trends in Finance Report results add color to this conversation. We know from our respondents that finance professionals are seeking to create new value from the same resources. Rather than pursue M&A opportunities, leaders are focusing on tech-enabled innovation, which is the key to competitive positioning.

Our survey reveals that new technology capabilities are allowing leaders to create compelling, differentiated products and services for customers. These forces are also accelerating the rate at which new offerings come to market. One-third of respondents also intend to use recurring and consumption-based billing models to give customers more choices on how they pay for services.

Finance leaders want to be on the front end of the digital transformation movement. However, not all are well-positioned to achieve their highest potential without making crucial investments.

Innovation Hurdles

Our respondents gravitated towards several challenges that could hinder revenue growth in 2020. For many finance leaders, rigid enterprise architecture, competitors, and regulatory pressures stand in the way of innovation.

Over 20% of finance leaders reported that system constraints could hold back their businesses. Two-thirds of those we surveyed are moving systems and applications to the cloud. Many are also consolidating system data for analysis and updating legacy systems.

Tying it all Together

In 2020, finance leaders have a lot on their minds. Threats exist in many forms — competitors, macroeconomic challenges, and out-of-date enterprise architectures all stand to slow ambitious growth plans.

Global businesses are choosing a more adaptive approach by bolstering capabilities that facilitate innovation, especially on the pricing front. Pricing offers a viable path to revenue growth and value creation without a huge investment. With dynamic pricing models, such as those involving complex consumption-based or tiered pricing, billing can become a true value-add and differentiator.

These insights and more are all in the 2020 BillingPlatform Trends in Finance Report. We cover the following topics in more detail:

  • Increasing finance budgets
  • Prioritization of innovation and growth
  • Common roadblocks to enterprise success
  • The evolving finance team
  • Cybersecurity
  • Business agility

To read the full report, click here.

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