Whether your software-as-a-service (SaaS) pricing and billing model is usage-based, one of the other pricing models or a combination, many subscription-based SaaS enterprises are asking the tough questions. Should you move our billing system to the cloud or keep it on premise? What cost savings can you expect, and how do you know that choosing an enterprise cloud billing solution over an on-premise IT stack is the right choice for your company?
With the advent of the cloud, enterprises began migrating their systems and processes. In fact, 93% of enterprise businesses currently use some form of cloud-based system, and 73% are planning to optimize existing use of the cloud for additional cost savings. Today’s cloud embracement was echoed by Gartner who predicted that 85% of organizations will adopt a cloud-first principle by 2025.
A Cloud Billing Solution vs. On-Premise Billing: What’s the Difference?
From a historic perspective, billing has been primarily on-premise and its migration to the cloud has taken a backseat as companies prioritized other workloads. However, change is in the air and cloud billing solutions are becoming the preferred choice for many reasons. Let’s compare the options depending on several key factors.
Billing system deployment
Cloud Billing Solution:
- No upfront hardware and server software license costs
- The billing system can be deployed in just weeks
On-Premise Solution:
- Sizeable hardware and software server licenses investment, as well as the cost of operational personnel
- Months of labor to implement a billing system
Total cost of ownership
Cloud Billing Solution:
- As technology evolves or in the event of an equipment failure, hardware doesn’t need to be replaced
- Potential reduction in operational personnel and associated costs
On-Premise Solution:
- Large capital investments to replace or upgrade hardware
- Ongoing cost of operational personnel and the possibility of staff increases
Service stability and reliability
Cloud Billing Solution:
- Better server uptime, with most cloud services vendors providing 99.95% service level agreement (SLA) guarantees
On-Premise Solution:
- Nearly 100% uptime since servers are always ‘up’, however this is costly and periodic downtime does happen due to system failures, maintenance issues, or upgrades
Scalability
Cloud Billing Solution:
- Avoidance of unused capacity and provides the ability to quickly add capacity to handle usage spikes
On-Premise Solution:
- Fixed hardware resources limits scalability to handle usage spikes
Security and Compliance
Cloud Billing Solution:
- Better anonymity since servers aren’t connected to a physical location or aligned to a specific organization. Additionally, the majority of cloud venders provide a variety of techniques to protect data from theft, leakage, and deletion
On-Premise Solution:
- While providing more control over data, on-premise systems are more vulnerable to breaches and cybersecurity threats
Integration
Cloud Billing Solution:
- Easy and seamless integration to other systems provides automatic data transfers between applications for a complete financial ecosystem
On-Premise Solution:
- While integrating the billing system to other applications is possible, it can take manual effort to transfer data between systems which can result in downtime, errors, and additional costs
Internationalization
Cloud Billing Solution:
- Ease of growing the business internationally since servers don’t need to be installed in new locations, which also decreases costs
On-Premise Solution:
- The purchasing of new servers and the manual process of installing them can delay entry into new countries and is more costly
Collaboration, efficiency, and customer satisfaction
Cloud Billing Solution:
- Employees have the flexibility to securely access information from anywhere at any time, enabling them to work collaboratively to provide improved and personalized customer experiences
On-Premise Solution:
- Today’s dispersed teams and flexible working hours make it difficult for employees to access information when needed. When teams can’t work in unison, efforts may be duplicated, and customer issue resolutions delayed
Finally, let’s consider the competitive advantages. The agility provided by cloud-based billing solutions means you can bring new products, services, pricing models, and bundles to market quickly and with less effort. When it comes to on-prem, IT intervention is typically required when bringing new products, services, pricing models, and bundles to market. That definitely inhibits your ability to quickly launch new offerings. However, the question remains – is a cloud billing solution right for your SaaS enterprise?
Cloud Billing Solution Considerations for Your SaaS Enterprise
While cost savings is a key factor when moving to a cloud billing solution, there are quantifiable, as well as less measurable considerations.
Quantifiable benefits of moving to a cloud billing solution
- CAPEX reduction since hardware and software doesn’t need to be purchased
- Only pay for the resources used – eliminates needing to purchase additional servers when usage fluctuates
- By not managing physical equipment, you won’t need a server room or be burdened by powering, cooling and maintaining it
- Reduction of IT maintenance costs, which can include a reduction of IT personnel
- Outsourcing your billing infrastructure provides for more predictable operational costs
- Fast disaster recovery since redundant copies of data are kept, with one copy located off-site
- Minimal downtime due to the cloud’s automatic failover to a backup server. In the case of a hardware failure, applications are typically hosted on at least two servers
Less quantifiable benefits of moving to a cloud billing solution
- You can react to market trends in real time by quickly and easily launching new offerings and pricing models
- Identify trends in customer usage, plan for capacity changes, analyze performance, predict churn, etc. with reports, analytics, and dashboards that provide actionable business intelligence
- Reduce risk and adhere to strict compliance and security standards
- Standardize operations on a single platform to consolidate billing and automate bill cycle processing
- Improve operational efficiency with the ability to extend the platform, so you’ll never outgrow the system
With so many benefits – hard and soft – why aren’t all SaaS enterprises moving billing to the cloud? As with all technologies, there are other considerations which include loss of control, dependence on an internet connection, potential migration challenges, and security and privacy concerns.
Are You Ready to Make the Switch?
Does your SaaS enterprise have varying capacity requirements? Perhaps you have pricing models that are usage-based, tiered, volume-based, skill-set based, service-based, asset-based, etc.? If so, a cloud-based billing platform may be right for you.
Designed to accommodate change, the right cloud billing solution can easily scale to meet today’s requirements, as well as all your future needs. BillingPlatform’s flexible and scalable cloud-based billing platform enables you to bring innovative products and services to market 30% faster and reduce operational spend by as much as 50%. With us you get more out-of-the-box functionality than any other cloud-based billing solution currently available. Plus our no-code, point-and-click configuration puts the power of change in your hands! If you’re ready to learn more about how a cloud billing solution can set you apart from the competition, reach out to our experts today.
