Build vs. Buy: A New Look at the Classic IT Dilemma

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A New Look at the Classic IT

Dilemma

By Travis Huch

Build vs. Buy

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• The Disruption is here

• The CIO is under pressure

• Change is happening – The Five

Kinds

• The business case for agility in

pricing

• Solution components & the cloud

stack

• Summary and recommendations

Agenda / Let’s Make this Interactive

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Disruption is Here

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CIOs Are Under Pressure

“We spend 80% of our budget maintaining the old legacy stuff we need to keep. We can’t just unplug it.”

AND

“Our only competitive advantage today is speed”

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The Five Kinds of Change

Launch Pivot Scale

B2Any or Usage BasedM&A

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It Looks Easy to the Business

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Billing

Gateways

Fulfillment

Provisioning

Immediate or delayed payment

Connect to CRM

Notification

Connect to accounting

Self service vs assisted flows

But it’s Harder Than It Seems

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The New Pricing Lifecycle

The pricing lifecycle is shorter than ever before

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And you are layering in more services

• Personalization / Customization

• Remote monitoring and updates

• Compute and storage

• Monitoring and contextual services

• Collaboration and sharing

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All These Changes Are Too Much

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THE Textbook Case for Pricing Agility

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• MCI announced The Friends and Family Plan

• AT&T was unable to respond for 18 months

• MCI’s revenues went up 11% while AT&T lost 8+% market share

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The Modern Example

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When was the last time you changed your

pricing?

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Now You Know You Need to Change

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But What Kind of CIO Are You?

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“We build things that are part of our core competence”

“It’s a simple ROI calculation to figure build vs buy”

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The Emergence of The Business Innovator

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“We extend and future-proof our architecture by using best of breed components”

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“As-Is” Solution at First Contact

43% of companies who elect to build commerce billing and payments come back within 2 years

49%

31%

18%

2%

Commercial accounting systems

Built home grown system

Replacing a commercial billing system

Completely mannual

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How Do I leverage what I have?

18

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The New Cloud Stack

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There Are Really 3 Parts of the Problem

Product Catalog Pricing

Web OrderSales-Assisted Order

Upsell / Cross-sell

Invoices Reciepts

Credit Card PaymentRefunds

Partial PaymentsBalances

Service Rating & Billing

Secure PCI Payments

Commerce Billing & Payments Finance

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Plugs into your ecosystem

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It all starts with the right data model

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Companies that Built then Bought

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Common Themes Post Go-Live from our Enterprises

We’re more agile in our approach to pricing and onboarding customers

Our engineers have been deployed to things that are higher value things that are closer to our wheel house

We were able to meet the deadline for launching the new SaaS product

We maintain the onboarding and provisioning flows, and Zuora manages everything else

“

”

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Infinite pricing options

Things you need to Consider before Building1. What is the risk of building (accuracy,

leakage issues)

2. Will you need to support the numbers in an audit?

3. Opportunity Cost = $600K per year in additional rev

4. What is the timeline goal that this is tied to?

5. How will this functionality need to change over time?

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Summary

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• Most companies don’t have unique requirements when it comes to core billing and payments

• Deploy dev resources on things that give you a competitive advantage and differentiation

• Agility = Revenue. Ability to change pricing quickly is a requirement in today’s market

• Let us provide you an assessment of what it would take to meet your use cases based our experience

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Thank You! travis@zuora.com

@travishuch

Let me know if you are interested in participating in

our “What is the Ideal Enterprise Architecture?”

panel discussion at Subscribed 2014!