The Everything-as-a-Service (XaaS) subscription model allows customers to fine-tune their purchase of a product or service. For example, a XaaS software subscription model can eliminate the risk of overbuying licenses and paying for unused products.
The trend in XaaS is increasingly shifting towards software. This trend, often referred to as the "softwareization" of everything, is driven by the fact that software models offer greater flexibility, scalability, and cost-effectiveness compared to hardware. The trend has become so common that many businesses are acquiring software engineers and entire software companies to improve or remake their products and services.
The bundling of software and services with products have proven to be an attractive business solution that increases customer satisfaction.
The success of subscription-based models relies not only on an initial sale, but an ongoing relationship with the customer that focuses on user-centric product development, customer support, and a better sales experience.
Entitlement Management Meets New Challenges
There are challenges to consider even though bunding hardware, software, and service allows businesses to innovate with new business models and revenue streams.
As new products and monetization models are created, sales and marketing teams often struggle with their current technical systems unable to quickly bring new subscription models to market. For example, with subscription-based models, software is sold as a usage right rather than a product. Subscription models require support from a dependable system that manages the customer’s rights and usage associated with the products and services.
Traditional systems often struggle to maintain accurate and comprehensive records because of reassignments to different regions, upgrades, swaps, and more changes to licenses and other entitlements. Tracking what the customer is entitled to is the key to sustaining renewals.
Finally, eliminating revenue leakage due to unauthorized use of software, subscriptions, and product bundles is another important factor behind the success of subscription models.
Summary
SAP Entitlement Management provides a flexible architecture to meet the needs of cloud computing and remote access, and addresses entitlements that are currently in use and formed in the future. Let’s see how EMS meets these challenges in the next unit.