The XaaS subscription model enables customers to fine-tune their purchase of a product or service. For example, an XaaS software subscription model can eliminate the risk of overbuying licenses and paying for unused products.
Shifts from Hardware to Software Models
The trend in XaaS is increasingly shifting towards software. This trend, often referred to as the "softwarization" of everything, is driven by the fact that software models offer greater flexibility, scalability, and cost-effectiveness compared to hardware. The trend is 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 has proven to be an attractive business solution that improves 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
Bundling hardware, software, and service enables businesses to innovate with new business models and revenue streams. However, there are challenges.
As companies create new products and monetization models, their sales and marketing teams often struggle with their current technical systems, unable to quickly bring new subscription models to market.
For example, subscription-based models sell software as a usage right rather than a product. These models require support from a dependable system that manages the customer’s rights and usage associated with the products and services. Tracking a customer's entitlements is key to sustaining renewals. It's also important to eliminate revenue leakage from unauthorized use of software, subscriptions, and product bundles.
Traditional systems struggle to maintain accurate and comprehensive records of these entitlements because of reassignments to different regions, upgrades, swaps, and additional changes to licenses and other entitlements.
Summary
SAP Entitlement Management provides a flexible architecture to meet the needs of cloud computing and remote access. It addresses entitlements that are currently in use and formed in the future. Let’s see how SAP Entitlement Management meets these challenges in the next unit.