Billing and Pricing for the new economy – 2
In the last post we talked about the need for a pricing and charging solution in case of usage based or pay-as-you-go pricing which is very popular in SaaS based scenarios. We also talked about how SAP’s convergent charging solution can help companies manage these scenarios effectively. In this post I would give more details of the functional underpinnings of this solution.
Let us start with the most loved things by architects, a simple ascii diagram of this solution
Usage events –> Mediation System –> Rating System –> Billing system –> Financial Postings
All these scenarios start with a usage – i.e. someone has consumed a product or a service. For example it could be a music download, use of a device, a person passing thru a toll bridge, use of a software or pure CPU and RAM usage in cloud. This usage is represented by an event. For example think of a CPU usage for a cloud service provider. You can represent this event with the following
Timestamp of CPU Usage
Duration of CPU usage
This event needs to be brought into the rating system for further processing. One can use a mediation system or tools provided by SAP Convergent Charging to bring in these events into rating and charging engine. You can bring these events in a batch mode, for example collect the events for few hours or a day and then bring them in a batch or you can sent them in real time.
Once in the system these events will pass thru pricing and rating plans for coming up with various amounts that need to be posted to various parties based on business arrangements. Most important thing over here is the algorithm for rating or price plan. SAP convergent charging provides a very easy to use and intuitive decision tree based interface to build price plans. You don’t need any programming language knowledge to create these price plans and business users can create these plans. Here is how a typical plans looks like, consider the above CPU usage for cloud service provider example, where the event being passed has 3 bits of information – user id, time stamp and duration
Check the plan for user id
Is there anything special going on for the day?
If yes bill special price for the day
If not charge regular price for the CPU usage for duration
Calculate rev share for partners for example Data Center operator
Send the two calculated amounts ( user charge, Data Center rev share) to billing system
Above was a really simple price plan and is created using simple interface by using components similar to creating a flowchart. This is an example of usage based plan. There could be cases where you want to charge a monthly fee or charge a one time set up fee. These can be easily fulfilled by recurring or one shot plans.
So far we have only talked about transactions where events come into the system get rated and are sent to the billing systems. There is also the master data side of the SAP convergent charging where you have entities that can represent a business partner and contract or agreement with the business partner. You can have per agreement data that can be used for rating and pricing. Consider the same Cloud service provider example, there can be plan that a monthly fee of $5 allows you to have 20 CPU hours and anything above will cost extra. You can achieve this by having per contract data. That is deducted every time a CPU usage event happens.
I hope I have explained enough functional details about the convergent charging solution to see where you can use this system. Let me ask what model you can think of where it can be used
Next Generation Billing – http://www.sap.com/solutions/business-process/next-generation-billing/index.epx
Follow on Twitter – @SAP_NextGenbill