The subscription economy – You can only manage what you can measure.
By Bert Schulze, Himanshu Sewalkar
Should I get a more environmentally friendly car? Should I do more sports? Am I paying too much for my apartment? Weather it is the CO2 emission of your car, the size of your pants or the price per square meter of the area you live in; measurement is always important in order to know what’s going on and where to improve. It keeps track of change and helps us to make decisions – private as well as professional. Actually, it is fundamental. Driven by several macroeconomic trends we observe a significant shift towards the subscription economy. This drives new expectations and at the same time enables new qualities to measure consumption.
The subscription economy is all about usage and consumption. There is no shelf-ware in the cloud. The expected agility and innovation cycles are at an unprecedented pace of change. Customers today are looking for ways how to transform their business to cater to our digitized, networked, and complex world. The prerequisite is to consume services rather than products, and if you want to digitally transform then everything needs to happen fast. So innovation with speed and running simple is the key.
Thus, consumption and respective benefits need to be measurable. Only with measurement it is possible to prove and derive value for customers and secure new business. The relatively low switching costs of services make it easy for customers to decide not to renew or reduce their footprint. The most significant advantage for enterprises in this new world is no longer about reduction of the bottom line but it’s about business nimbleness and time to value.
Consumption analyzes and behavior measures in the service will provide the capacity to improve continuously. Running the best businesses requires to continuously measuring achievements – benchmark against peers and going beyond expected business outcomes.
It is not an overstatement to say that usage measurement in the subscription economy is a key success factor for both, the customer and the service provider.
Monitoring and measuring service usage is critical as it contributes to identification of process improvement initiatives within an enterprise. Analyze consumption and adoption, uncover usage patterns and benchmark organizations help customers improve processes, increase efficiency and drive fact-based Best Practices across organizations. There are many examples for usage measurement becoming handy and we will discuss different use cases in forthcoming blogs, but till then here are three main bites.
Do you know the quality of your data? Data Veracity
Veracity refers to the messiness or trustworthiness of data. Dashboards, reports – whenever aggregated data is consumed, executives want to understand the cleanliness of what they consume. How accurate and actual is the data? What data stamps does the raw data have? How much of the data in a report has been created automatically from the system vs manually entered into the system? Have defined quality-gates being passed or is the data what we call grey data?
Usage data is there to monitor the quality of data in automated in the background. The data that is collected is purely used for improving transparency and supporting fact-based decisions within a company and its subsidiaries based on clean, real-time data.
Are you a social enterprise already?
The traditional collaboration analysis mainly consisted of technical metrics such as number of page views, gigabytes of content, unique visitors. These metrics fail to address the business impact. The single way to know if collaboration is at work is to analyze it; by measuring usage. For example is a collaborative selling approach key in today’s transformed world: Do you compare the collaboration patterns of regional sales teams, and make a correlation between selling performance and sales team collaboration to instill change in behavior?
Insights from the internal collaboration usage data can be followed up on in two steps. First, improve collaboration of teams and simplify exchange of information. Subsequently, justify the investment in social tools and maximize the gain. In a 2012 global research study, businesses that improved their collaboration practices reported faster, more informed decision-making and improved training productivity.
What measures do you have in place to detect enterprise fraud at the earliest possible point in time?
Measure real-time data and access control. Identify unusual access pattern and uncover potential misuse or 3rd party attacks in customer tenants.
Usage data that is pointing to unusual behavior can lead to the detection of fraud attempts and cyber security attacks. An automated analysis of the data can help identify weak points and enables quicker reactions to potentially fraudulent behavior (e.g. blocking access). Examples require usual logon and usage behavior to be stored as “normal” patterns and to be compared in real time based on predictive algorithms with actual behavior to uncover misuse.
How it works – a golden opportunity for IT
For long the purpose of IT had been to store or compute things. Run the company, while others were focusing to achieve business outcome. Usage measurement presents a golden opportunity to IT to reinvent itself not only as a prized partner to the business but also as a direct contributor to help achieve economic results. Measuring usage starts at the business and ends with business – in between you have technology as the facilitator. This also means that there needs a continuous handshake between business and IT. Each step must add value. Don´t limit yourself by starting with technology.
First, build a use case with the end in mind. Begin by understanding the business needs. Describe the measurement goals as well as necessary decisions in order to benefit in a structured way. Determine how data has to be provided and who will provide it. This is the purview of business.
Next, according to available technology and data transfer channels, interfaces have to be built and data flows to be established. This forms the acquire part of the process governed by technology. In the third step, the acquired data has to be persisted in a way that it is available according to the use cases – In time, in the needed granularity, enriched with necessary context information. To comprehend the actions that were defined in the use case the data have to be provided to the stakeholders in an easy to consumable manner.
Benefit comes if decisions can be made on clear facts. The business processes within the company, ecosystem and customers must be set up to react on recognized information.
With the architectural framework of modern technology like Big Data Analytics, companies must apply measurement consistently across the solution portfolio to gain the right insights. Companies have to be watchful about what to measure. Becoming data fanatic is not the purpose – becoming data driven on the other hand is.
Consumption insight goes beyond pure usage measurement. The question is not only if the solution or its parts are used, but also how effectively it is used to optimize business outcomes.
Appetite for more? In our forthcoming blogs we will interact with subject matter experts to know the ground realities of cloud usage measurement and will also see how our private lives are conquered by cloud and usage measurement per se. In addition to the three mentioned above, there will be plenty more use cases of usage measurement, so stay tuned.
Let us know your thoughts
Bert Schulze (@BeSchulze ) and Himanshu Sewalkar (@HSewalkar)