How to Cut Through the Complexity of Cloud Consumption

The reality is, cloud-based products are becoming more and more common. For the channel, this represents both a massive change in revenue streams (opportunity) AND a potential world of billing pain (threat).

Graeme Boorer recently wrote a commentary about the challenges of managing subscription billing in the channel. Importantly, he believes “bill shock” will be felt most by the reseller through the addition and complexity of usage charges on top of the fixed monthly fee.

In addition to bill shock there is also the potential for “bill overload”. If you have ever had a supplier send you more than one bill per cycle because they forgot to add charges to your original bill you will understand the potential frustration this causes.

Both bill shock and bill overload have serious consequences for your customers. In their frustration, many simply say “I don’t want this” and in an understandable knee-jerk reaction simply cease doing business with you. Recovering from this is difficult and requires time and energy that may not pay off.

In sum, the biggest challenge comes down to your ability to manage cloud consumption usage fees. The fixed fee component is stable and regular but the multitude of consumption charges that can accrue in a month are impossible to accurately forecast and even more difficult to bill. Making sure this process is simple, accurate and timely is essential to avoid customer angst and to create more stable billing patterns.

So, here’s how we recommend channel partners manage it with their customers:

1) Make sure you’re familiar with all the configurations/charges/freemium options etc.

The more familiar you are with the various consumption charges and freemium periods, the better you can plan and prepare your customers. Your teams are already used to upskilling and training on new vendor products, this is no different and can be treated as such.

  2) Prepare your customers for a transition period

Being forewarned is being forearmed. It’s likely your customers have requested these changes and are willing to tolerate some “transition”. The cost/benefit ratio will pay off them - but letting them know that there may be a teething period will ensure you avoid frustration associated with billing.

So make sure you…

3) Develop a process to manage the new products

There’s only so long a transition period can occur. You will therefore need to promptly implement a process for capturing data and billing accurately. In doing this you will be more empowered from having your own view of the data - rather than just relying on the information provided (often irregularly) from the vendor.

4) Create a feedback loop

Building a step that checks the process is working with your customers is essential. This could occur between the two account teams. This not only strengthens the relationship with your customer but creates a systematic and regular line of communication. Remember - timely communication is the key to successful customer engagement.

Being proactive with your customers is the best way you can assist them successfully transition to the cloud model as it ensures they are prepared and avoids that nasty bill shock and bill overload that can irrevocably damage any trusted relationship.  

If you are looking to build out a process to manage usage, consumption or any other fixed and variable contract types, iasset.com offers a single platform that can be configured to collect usage or consumption data for any channel member (including distributors, VARs and vendors), integrate vendor system feeds as well as produce accurate monthly billings.