Recurring Revenue Lagging? Big Data Can HelpServiceSource's cloud application is built specifically to maximize a company's recurring revenue.
A business's overall revenue mix is often comprised of a variety of sources, including recurring revenue streams such as subscriptions, maintenance and support contracts, and other services. However, several factors can limit this recurring revenue, including customer churn and a sales force that's too focused on new product sales. In addition, incomplete and missing data can hurt a company's efforts to find recurring revenue sources. Research firm Gartner estimates that companies are missing out on some $30 billion in annual revenue, in part because they're using outdated or poorly implemented tools to manage this side of their business.
ServiceSource, a software and services provider that targets the recurring revenue niche, says its new Renew OnDemand cloud application uses big data analytics to help companies find revenue opportunities in their existing customer information.
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"There's a big data problem in renewal analytics," said Ganesh Bell, ServiceSource chief product officer, in a phone interview with InformationWeek. "We help tech-enabled companies derive recurring revenue from subscriptions, maintenance, support contracts, or any other form of recurring revenue."
[ There's a difference between the people who gather big data and those who know what to do with it. Read more at How To Bridge Big Data's Information Gap. ]
"We estimate that in two years' worth of data that we've seen across fifty global companies, about $1.4 billion dollars in recurring revenue have been lost because of incomplete data, missing data, wrong asset information, and things like that," he added.
Renew OnDemand has real-time analytics tools and integrates with existing enterprise applications. It can slice and dice a company's recurring revenue performance in a variety of ways, including by contract size, customer segment, distributor or reseller, and so on. "In our application, you can do target planning in terms of recurring revenue. We've built analytics that allow you to get an overview of the entire picture of your recurring revenue business," said Bell.
Renew OnDemand offers industry benchmarking tools as well. "Not only do you know how well you're doing against your recurring revenue, you know how you're doing against a peer group in the industry," Bell said.
"When we engage with customers, we're able to take all their data and identify where they have data gaps, and whether they have data duplication," said ServiceSource chief delivery officer Rob Sturgeon.
Based in San Francisco, ServiceSource has focused on the recurring revenue market for 12 years. It currently has approximately 120 customers, including well-known tech giants such as Hitachi Data Systems, Motorola, Verizon, and VMware.
ServiceSource launched Renew OnDemand last month. It claims the product is the only cloud application on the market to focus on recurring revenue.
In a recent analysis of Renew OnDemand, Gartner analysts Patrick Stakenas and Robert P. Desisto stated that competing products from vendors such as NetSuite and MaxQ address recurring revenue problems as well. "In some respects, Renew OnDemand may look much like the CRM systems currently in place in many companies, and these organizations may question the need for yet another one," wrote Stakenas and Desisto.
However, the Gartner analysts agreed with ServiceSource's assertion that recurring revenue poses a major challenge for businesses. "Many companies with large installed bases of renewal customers struggle to maintain an accurate view of who buys their products and services month after month, and [they] battle with complex spreadsheet-based systems. And they increasingly have to capitalize on every customer opportunity to meet and exceed their revenue targets. In such an environment, revenue from existing customer relationships represents a frequently undervalued asset," they wrote.
ServiceSource positions Renew OnDemand as a viable alternative to spreadsheets and expensive in-house recurring revenue management systems. "For the first time, they have a solution they can go buy rather than cobbling something together," said Bell.
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