Uddhav Gupta, President of CloudBlue.
Digital transformation, cloud monetization and the subscription economy are more than just buzzwords. Each of these concepts represents a distinct facet of modern business strategy, but their interconnected nature can make it challenging to distinguish their unique roles. However, I’ve found the interplay between these three concepts is where the real magic happens.
Digital transformation involves a comprehensive shift in how companies use technology to enhance operations and deliver superior value. Leveraging cloud computing, businesses can deliver scalable, flexible solutions that form the backbone of subscription-based offerings. In turn, the subscription economy provides a predictable revenue model that incentivizes ongoing innovation and customer-centricity, further fueling the cycle of digital transformation.
1. Digital transformation: Make sure you have a good roadmap for the journey.
What is it that you want to achieve through digital transformation?
There’s an often-quoted scene in the movie Lincoln, where President Lincoln talks about how a compass will point to true north but offers no advice about the chasms that you’ll encounter along the way. So what’s the use of knowing true north? Success in digital transformation requires more than just a clear goal; it is also essential to have a supportive team.
An organization’s digital transformation journey should:
• Involve strategic thinkers and change agents: Identify people within your organization who have a deep understanding of the company’s past and future direction because these team members can help the business focus on its North Star and determine the incremental building blocks needed to get there. And ensure there are advocates for a change in mindset to drive successful adoption of digital transformation.
• Embrace data-driven decisions: Collect data from customer interactions and internal operations while continuously gathering and analyzing feedback. This information should refine and improve the transformation process.
• Prioritize agile project management: Setting quarterly goals can test the viability of digital initiatives. Regularly measure progress and be prepared to pivot as needed. Fail fast, adjust and move forward.
• Encourage a nimble company culture: Stakeholder buy-in is key to operating with agility because you need the ability to make informed decisions quickly in a digital-first world.
This journey encompasses a reimagining of processes, workflows and even business models. While the C-suite provides leadership, the entire organization needs to be involved and move together as a cohesive unit. It’s not an individual race; it’s a caravan.
2. Cloud computing: Leverage technology for new revenue streams.
Cloud monetization creates new revenue opportunities because it offers organizations greater flexibility and scalability through virtualized computing resources.
This shift requires a reevaluation of go-to-market and ecosystem programs. Independent software vendors (ISVs), for instance, can expand their market reach through a digital ecosystem of cloud marketplaces to sell and procure products globally, with support for multiple currencies and languages. As ISVs grow their network of partners, products and services, the complexity of daily operations increases.
I recommend you embrace the concepts of elasticity, try-and-buy models, subscriptions, renewals, churn management and service level agreements or service level objectives. These elements need to become integral to the mindset and vocabulary of organizations adapting to the cloud monetization landscape.
3. Subscriptions: Maximize the value of access over ownership.
People often ask what it means to unleash the full potential of the subscription economy. From streaming services to software subscriptions, this model is changing the way products and services are consumed and monetized. I think a great example is phone companies bundling with streaming services, combining connectivity services into a single bill and simplifying the payment process.
Business customers, like individual consumers, expect a shopping experience that is tailored to specific needs, with the convenience of paying one supplier. For example, businesses can subscribe to a package that includes a PC and other productivity tools for a monthly fee. This model also provides a stream of recurring revenue, enabling companies to shift their focus from individual sales to a longer customer lifecycle, enabling a better understanding of customers’ evolving needs.
The more businesses know about customers’ preferences over time, the more organizations can tailor offerings to improve customer experiences and boost engagement. Subscription-based pricing models enable businesses to deliver continuous value, boosting customer loyalty and retention.
This model also aligns the incentives of businesses and customers, encouraging companies to maintain high standards of service to sustain long-term relationships.
Together, the essential trio is a powerful combination.
True innovation occurs with the interplay among digital transformation, cloud monetization and the subscription economy. Digital transformation acts as a catalyst, enabling businesses to harness the power of cloud computing and embrace the subscription economy, but it is always a moving target. By modernizing operations and infrastructure, businesses can seamlessly adopt cloud solutions, which in turn support scalable, flexible subscription-based offerings.
Cloud computing provides the necessary infrastructure for a subscription-based business model to deliver consistent and scalable services. As businesses strive to deliver consistent value in the subscription economy, organizations are propelled into a cycle of ongoing digital transformation, continually refining processes and offerings to meet and exceed customer expectations.
Fusing the benefits of cloud monetization, the subscription economy and digital transformation can be a challenge because integrating existing systems with digital tools is complex.
This is often where the build-it versus buy-it debate happens within organizations. For example, building a customized software solution can translate into many hours of development, committing an organization’s internal resources, and incurring investment and maintenance costs. Partnering with a cloud monetization platform is one option help organizations avoid a siloed approach. (Disclosure: My company specializes in these platforms, as do others.) Whatever you decide, make sure to consider product updates, subscription, billing and marketplace management.
Transitioning to a digital-first approach and adopting subscription-based models require significant cultural shifts within an organization. It is important for businesses to get a “buy-in” across departments because resistance to change can impede progress.
In essence, digital transformation, cloud monetization and the subscription economy are interlinked elements of a modern business strategy. As businesses continue to manage the complexities of the digital age, understanding and leveraging the synergy among these concepts will be crucial for achieving long-term success and growth.
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