Any company that adopts a subscription- or consumption-based pricing model will need to transform every aspect of the organization, from its overall vision and strategy down to its essential back-office functions. But exactly how fast are these cloud-like models advancing? How are they changing an industry’s underlying economics? And what new practices do companies need to adopt to capitalize on the growth opportunities this transition offers?
BCG’s survey of more than 600 buyers of business software and hardware in five countries, supplemented by vendor interviews and our own experience, yielded empirical evidence to answer those questions and help companies design and implement cloud-like models. We focus in this article on the tech sector and its anything-as-a-service (XaaS) offerings, but we believe that the pricing benchmarks and best practices we describe apply broadly to all industries that seek to “cloudify” their offerings.
Regardless of industry, companies need to better understand and more confidently embrace the ways in which subscription- and consumption-based models will change their business, the new strategies that will apply, and the new practices they will need to establish. The companies that embark on this journey with a mix of vision, innovative products and services, and patience can achieve the financial upside that ultimately drives higher enterprise value—as long as they recognize and mitigate some significant short-term implementation risks.