| 1 | www.blulogix.com HOW TO CREATE A MONETIZATION FRAMEWORK FOR YOUR BUSINESS Success in the digital economy requires that organizations move beyond traditional ways of doing business while accelerating market-facing responsiveness. Increasing competition and shifting market dynamics complicate revenue predictability. Developing a Monetization Mindset™ empowers businesses to translate organizational expertise into products and services that respond to market demand and drive profitable revenue growth. | 2 | www.blulogix.com WHY DOES MONETIZATION MATTER? There’s little dispute that digital transformation has affected nearly every aspect of B2B commercial activity. Success in the digital economy requires that organizations move beyond traditional ways of doing business while accelerating market-facing responsiveness across all functional areas. Increased competitive pressures and shifting market dynamics complicate revenue predictability. There- fore, the ultimate measure of effectiveness will be how efficiently and accurately organizational expertise is translated into products and services that generate market demand and drive profitable rev- enue growth. In other words, organizations in the digital economy have no choice but to become monetization-focused. In real terms this means businesses must hone or develop skills related to: – Identifying what customer’s value and align- ing new offerings to meet these demands – Expanding organizational awareness of monetization activi- ties beyond the finance, accounting, and billing departments – Creating an organizational “monetization mindset.” – Articulating and implementing new busi- ness practices that cross operating areas – Leveraging the economics of the digital market- place to create new product and service offerings – Optimizing sales and customer engagement strategies to capture recurring revenue opportunities throughout the customer lifecycle versus “milestone” billing events – Evaluating existing business processes, resourc- es, data flow, systems, and to create an opti- mum environment for monetization activity WHAT’S A MONETIZATION FRAMEWORK? A Monetization Framework is an organization-specific planning tool which details the decisions, processes, activities, systems, and metrics that will be used to develop monetization as a business discipline. The Monetization Framework serves as a strategic road map and aligns the organization around universal operating princi- ples. This white paper is intended to provide a high-level summary of the Monetization Framework development process. Depending on organizational bandwidth and timeline, development of the Framework can be a corporate exercise or facilitated by a third-par- ty entity. WHAT’S MONETIZATION MINDSET? The terminology “Monetization Mindset” is a way to quickly refer- ence the operating activities and organizing principles of a business which has embraced monetization as a strategic imperative. It assumes cross-functional and organization-wide involvement when setting goals, aligning operations and making decisions related to monetization. If a Monetization Mindset could be objectively mea- sured, it would be an indicator of the degree to which the actions detailed in the Monetization Framework had been implemented. Other indicators that a business has successfully created an organi- zational Monetization Mindset include: - Documented changes to existing activities or implement- ing new business practices that affect monetization - Differences in individual and group performance metrics that relate to monetization outcomes - Observed changes in organizational behav- ior as monetization becomes a common talking point both strategically and tactically - Operational changes in areas traditionally not associat- ed with billing and revenue that can articulate and act related to their role in affecting monetization strategy. “Monetization is how efficiently and effectively market demand is created and translated into revenue, profits, and competitive differentiation. The process of monetization reaches across the organization; from product development, marketing, sales, finance, billing, even into customer support. Monetization is not a single product, but a business discipline that combines business processes, tools, and skilled human resources to efficiently and effectively create and translate market demand into revenues, profits, and competitive differentiation.” - MGI Research | 3 | www.blulogix.com GETTING READY How is the organization operating now? Any organization setting out on the path to develop a monetization business discipline is well-served to consider their current business operations versus the structure, processes, and activities that are needed for long-term success. The following B2B Monetization Maturity Model will begin to map where your organization lands on a continuum of monetization activity. This model is not intended to be a prescriptive; instead, it is designed to give you a head start on prioritizing areas of focus and iden- tifying operational gaps before the work begins to develop a customized Monetization Framework. LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 BUYERS CUSTOMERS SUBSCRIBERS LIFECYCLE RELATIONSHIPS BUSINESS PROCESS & TECHNOLOGY SILOS SYSTEMS ECONOMIES OF SCALE OPTIMIZE RELATIONSHIPS WITH INSIGHT TRADITIONAL PRODUCT-CENTRIC PROCESS-CENTRIC DATA-ENRICHMENT GO TO MARKET Single/disconnected purchases 1-to-1 Invoice to payment relationships License fees & maintenance agreements Recurring payments / revenue SaaS software offerings / Digital products Direct Sales Onboard and provision remotely for hosted services Subscriptions / Bundled features and plans Accelerate speed of go-to-market with new offerings Online Sales Inbound demand generation & inside sales "Best-of-need" feature bundling Use Buyers' Journey and usage insight to create new offerings Re-engage channels / Expand indirect channels Focus on retention and expansion SUPPORT Call center customer service Account management portals Self-service customer management Personalized customer portals / Insight enriched PRICING Quoting & Proposals Procurement negotiation Cost plus Unit pricing Monthly recurring revenue Usage counting and rating Metering Focus on customer acquisition Subscriptions Bundled feature plans based on product Personalized experiences Hybrid packaging and pricing models Usage intelligence PROCESS FOCUS & METRICS Automate processes DSO AR Aging COGS Improve effi ciency and self- service Get rid of information silos Invoicing speed DSO PCI Compliance Improve provisioning Bundle product features Product iteration cycles LTV Negative churn Profi tablity CAC Align offerings with customer value drivers Cost of revenue Product utility Churn risk Growth & Profi tability Predictive insights TECHNOLOGY & PLATFORMS Excel Premise based or hosted accounting & GL Quickbooks 1st Generation SaaS Billing Software Subscription management Revenue recognition True multi-tenancy monetization platforms Data-optimized architecture B2B MONETIZATION MATURITY | 4 | www.blulogix.com What areas of the organization need to be involved? Before formulating a plan of action, it’s essential to document the “current state” of activities, processes, systems, resources, and outcomes. This current state analysis can then be compared to a desired “future state” to identify gaps and develop a prioritized working plan. When developing a Monetization Framework, it is suggested that the “current state” and desired “future state” be assessed for the following areas of your business. PRODUCTS & SERVICES : What do you sell? What business are you in? How do you set prices? Do you have a pricing strategy? What the current dynamics of the broader marketplace (com- modity, growth, mature, niche, etc.)? CUSTOMERS: Who is your customer? How do you engage across the entire customer lifecycle (quote-to-cash-to-retain)? How do customers engage with your business to select and purchase? PROCESSES: What parts of the organization are involved in the customer engagement lifecycle? Who are the key stakeholders, processes, inputs, and measures? SALES & MARKETING: How do you sell? How complex is your transaction? Do you use channels or direct sales? What pricing autonomy does the sales team have related to deal dynamics? What’s involved in introducing new products? SYSTEMS: What are the technology and systems that support your entire customer engagement lifecycle from marketing to retention, including ongoing transaction and revenue manage- ment? DATA: What data sources are currently part of your monetiza- tion activity? Is there an opportunity for new monetization by using data differently? Where is data coming from? Where is the data needed? What are your organizational capabilities regard- ing data storage and management? (Each of these topics will be explored in detail in the following section. ) SUCCESS CHECKLIST ¥ We have considered the current state of or- ganizational Monetization Maturity ¥ There are clear strategic drivers or events sig- naling organizational readiness ¥ The initiative has CXO-level involvement AND attention ¥ A Monetization Champion has been identi- fied and appointed to lead the initiative ¥ A project plan has been created to manage the process of capturing and documenting the “current state” of key areas and generating “future state” requirements. Is this the right time for the organization? Businesses typically undertake strategic initiatives in response to a change in conditions or shifting market forces. These “inflection points” can be a catalyst for articulating a new mission or imple- menting new strategies. The following are some of the common triggers and scenarios we have observed within organizations who have embraced monetization as a strategic discipline. As you review this list, consider which of these conditions are reflective of your or- ganization and may signal some degree of organizational readiness. – Business Inflection - A significant change in business oper- ations related to a change of ownership such as an acquisi- tion, mergers, or an equity event; the introduction of new products or services associated with a significant ownership event or change; a significant industry shift related to new competitors, resources availability, or changing regulations. – Changing market conditions - Changing business models related to the continued evolution of the digital econ- omy, new competitors; regulatory changes affecting the customer base which drives product changes. – Changing Customer Engagement - Customers are asking for features, functions, products, or services that you can’t currently deliver; customer churn is higher than expected; sales are stagnating. – Executive vision - A CXO-level executive has embraced monetization as a strategic principle and drives the change; a desire to grow faster necessitates a shift in business operations; key stakeholders are pressing busi- ness leadership to drive change and impact results. Who will be your Monetization Champion? Developing a Monetization Mindset relies heavily on the creation of a knowledge culture that’s attuned to customers’ needs and focused on creating new offerings that drive growth. Strategic initiatives have an exponentially higher chance of success if a single point of contact is responsible for overseeing the formulation and implementation of related activities and projects. To that end, the Monetization Champion is an individual designated within the or- ganization to be a central point of expertise, coordination, and com- munications related to monetization. The Monetization Champion acts as a change agent and facilitator to assist with activities that span the entire organization. In an ideal scenario, this person will be a CXO-level individual or have cross-functional credibility resulting from formal appointment as the Monetization Champion by a CXO executive. The responsibilities of the role should be communicated to the entire organization, and individual performance objectives for the Monetization Champion should have related monetization components. | 5 | www.blulogix.com GAP ANALYSIS The following section provides detailed insight to assist with documenting the “current state” of organizational activities. For each area of review, there is a brief description and ra- tionale for reviewing each area, suggested monetization-re- lated questions for exploration and discussion, and a list of documentation that may need to be created (or assembled if already existing) to provide a comprehensive picture of existing monetization activity. The questions in each section offer an opportunity not only to examine current activities but also to begin exploring the desired “future state” of monetization as it relates to overall strategic objectives. These questions should be the starting point to facilitate conversations and interviews throughout the gap analysis process. You may wish to adapt these ques- tions for your business. PRODUCT & SERVICE PORTFOLIO  Description: What do you sell? What business are you in? How do you set prices? Do you have a pricing strategy? What the current dynamics of the broader marketplace (commodity, growth, mature, niche, etc.)? Product strategy is key to understanding go-to-market require- ments as they relate to monetization. Exploration & Discussion:  What are our current offerings?  What’s our revenue cycle by product or service of- fering. Is there commonality or complexity relat- ed to your product portfolio monetization?  Would our revenue processes be defined as simple or complex?  Where is there opportunity in the market? What are the key drivers of future opportunity? How does the market oppor- tunity tie to strategic goals and monetization objectives?  What new products and services are currently planned? How will these offerings be monetized?  Are there customer needs that we now can- not meet because of operational issues?  Are there any external industry trends or regulatory chang- es that create business imperatives for our organization or customers? How will this affect monetization, if at all? Artifacts & Checklist: W Current product catalog with inventory and pricing information W Current services catalog with provider and pricing information W Pricing documentation and use cases: W What’s billable? W Product/pricing tables W Bundled item/packaged pricing - pack- age components and pricing formulas W Sales and net profit by product or service line W Strategic planning and market positioning documentation “Fueled by the Digital Revolution, the very nature of competition today is changing radically. Product inno- vation and growth opportunities are only bounded by the imagination. Once-protected pools of profit are now at-risk. Product cycles and market opportunities come and go in less than five years, with the majority of ben- efits accruing to a limited few. Organizations of all sizes want greater transparency and control in their business relationships. The demand for custom pricing models and flexible terms is counter-balanced by the challenges of delivering these capabilities at scale. Across most key world economies, the number and complexity of regulatory and audit requirements are mounting while the timeframes to reach compliance are getting shorter. Against this rapidly accelerating backdrop, product innovation and revenue optimization are the critical levers for growth and profitability. In the face of these opportunities and threats, progressive organizations are focusing on key processes and new monetization tools to sharpen their edge.” - MGI Research | 6 | www.blulogix.com BUYERS & CUSTOMER PROFILES  Description: Who is your customer? How do you engage across the entire customer lifecycle (quote-to-cash-to-retain)? How do customers engage with your business to select and purchase? Monetization processes that are influenced by customer insight are yield more relevant decision data and drive revenue growth. Exploration & Discussion:  Who is our ideal customer? Can we demonstrate who our most profitable customers are?  What is the length of our average customer relationship? Can we measure the lifetime value of our customer relationships?  Is churn a concern for our business? How do we mea- sure churn? What is the cost of churn? At what point in the lifecycle of a customer are we most at risk for churn? What opportunities does this signal?  How have our customer needs changed in the past year, three years, or 5 years?  What is changing for our custom- ers that could signal future needs?  What is the basis for how we charge customers? Is there a way to align this more with how cus- tomers assess the value of our solution?  What is the experience for our customers from the time that they identify a need and choose our products/ services?  What is the onboarding and provisioning experience?  Do we use customer touchpoints after the sale to in- crease relationship or revenue opportunities?  Are we using intelligence about product/ser- vice usage to identify new opportunities? Artifacts & Checklist: W Buyers’ Journey Map W Customer churn and retention data W Revenue by customer and product lines with trend data W Anecdotal data related to customer engagement challenges W Customer survey data CUSTOMER ENGAGEMENT PROCESS  Description: What parts of the organization are involved in the customer engagement lifecycle? Who are the key stakeholders, processes, inputs, and measures? The customer engagement lifecycle is the heart of your monetization activities. Exploration & Discussion:  What happens between the time we provide a price quote/ pricing information and the collection of the first payment from a new customer? Also known as Quote-to-Cash  What areas of the organization play a role (no mat- ter how small) in this Quote-to-Cash cycle?  What are our operating metrics relat- ed to the Quote-to-Cash cycle?  How is billing currently managed? Does this differ by product line, customer type, or some other variable? How does the Quote-to-Cash process change with each variation? Why do these variations exist?  How do we collect payments and report the associated revenue? How does this impact our Quote-to-Cash activities  What other points of engagement happen outside the Quote-to-Cash process - such as support, profes- sional services, account management? Map these pro- cesses as they relate to the Quote-to-Cash cycle.  What issues do we currently have related to quoting, billing, payments, invoicing, provisioning, on boarding or other key stages in the Quote-to-Cash process?  Are any third-parties involved in our Quote-to-Cash process? What are their roles and our dependencies on their activity? Artifacts & Checklist: W Quote-to-Cash Process Map with details about stag- es, activities, resources, issues, opportunities W Process dependency maps for Quote-to-Cash W Systems map showing Quote-to-Cash dependencies W Manual versus automated process maps W Process gap/issues documentation and resolution alternatives | 7 | www.blulogix.com SALES & GO-TO-MARKET  Description: How do you sell? How complex is your transaction? Do you use channels or direct sales? What pricing autonomy does the sales team have related to deal dynamics? What’s involved in introduc- ing new products? Sales processes and introducing new offerings affect monetization complexity and process requirements. Exploration & Discussion:  How do we decide on pricing? Have we tested different pricing strategies? What works, what doesn’t and why?  What autonomy does the sales team have concern- ing pricing and negotiation? How are sales pric- ing changes handled at the billing level?  How does our pricing affect the way we col- lect payments & revenue?  Are there external pricing drivers that im- pact our ability to offer pricing flexibility?  How are new offerings presented to customers?  When a new offering is created how do we determine pricing?  When a new offering is created what’s in- volved in setting up billing and payments?  Does our billing capability enhance or lim- it our pricing flexibility?  Do we have indirect or third-party channels that use our pricing or collect revenue on our behalf?  Do we have commission or revenue sharing process- es that impact our billing and invoicing activities?  Are there current product development objec- tives that are blocked due to operational issues? Artifacts & Checklist: W - Pricing documentation and use cases W - Commission plans for internal teams and channels W - Channel and agent revenue sharing agreements W - Industry pricing surveys W - Product development road map and timeline W - New product launch process map - includ- ing Quote-to-Cash dependencies W - Indirect channels Quote-to_Cash process map with depen- dencies and overlap with the organizational map SYSTEMS & TECHNOLOGY  Description: What are the technology platforms, systems, and software applica- tions that support your entire customer engagement lifecycle from marketing to retention, including ongoing transaction and revenue management? A comprehensive monetization technology platform will support the process and information of your monetization strategy. Exploration & Discussion:  What systems are key to our customer engagement lifecycle?  What constraints do we have related to sys- tems, both purchased and built in-house?  Are there regulatory requirements that impact our systems?  What technology investments have been made that are fixed/unchangeable, why?  What technology investments have reached their “end of life” or are currently not supported?  Where are we lacking systems and using manual workarounds?  What reporting tools are we using? Do we have the information we need and is it timely?  Do key stakeholders in the Quote-to-Cash process have access to the information and functionality that they need?  Are there investments we have made in technology which is abandoned or lost due to organizational or sys- tem issues? Do any of these impact Quote-to-Cash?  What systems integration issues do we have? Can data move between systems easily? Where are the gaps in our information flow?  Our primary system of record for customer information is...? Artifacts & Checklist: W - Systems application map for Quote-to-Cash show- ing dependencies. Potential applications to include: - CRM - ERP - Order Management - Ticketing - Provisioning - Inventory - Invoicing - Rating & Metering - Payments - Channel Management - Commissions - Customer Support - Web Portals | 8 | www.blulogix.com W Detailed System Inventory for Quote-to-Cash including solution name, investment date, licensing terms, environ- ment, process impacts, functional ownership, issues, etc. W Third party systems map (with process dependen- cies) and detailed listing (payment gateways, tax en- gines, shipping, channel partners, etc.) W Functional specifications for emerging systems requirements and goals for new technology platforms (What needs to be fixed, replaced, supplemented? Which processes will be im- pacted? Who are the users/roles/responsibilities? etc.) DATA FLOWS  Description: The digital economy relies on data. Monetization is no different. What data sources are currently part of your monetization activity? Is there an opportunity for new monetization by using data differently? Where is information coming from? Where is the data needed? What are your organizational capabilities regarding data storage and management? Data is the fuel of the monetization engine. Exploration & Discussion:  What data is essential for our Quote-to-Cash process?  Where does this data come from? Where is key data stored?  How is data exchanged between systems internally?  What external sources of data are part of our Quote-to-Cash processes? How is data exchanged with external systems?  Where do we have gaps in our customer, revenue and billing information? Where does this information exist, if at all?  Are there opportunities to provide new custom- er value if we had different data or insight?  Do we have an organizational data strategy? Artifacts & Checklist: W Data flow map showing Quote-to-Cash process dependen- cies (inflows and outflows, internal and third-party systems) W Data flow map showing Systems dependencies (data trans- fer activities, manual processes, flat files, APIs, etc.) W Data repository architecture and depen- dencies, system-of-record maps W Data security & integrity documentation, policies, and procedures NEXT STEPS: DRAFT THE FRAMEWORK: Once your organization has completed the review of your key operations, processes, systems, and activities – as outlined above – the organization will have the necessary information to create a draft Monetization Framework. You can download the BluLogix template for a Monetization Framework from our website or create an outline that works for your organization to compile your findings. ORGANIZATIONAL BUY-IN & KICK-OFF Once the initial Framework is drafted, the Monetization Cham- pion should circulate the documentation for internal review and discussion to ensure that it reflects the input and concerns of key stakeholders. Once the appropriate input is solicited and incorporated the project should move into the subsequent phases of implementation and change management. With your Monetization Framework as a guiding document, the organiza- tion will be well-positioned to develop monetization as a core business discipline and impact strategic objectives. DIY OR GET HELP? The effort related to the development of a Monetization Framework should not be underestimated. Therefore, it’s worth considering whether or not to engage an external mon- etization authority to help with facilitation and development of the Monetization Framework. External facilitation can help keep a project on track from a focus and bandwidth perspec- tive. External facilitation also injects third-party objectivity into the process and may spur fresh thinking about challenges and issues. A third-party may also be able to spot potential pitfalls, while also offering benchmark data and anecdotal case studies about the monetization initiatives of other organizations. | 9 | www.blulogix.com BluLogix helps businesses in the digital economy frustrated with billing, aggregate data to automate processes, generate new customer intelligence, and revolutionize growth. Founded in 2013, BluLogix delivers BLUIQ - the only true multi-tenant SaaS monetiza- tion platform in the market. Our proprietary technology and data-enriched monetiza- tion approach has helped 100+ companies get beyond billing and focus on identifying value-aligned relationship and revenue opportunities.  www.blulogix.com  +1 443.333.4100  info@blulogix.com If you are ready to start working on monetization initiatve for your organization, it’s time to get to know BLUIQ. The BLUIQ Platform, powered by BluLogix, is engineered to identify and address the full continuum of B2B monetization requirements including, billing; product, service, and catalog management; go-to-market activ- ities; on-boarding & provisioning; customer engagement; and advanced analytics. And because BLUIQ is the only true multi-tenant, SaaS monetization platform in the market today we can deliver solutions for complex business requirements where other vendors have failed. We think differently. Our platform doesn’t stop at just delivering the best billing functionality. We go beyond billing to enable your business with data-enriched monetization. In short, this means that our proprietary technology approach optimizes data differently to close efficien- cy gaps, deliver true automation, generate customer insights, and adequately address the needs of complex B2B revenue models. We like to listen. You’ll notice from your first interaction with our team that understanding your business is our primary goal. Even our sales process is different. We won’t rush to show you a demo of BLUIQ until we fully understand what issues your business wants to address. And because we have a true multi-tenant solution, we can show you a demo environment tailored to your needs. No more wondering if the solution will really work in your business environment - we will prove to you that it can. We love complexity. Our data-centric architecture enables BLUIQ to manage a broad variety of billing and revenue scenarios from simple sub- scription billing, to hybrid usage and flat fee scenarios, to complex indirect channels, commissions and revenue models. We support intricate parent/child account hierarchies and extensive integrations with external systems. We deliver results. Since 2013 we have been providing sophisticated billing and monetization solutions for 100+ satisfied clients. Our success rests on our commitment to fully understanding your business needs. From the start of our sales process and throughout implementation and beyond, our team of monetization experts is committed to addressing your business needs and empowering your business with a plat- form to drive growth. And because we believe so firmly in our ability to create a positive impact for your business, we are the only vendor to offer “shared upside” pricing that scales based on your growth. PUT YOUR BUSINESS ON THE PATH TO MONETIZATION. GET IN TOUCH TODAY GOOD LUCK AS YOU EMBARK ON CREATING YOUR MONETIZATION FRAMEWORK. SHOULD YOU HAVE QUESTIONS, PLEASE DON’T HESITATE TO GET IN TOUCH WITH THE BLULOGIX TEAM. WE’D BE HAPPY TO EXPLORE HOW WE CAN HELP YOU WITH ANY ASPECT OF YOUR MONETIZATION INITIATIVES - INCLUDING THE DEVELOPMENT OF YOUR MONETIZATION FRAMEWORK. PLEASE VISIT OUR WEBSITE TO LEARN MORE ABOUT OUR MIND METHODOLOGY™ APPROACH TO SERVICES AND OUR DATA-ENRICHED MONETIZATION TECHNOLOGY PLATFORM BLUIQ.