CFO Surveys Reveal: Companies Capitalizing on Subscriptions & Services Economy

As-a-Service Business Is Growing

Read almost any survey or research paper touching business models: service transformation is clearly visible.

There may be several terms used when discussing growth of services and new service business models, for example: 

• Service transformation
• Recurring revenue business model
• Service business growth
• Subscription and services economy
• SaaS
• Internet of Services
• Digital Services
• Disruption 

No matter the terms used, the growing trend towards selling and procuring as-a-service is clear.

Below are two examples: a survey by CFO Research and a study by Forrester.

CFO Research Survey Shows High Service Business Growth

A survey conducted by CFO Research in Q1 2017 aimed to evaluate the impact that the economy’s shift to a subscriptions and services focus has on CFOs:

• 71% of respondents reported that their companies derive half or more of their revenues from services, either directly or linked to product sales.

• 55% said that services generate a higher percentage of revenues today than they did five years ago.

• More than a third of the respondents stated that subscription-based services have become significantly more important for their companies over the past five years. Roughly the same number sees those types of services as an important part of the company’s growth plan over the next two years.

The report summary states that “CFOs who recognize the significance of the change in business focus can in fact drive more revenue from services, such as professional services, subscription-based services, software/apps delivered as a service, managed services and usage-based contracts.” 

Forrester Research Paper Zooms in Recurring Customer Relationships and Recurring Revenue

According to Forrester´s Q3 2017 published “Recurring Customer and Billing Management” report service transformation is ongoing in most industries and 29 percentage of organisations are aiming to introduce recurrent revenue-based business models in the next 12 months.

Forrester research states that the biggest business and technology trends drive recurring customer relationships: “The age of the customer is pushing companies of all sizes and across all industries to adopt more recurring relationships with their customers. Subscriptions aren’t for every company — but recurring relationships are.”

“Business models now include hybrid models that combine one-time transactions, subscriptions, and usage/consumption rating.”

Is Software in Place to Support New Business Models?

The mentioned CFO study concluded that only 17% of CFO’s believe they have the proper operational and technological infrastructure in place to cope with an increase in service-related revenues.

Forrester’s research findings suggest that 40 percentage of companies planning to launch new business models see also a need for new technology to enable those models.

Further, Forrester concludes that also the focus in supporting software has shifted away from traditional subscription billing software towards supporting companies to design, launch, and manage any business model.

This is why modern software like Good Sign's Billing and Monetization Software has been created: to digitalize any service business model offering recurring revenue end-to-end digitalization capabilities.