Going usage-based with Hybris

SAP Hybris is talking up the move to a subscription and usage-based economy. But how fast is that actually happening?

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SAP Hybris recently ran a unique summit which saw, over a 24 hour period, a series of global events, a digital conference and some product news. The company invited me to the New York event to meet with customers and executives and discuss what the news was. Before I go into my thoughts, it is worth summarizing what Hybris announced.

The SAP Hybris Revenue Cloud solution, while a mouthful to say, is actually a product with a pretty simple idea. The focus of the product is to go beyond traditional quote-to-cash offerings and instead offer solutions that cover the spectrum of the monetization process -- order configuration, pricing, quoting, order orchestration and subscription billing. Hybris articulated a perspective that the rise of the so-called “subscription economy” is resulting in a need for solutions that can go beyond static pricing, and instead offer a dynamic and ongoing flexibility. Hybris suggested that in the new “outcome-based” world, a solution like this is required if organizations are to be successful in their efforts to digitally transform. Available initially in the U.S., and due for global rollout through the year, the solution will include a number of different editions for specific verticals.

Why Hybris says this is important

Hybris went to great pains to articulate a vision of a usage-based future. One of the key narratives it told was the example of a large, unnamed air compressor company which moved away from static pricing of its large industrial compressors and instead developed pricing based on the outcomes that its customers actually want -- namely, the provision of compressed air. Hybris pointed out that this example mirrors others -- most airplane jet engine manufacturers, or example, now use this outcome-based approach. And most of the large corporate printer manufacturers have also moved to a pay-per-print, rather than a capital outlay and outright ownership model. And in the health sector, most MRI machines aren’t owned but are rather changed on usage-based models.

“Client business models are changing, and digital is at the forefront of every customer interaction across all channels,” said Brian Walker, chief strategy officer, SAP Hybris. “With the addition of SAP Hybris Revenue Cloud to our portfolio of cloud solutions, we are ideally positioned to help clients take advantage of disruption occurring in their markets, develop new business models and focus on what really matters -- delivering outstanding customer experiences.”

Tying it back to the SAP mothership

Unsurprisingly, given Hybris’ corporate ownership, the company was quick to articulate the benefits that integration with core financials can bring. And in this assertion they are justified -- to really drive business model change, solutions need to tie all the way from the customer-facing aspects deep down into the back office. Current solutions tend to be siloed and hence don’t lend themselves to innovative monetization models and agility for the organization. This Hybris offering is deeply integrated into SAP S/4HANA to deliver a single view of the customer and products or services.

But at the same time as Hybris is talking up this deep integration and suite-based approach, it is also pushing what it calls a microservices-based approach, which sees the product decomposable so that organizations can take advantage of as many, or as few, of the individual functional modules as they like.

MyPOV

I found the micro-services pitch alongside the narrative of deep integration into SAP a little jarring. These two value propositions are, in my view, diametrically opposed and it creates a fairly difficult task for Hyrbis’ marketing folks to clearly articulate this dual proposition.

Aside from the positioning, however, my questions at the event had more to do with how far along the world is when it comes to this usage-based move. While there are undeniably some good examples of this shift, for every one of those there are hundreds, if not thousands of examples of commercial models following far more orthodox approaches.

The key question here for Hybris is how long will it take for the world to more generally follow these models -- being too early to market is as bad as being too late, and Hybris is betting that an increasing number of organizations will want to make these sorts of changes sooner rather than later.

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