Select Excerpts from Subscribed Podcast with Amy Konary
Amy Konary is Zuora’s VP of Customer Business Innovation and Chairperson of the Subscribed Institute. Amy has nearly two decades of experience advising companies on subscription strategies. Before Zuora she was an industry analyst with IDC, where she notably coined the term “SaaS” or “software as a service”. She launched the company’s SaaS practice and produced the industry’s first forecast. While at IDC, Amy also launched a research and advisory practice on subscription strategies. In that role, Amy realized what business leaders needed to successfully transform and lead their companies: ideas, data, and connections. The Subscribed Institute, a dedicated think tank for the Subscription Economy, provides just that.
We talk to Amy about the origins of the term “SaaS”, the Subscribed Institute, and subscription pricing strategies.
How did the term “SaaS” come about? What made you think it up?
It was groupthink, for sure. If you are not familiar with what IDC does, to put it in basic terms, IDC puts revenue into buckets and then counts them up. And the buckets have to be mutually exclusive and collectively exhaustive. Back in the late 90’s, we had in the software research group, a bucket for software product revenue, so that was license and maintenance revenue, and then a bucket for services, which would be things like consulting services, systems integration services.
We did not have a bucket for what we call SaaS today because it didn’t exist. I was on the team that was looking at these new companies that were starting to become interesting and gain attention that didn’t sell software the traditional way, where here’s your product, and you’d pay a license and maintenance fee, and then charge you professional services to implement it. They instead charged a single subscription fee that combined the product portion of software with the hosting portion. And there really weren’t a lot of professional consulting services needed in the traditional sense because it was much more one too many.
We spent a lot of time as analysts trying to figure out, well, does it belong in software or does it belong in services? And frankly, there was a little bit of arguing internally because it seemed like a really interesting thing to cover. Eventually, we landed on “Software as a Service” or “SaaS”.
You’ve recently launched the Subscribed Institute. Tell us more about it.
I joined Zuora to help our customers with the subscription business challenges that they’re facing. In June, we launched the Subscribed Institute which is a think tank for the Subscription Economy. We’re providing the framework and a foundation for a group of experts from Zuora, from academia, from our customers, and from the broader community who come together and help them solve the biggest and most interesting subscription opportunities and challenges of the day.
There are three components to the institute: i) Research and data – We are able to, at an aggregate level, see how our customers (anonymized) are running their businesses on Zuora and what is successful in terms of driving revenue and reducing churn, what is not as successful along those same lines. We’ll bring these insights to the community to help guide them. ii) Community – We have a membership community of companies and executives who actively contribute to the community so that everyone is both getting something out and also putting something back in. If you’re driving subscription business strategy at your organization, or you are doing research as an academician, or you are an academic, or you’re an industry analyst or consultant, we would love to have you as part of our community. iii) Events and engagement – We’ll have executive summits and working groups on specific topics in San Francisco, New York, London, and Paris to begin with. We’ll also have different networking opportunities to bring together the leaders of the Subscription Economy throughout the year.
Everyone that I’ve had the opportunity to present the idea to has been very enthusiastic. It’s really filling a void out there in the industry.
You are looked up to in the SaaS world as a “pricing guru.” If there’s one piece of advice that you’d give companies on pricing, what would that be?
It’s hard to think of one, but if I could think of just one, I would say keep it simple. People will push back on that and say “Keep it simple?But, one price point doesn’t work. Then you’re talking about one size fits all, and we can’t offer flexibility.”
My perspective on that is that you need to keep it simple and provide flexibility. You have to be able to provide multiple ways to buy. In many cases it’s most appropriate to look at consumption or pay per use pricing. In other cases, it’s important to have a tiering strategy. Sometimes you might want to have a free trial or premium strategy. You might have multiple industries that attribute different value to your service. So when I say keep it simple, it has to be simple from the customer’s perspective. At the back end, there might be a lot of complexity that you have to mitigate with technology.
For more on all things subscriptions, check out previous episodes of the Subscribed Podcast here