Zuora has taken the wraps off Zuora Central, a cloud-based hub for coordinating order-to-cash operations across an enterprise's systems. It's the result of a top-secret project that's been in the works for two years, and it will define the next 10 years of the company, CEO Tien Tzuo said during a keynote at the company's Subscribed conference this week.
Zuora sells a series of SaaS applications for businesses that run on a subscription model. The company sees the "subscription economy," which has already enjoyed robust growth over the past decade, as set to explode thanks to changing consumer expectations about how they want to buy, as well as trends such as the IoT (Internet of things), which is allowing enterprises to create new types of subscription service and product offerings with the use of connected devices and data analytics.
Central uses a microservices architecture and sits between a company's CRM and ERP systems—of which there can be many indeed due to acquisitions, divisional requirements, runaway procurement practices and other types of technical debt. The clutter makes it difficult for companies to make pricing and packaging changes, for example, without a lot of manual labor addressing each system. It's the kind of problem that stifles any company looking to become a dynamic, subscription-based business, Tzuo said.
In hub-and-spoke fashion, Central connects to all these systems by leveraging order-to-cash engines decoupled from Zuora's applications. The engines target subscription orders, subscription accounting, subscription metrics, a central pricing engine and a global payments engine.
Central will serve as Zuora's core central platform and a target for continued investment, while its six products will continue to work and be sold independently, Tzuo said. Customers who buy Central will be able to integrate it with third-party applications, such as a CPQ (configure, price, quote) system that provides specialized features not available in Zuora's offering.
Analysis: Zuora Central Is the Natural Evolution
It's notable that with Central, Zuora is making no attempt to usurp the likes of Oracle, Salesforce or Salesforce from customer environments. Rather, the strategy is to accept the messy reality of enterprise IT environments and present Central as the solution for companies looking to subscription offerings for growth.
Zuora was able to convince three extremely high-profile customers to take the keynote stage during Subscribed: General Electric, Caterpillar and Ford. While it wasn't clear whether they are initial Central customers (their appearances came before Tzuo's big reveal of the platform), that seemed to be the implication.
GE has been selling its IoT software platform Predix on a subscription basis, while Caterpillar's CAT Connect initiative offers digital value-added services across its construction, mining, energy and transportation businesses. Ford, meanwhile, has developed the Fordpass mobile app as part of a bid to develop deeper, ongoing customer relationships. Ford's longer-term vision sees subscription models playing a role in car ownership as well as other modes of transport. All in all, it was a solid set of references for Zuora to get onstage.
Zuora has spent the past roughly 10 years building out its application set through organic development and acquisitions (the most recent being Leeyo, maker of revenue recognition software). Central's two-year gestation period shows good foresight on the part of Zuora's leadership. Today, the GEs of the world are placing big bets on subscription business models and as they scale, a unified platform will be what they require.
Moreover, Zuora's technology is mature, as the company will make its 100th overall release this year. What to watch now is for how well Zuora Central, version one, delivers on usability and time-to-value. The last thing its target customers need is another data-integration hairball.
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