University of Chicago
Type of paper: Thesis/Dissertation Chapter
Tien Tzuo was the chief strategy officer at Salesforce.com and K.V. Rao was head of strategic marketing and business development at WebEx. Both Tien Tzuo and K.V. Rao worked on building their respective billing solutions that was a big barrier to many SaaS companies. Once realized that this is a huge unaddressed problem for SaaS companies, they saw this an opportunity to exploit this new e-commerce niche in the SaaS Industry, thus creating Zuora. Cheng Zhou, the head of Bliss joined them and they were able to obtain $6.5 million start-up investment from Benchmark, a venture capital company, and Benioff, Tien Tzuo’s former boss, the founder of Salesforce.com Analysis of Zuora Inc as a business
Tien Tzuo and K.V. Rao founded Zuora to address the need for billing efficiency. They are aware that there’s an increase in products being offered as a subscription service (i.e. Netflix offering a monthly subscription for a library of shows and movies, Zipcar offering a pay as-you-go utility that eliminates the need to buy cars etc). Their vision is to provide an e-commerce platform that provides a low-cost, state-of-the-art and highly efficient billing systems. Before the launch of their billing module, they tested their program to 5 alpha customers. Their feedback caused Zuora to create a payment module that handles payments, and signed a partnership contract with PayPal. With their launch in October 2008, their Z-billing product sold to over 70 customers. In January 2010, Zuora released another product, Z-commerce, a billing platform aimed towards cloud developers What is wrong?
Zuora currently faces the following threats:
•The rise of Cloud Computing
•Offline Subscription of Zuora’s current services offered by their competitors such as AT&T or Zipcar
•Given the constant change in the market dynamics of the technology industry, Zuora must be able to ‘quick think’ of opportunities in order to strengthen its current position as a major player in the SaaS Industry What is the impact?
•The rise of Cloud Computing
oZuora shouldn’t be thinking of Cloud Computing as a threat just because the IT industry had not yet clearly defined what role cloud computing will play. oCloud Computing is very advantageous to Zuora because all cloud services needed a billing and payment solutions and Zuora, with its state-of-the-art, highly efficient and low-cost billing platform, can differentiate itself with the rest in the Saas Industry by combining its platform with cloud computing •Offline Subscription offered by AT&T or Zipcar
oWith the offline subscription offered by AT&T or Zipcar, they still present a disadvantage because pricing for services was more complicated than pricing for products especially when time dimension was introduced. Thus, with offline subscription of billing and payment, introducing a new pricing for subscription systems could take as long as 6 to 12 months and cost hundreds of thousands of dollars •The constant change in the market dynamics of technology industry