Q2C Is Dead, Long Live Prospect-to-Disclosure

Welcome to The Margin, a newsletter designed to keep you on the leading edge of monetization.

In business, the difference between being ahead of the curve or slow to adapt is anything but marginal. The Margin aims to be the most useful, timely, and incisive ping that hits your inbox all week. It includes critical research and analyst insights to inform short and long-term decision making.

Here’s what you need to know:

Tune In to MGI | Here Comes Usage!

Upstart billing vendors with a primary focus on usage billing have raised more than $130 million in venture funding since 2020.

We think another $200-500 million in investment could pour into this space in the next 36 months.
Beyond VCs hyping usage to promote their portfolio companies, the area of usage and consumption billing has not been analyzed in detail.

Usage billing ranges from the very simple to the highly complex. Our recent 30-minute webinar on usage billing examined:

the key capabilities that separate a simple usage capability from a complex one
the headwinds and tailwinds that shape the adoption of usage/consumption pricing (we view usage as a subset of the overall Agile Billing market)
how users and vendors can build a realistic roadmap to comprehensive usage billing.

View the webinar on-demand here.

Our next webinar takes place on September 19 and will provide an updated economic forecast and IT investment outlook – just in time for FY24 budget planning season. Register here.

Research Spotlight | Q2C Is Dead

The concept of Quote-to-Cash (“Q2C”) originated in the 1980s, in a world of monolithic systems and batch processing. In 2016, we redefined Q2C as “Prospect-to-Disclosure” to reflect a more expansive, modern view of the resources and capabilities now available to support an organization’s drive to create demand and convert it into revenue and profits while completing the necessary reporting and disclosures.

Prospect to Disclosure (“P2D”) is a nonlinear cycle that expands the breadth and depth of this crucial capability.

This piece of research is just as relevant today as it was when we first published it.

We’re preparing an updated research note that will examine how organizations can achieve excellence in Q2C. For context, read about how “Quote-to-Cash is Dead” here.

On The Horizon | What Does Excellence in Q2C Look Like Today?

What does a successful Q2C implementation look like? What does failure in Q2C mean? How can your organization become best-in-class?

An upcoming research note will explore how organizations can assess their Q2C functionality and provide concrete steps to build a realistic roadmap to excellence.

Stay tuned – we plan to publish this update next month.

Now let’s dive a bit deeper.

Tune In to MGI

Here Comes Usage! Adopting & Optimizing Consumption Business Models

If you missed our webinar on usage billing and consumption business models, don’t worry – it’s available to view on-demand here.

This webinar provided a 30-minute crash course on usage billing, mediation, common usage challenges, and how to build a realistic roadmap to introducing and optimizing a consumption-based business model.

Here are a few key takeaways:

Usage billing is not a market, but a feature of the existing Agile Billing marketplace.
- Its popularity is being driven by its ability to capture value that would otherwise be lost – a vital capability in times of economic uncertainty.
Billing vendors who say they can provide usage could mean they have a very simple offering or a very complex one – with myriad capabilities in between.
- An accurate understanding of the components that enable usage, such as tiered pricing, volume purchasing agreements, quick-time/real-time sources, and rating/metering, ensure you are investing in a solution that can actually meet your organization’s needs.
- Many of the emerging usage billing solutions are lightweight and unproven.
More than 60% of recent survey respondents say they are using some form of usage billing now, or plan to deploy it in the next 12 months.
- Of those respondents with a consumption model, 0% have a business model solely dependent on usage.

For more on usage billing, who can provide it today, and how it fits into the large Agile Billing landscape, check out the Agile Billing Top 50 buyer’s guide.

September is just around the corner (hard to believe!). MGI Research will be attending a number of major industry events in September and October, including Dreamforce, Workday Rising, SuiteWorld, TSIA, and Money20/20. Let’s meet up in person – contact us at [email protected] to set up an analyst meeting.

Research Spotlight

Q2C Is Dead, Long Live Prospect-to-Disclosure

Quote-to-Cash (Q2C) is not a new concept. It’s commonly understood as the series of steps between quote generation and revenue collection, including sales quoting, contracting, order management, billing, invoicing, and payment.

An MGI Research note from 2016 – Quote-to-Cash Is Dead, Long Live Prospect-to-Disclosure – makes the case for a more comprehensive approach emphasizing broader and deeper capabilities spanning all the way from prospecting to revenue collection and financial/regulatory disclosures. We dubbed this expanded concept “Prospect-to-Disclosure” (P2D).

P2D can be thought of as a nonlinear, organic cycle that describes how demand is created, captured, and translated into revenue, profit, and brand differentiation.

In a frictionless enterprise with a comprehensive view of P2D, the key functions operate not as isolated islands, but as an integrated whole.
Today, many organizations still limit themselves to the outdated, linear Q2C approach (which is why this note from 2016 is evergreen).
Many solutions purporting to cover “quote-to-cash” in fact do not cover even a dated view of Q2C, let alone P2D.

Why you should care | Our research indicates that expanding organizational focus from Q2C to P2D can shorten sales cycles and product time-to-market, minimize revenue leakage, reduce order processing cycle times, enhance flexibility, improve accuracy, and increase sales per customer by 7-15% — among other benefits.

Download the research note here to learn how broadening your understanding of Q2C can provide a major strategic boost to your organization.

On the Horizon

An individual working on a computer and ipad

What Does Excellence in Q2C Look Like Today?

Now that you’ve revisited our thoughts on Q2C from seven years ago, it’s almost time for an update. An upcoming research note will examine what it means to achieve success in Q2C, the price of becoming best-in-class, and the cost of ignoring excellence.

Success in Q2C often manifests itself through sales acceleration, improved cash collections, greater customer retention, and declining or non-existent revenue leakage. Failure in Q2C takes on many forms and its impact can be far-reaching. A fiasco in Quote-to-Cash has direct bearing on the company’s competitive position, market share, growth, margins, customer satisfaction, and, ultimately, its valuation. Quote-to-Cash performance can affect cost of customer acquisition, subscriber churn, and financial performance.

Many organizations assume they can buy a few software tools to automate the Q2C process and call it a day. But this is really just step one. True excellence requires vision, benchmarking, commitment to a realistic roadmap, and perhaps most importantly, continuous improvement.

The bottom line | The full research note, slated for publication in September, will outline how organizations can:

assess their current Q2C processes and operating metrics
prioritize strategic objectives
pinpoint talent pools
invest in technology to transform a bare-bones Q2C pipeline into an accretive Prospect-to-Disclosure lifecycle.