The potential benefits of digital transformation are clear, but they’re sometimes outweighed in the minds of management by immediate issues and the formidable effort involved in restructuring a business. BluLogix is a platform that prides itself on being a real partner to its clients in their transformation journeys. The company’s CEO Youssef Yaghmour spoke with MGI Research analyst Igor Stenmark at the 2021 Monetize Forum to tell our audience more about the innovations in monetization today which are worth the trouble they take to implement. Youssef covers what it means to have an end-to-end automated monetization platform, why subscription and usage can secure lasting revenue, and how companies are taking the difficulties of the pandemic as opportunities to improve upon traditional methods.
How will our concept of subscription evolve and expand in the future?
How can businesses struggling in the pandemic better position themselves to outlast it?
What is the ideal use case for a platform like BluLogix?
Youssef is the founder, CEO, and chief architect of BluLogix, a platform that provides companies with more control over their business growth and adaptability on their subscription and digital transformation journey. His over 25 years of experience in enterprise technology, business leadership, and digital transformation make him one of the foremost experts on subscription and revenue models and digital transformation in the world today.
Hello and welcome. This is Igor Stenmark of MGI Research. We are at the 2021 Monetize Forum, and for our next session, we’re going to be focusing on the topic of innovation, specifically as it applies to the area of monetization. Our guest for this session is Mr. Youssef Yaghmour. Youssef is the CEO, co-founder, and chief architect of a company called BluLogix. When we think of BluLogix and the team behind it, including Youssef, we think of people who are really intellectual top guns when it comes to monetization—enterprise software in general, but monetization specifically. So, welcome, Youssef. We’re happy to have you here. Maybe to begin, could you give us a sense of BluLogix—just introduce the company, what you guys do, and what really differentiates you?
Thank you, Igor, and thank you for the kind words—we appreciate the recognition in the market. BluLogix offers a turnkey monetization solution, and by solution, I don’t only mean the platform. This is probably one of the strong areas that we focus on and where the market recognizes BluLogix as a provider of technical excellence. Basically, there are two aspects to that. First, the platform itself is a comprehensive platform which provides an end-to-end, automated solution for the monetization process, starting from the CRM on one side and ending with the ERP on the other—so, CPQ, order management, activation, billing of all kinds (subscription, recurring, consumption), with the advanced rules that you require to manage all of that. There are good examples that we can talk about during the presentation. Additionally, there’s revenue management. With revenue management, you need to manage not only the revenue recognition by the ASC 606 standard but also the aspect of margin analyzer. How much money is the company really making on every product, every channel, every customer, and from every provider? That’s the platform side.
The other side is that we really focus on partnering with the customer to take them through the digital transformation journey, the monetization journey. We don’t just provide them a platform and say, “This is how it works. Go ahead and figure it out yourself.” We will spare the time and effort to actually partner with the customer and take them through the full journey. In the onboarding process, we engage with them in a detailed discovery process that identifies their current state, how they’re doing business today, and their business objective. We will actually share some of the best practices and experience that we have or see with some other case studies and take them through that journey. So, we basically partner with them every step of the way to make sure they are successful in that. That’s probably what categorizes and identifies BluLogix.
You guys do a lot of different things. You have a lot of different capabilities in your core platform. How would you describe the ideal use case for your solution? I know that you focus a lot on certain industries like unified communications. You also have a kind of a specialty in handling very complex, channel-oriented business models. What is your ideal use case because, obviously, you can’t be doing everything?
Of course. I think our unique offer in the market is when the service that the provider offers to their market has some degree of complexity, where they actually have to manage services beyond just a 10.99 per month subscription—rather, they have to control and manage details about the service offered; they have to mediate a lot of data from different sources; they have to provision services; they have to interact with multiple platforms either to activate the service or to receive the consumption, billing load, or workload that the customer is billed for; they have to exchange data with multiple platforms.
We started talking about the CRM on one side and the ERP on the other. Take an example of the CRM. We have a CPQ functionality, but the CPQ really works hand in hand with the CRM. You manage all the opportunities in the CRM, and you manage all of your marketing campaigns in the CRM. But then, when you decide to create a quote, that’s when there has to be seamless integration. So, these are some of the areas where we are considered to be unique and where we offer very powerful capabilities.
In terms of industries, we obviously have a large number of customers in the UCaaS and Cloud space. That has recently expanded to also cover infrastructure as a service, and we consider these as one block. Most of the MSPs in the US market usually offer all three services. So, that’s where we started, and we still focus on that a lot. Recently, we expanded into SaaS, and we’ve managed to acquire some very reputable and large enterprise SaaS providers. An example of one of the challenges they face is that, in SaaS, they have to manage the licenses, the entitlement, the roles, the access to the platform, who can use what and what kind of data, volume, users, et cetera. There’s complexity in how you manage that service experience as well as customer experience, and that’s part of what we do. We also do have some customers in the IoT space.
You’ve mentioned the channel, and in the channel, we have some unique capabilities that allow you to build an n-tier channel structure to serve your agents; serve your resellers; give them branding capability; and give them full autonomy where they can manage their customers, own their customers, offer their brands in branded invoices and even the branded customer access portal. We offer that in multiple languages. We handle tax complexity across the different channel levels so that resellers and agents don’t have to suffer because they don’t know how to handle compliance, how to handle tax filing, et cetera. So, these are some of the capabilities that we cover.
Great. I want to kind of drill into this main topic of our session on innovation. Customers are being told that innovation is great by business press and by us, the analysts. They want it and kind of understand intrinsically that innovation will help them hopefully differentiate their business and create a sustainable advantage over time. But in our practice, the question I hear in the field a lot from customers and clients is, “Listen, I want to innovate, but in the meantime, I have 10% invoice dispute rate. I’ve been leaking 5% of my revenue on $5 billion. I don’t have enough resources, and I don’t have enough people—when do I have time to innovate?” Then, the pandemic happens.
Given all that as backdrop, all this top-line drive to innovate, what have you seen in the field? How are companies innovating? How are they perhaps leveraging some of the monetization tools that you offer in order to innovate? Tell us some war stories. What’s happening?
When we talk about subscription, some people think that it’s something relatively new to the market. I still remember the days when the concept of application service provider was introduced to the market, and this was probably more than 15 years ago. I’m sure you remember that. Actually, ASP, or Application Service Provider, was nothing but a multi-talent, subscription-based SaaS—that’s basically what it was. It wasn’t popular, and the market didn’t understand it, so it never took off. That’s really what subscription is all about today. Another example that crosses my mind is the concept of the shared corporate jet. There are many corporates today that use corporate jet service, but they don’t really own a dedicated jet. They share the ownership of that. That concept of time-sharing of cost and time-sharing of assets is at its core the concept of subscription which we refer to as subscription today.
It wouldn’t be surprising if, in the very near future, this concept will transfer and transform into something more recognized as subscription. So, instead of four companies sharing a jet, you would be subscribed to a company that offers that service, and you just pay a monthly fee or some usage-based fees in order to go ahead and use that. That’s really subscription. So, when you talk to those service providers that are transforming their businesses, the advice is (especially because of the pandemic), “Yes, go ahead and transform your business from the conventional concept where you have to sell on-premise, where you have to sell perpetual service, where you do it the conventional way. Forget that old method because the pandemic forced people into not making upfront payments.”
We have a customer that actually used to be in the licensing of large enterprise platforms, customer support, and annual maintenance. Because of the challenge of the pandemic at the beginning of the year, they were unable to add a single contract to their revenue for six months. The only option they had was to say, “Well, let me redefine my services.” That’s the real innovation that you have to do—forget the old way and methods that you used to use and start offering your services either on consumption, on-demand, or as some kind of an annual/monthly/quarterly subscription. That actually helps your customers who are having some difficulty managing cash in the way they used to.
So, be innovative about how you repackage your service offering to the market instead of operating through upfront payment and permanent or on-premise solutions. Think of how you can help your customers pay monthly or quarterly for services like that. Part of that innovation is actually the positive impact it has on the valuation of your company because subscription revenue is more permanent, it’s repeatable, and it’s recurring, so it’s more guaranteed than one-time payments for you to create your business around. That grows the business, and that brings you more traffic which brings you more customers. One piece of advice I would very strongly urge customers that are embarking on this journey to consider is to try to use fresh team members that are not necessarily the same people you used in the conventional business. You need some kind of fresh blood to help you transform and go through that journey.
As far as avoiding the challenges of billing disputes, revenue gaps, and unpredicted margins, think about which platform is right for you. If you can identify a platform that has most of the engines that you’ll need for your monetization journey, that’s the platform that you should choose. Obviously, before you do that, look at your business needs and do your homework on the various platforms. I want to sound neutral when I’m offering that advice. You know, we would love for people to come and join us when they make that decision, but my advice to everyone is, “Do a little bit of homework. Look at some use cases that those providers can offer you just to make sure that they have a proper understanding of your business.” That’s my honest advice to those that are considering the transformation journey. You want the most automation you can have, the engine that can be comprehensive, and the provider that can be a true partner with you throughout the journey—not a company that is only a platform provider, where that’s the end of the relationship.
So, to summarize, some of the things that you’ve mentioned are: get a platform, get a fresh set of talent (basically try to search and recruit top talent), and really position your business for being able to handle recurring/subscription/usage-based pricing models in order to then move the company forward and reposition broadly. Is this realistic in the pandemic-type environment we are in now in 2021? Companies are always trying to balance, saying, “I want to innovate, but I can’t right now. I’m just too busy. I’ll innovate at some point in the future.” Do you think this is realistic?
Well, I can give you a couple of examples just from existing opportunities of companies in the hospitality business. They have seen a 40% drop in their business because of the pandemic challenges, but this pandemic is going to be over—hopefully, in the near future.
This is not the end of the business. This is not the end of life. So why not take advantage of the situation to do some kind of restructuring and some kind of process re-engineering so you can be more efficient, you can be more scalable, and you can look for new revenue streams? That’s exactly what they did. They took a step back, reevaluated what they could do, and decided that instead of, for example, selling a point-of-sale system to a restaurant or a hotel and collecting the money upfront while the hotel itself is actually having a more than 40% reduction of their revenue, they would change that to, for example, seasonal subscription billing. They would say, “I’m going to charge you for the two peak seasons when you sell the service to your customers, and when you have traffic with customers, that’s when you pay me.”
Of course, doing this may sound like you would be taking a hit on your revenue, but you’re actually protecting the long-term relationship that you have with your client. That’s a very good example of how you can be creative about repurposing and restructuring your business. You’re still providing the same point-of sale-system, you’re still providing the same voice services that you were providing to that hotel, but you’ve changed the packaging and changed the way you’re collecting money from the customer. By doing that, you’ve made the customer’s life easy in this case. So, that basically strengthens and creates a new dimension in your revenue stream for you, maybe not immediately but in the near future. This is a must-do exercise, Igor, because the pandemic was just a kind of warning. It’s something to wake us up to a system that wasn’t going to last a long time. Customers were not going to continue to pay two or three million dollars upfront for a perpetual license or an on-premise infrastructure.
Today, there are big players (though I’m trying to stay away from giving you examples of actual names) in this space in the industry—for example, in the technology space—that are no longer just selling boxes for an upfront price. They are actually shipping the box, you pay as you go, and they take care of the maintenance. And, in a couple of years, they probably ship you another upgrade, and you don’t have to worry about managing all of that. That means your IT infrastructure has completely changed because you’re no longer having people actually manage these services. So, recognizing and admitting that the industry is changing, the technology is changing, the service offering is changing—this is the time to restructure and be more innovative. Turn the challenge and downtime that the industries are witnessing because of COVID into something that would be very productive for you in the future.
Youssef, we’re almost at the end of our session. I wanted to ask you one closing question and thank you for this discussion here. This is more related to BluLogix specifically. What is one thing that every C-level (CEO, CFO, et cetera) must know about BluLogix that they don’t know right now?
We would like for them to know that we are partners with them. We’re not here to simply just sell them a license for software (on a subscription basis because that’s how we offer our technology). We’re not here to sell it to them and walk away. We would like to partner with them. When we talk to the CEO, the first thing that we want to ask is, “How do you grow your business? How do you add new revenue streams?” The service that we offer is actually to focus on that. We will help every CEO through that journey and, for that matter, the chief revenue officer and the chief business officer as well.
Revenue growth is one area that we focus on as we embark on a new journey with each of our customers. We try to give our partners use cases: “Here is how you could do it. Here is how you can repackage.” On the CFO side, we also show companies that we partner with that we can make the platform and the journey very scalable, the business repeatable. The delivery of service is streamlined and unified, so their journey is scalable, their service offering is scalable, and the management of that infrastructure and that journey is very efficient and very profitable, with the cost efficiently managed. Giving the CFO visibility into how much money that CFO is making when every product from every customer is a great value is one of the areas that we focus on.
Thank you, Youssef. We appreciate you participating in the forum. I’d like to remind everybody to visit BluLogix’s booth in the virtual exhibits area, and we hope to see you back at the next Monetize event, Youssef. Thank you very much.
Thank you, Igor.