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 a late adopter 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:

Research spotlight | Survival of the Fittest: Managing Extreme Economic Uncertainty

Are we headed for a recession? Stagflation? Or are calmer waters ahead?

  • There are no crystal balls – it is impossible to predict exactly what will happen as global economic conditions struggle to stabilize. However, scenario planning can provide waypoints toward a handful of likely (probabilistic) outcomes.
  • In times of uncertainty, it is crucial for tech buyers and vendors to adopt the Vivaldi approach – a durable business plan for all Four Seasons.
  • Our latest research note summarizes the opportunities and threats that technology buyers and suppliers are likely to face during the economic downturn, as well as tips to make the most of the slowdown.

A story you can’t afford to miss | Banking on consolidation

  • After the collapse of Silicon Valley Bank and this week’s takeover of First Republic, regulators are flashing back to the 1980s S&L crisis.
  • In hopes of averting a wide-spread loss of banking confidence, the White House and US Fed are contemplating new rules.
  • New regulations, plus the possibility of a relaxed penalty for crossing the $250B threshold, may lead to an acceleration of bank sector consolidation.
  • Expect to see increased scrutiny on all balance sheets – not just banks. Corporates are holding long-term T-bills that are currently underwater.

On the horizon | 360 Ratings™ in Agile Billing

  • Our comprehensive Agile Billing Buyer’s Guide & Market Ratings Report is coming this summer. But the individual company ratings will come out even sooner.
  • We expect to begin publishing individual ratings this month (May).
  • The upcoming batch of 360 Ratings will include quantitative and qualitative vendor evaluations of 34 leading billing providers.

Tune in to MGI | Monetization Masters

  • Last week, MGI’s Andrew Dailey was the expert guest on the inaugural episode of Monetize360’s Monetization Masters podcast.
  • Andrew discusses the Agile Monetization Platform (AMP) and the value of transforming back-end processes into positive representations of a company’s brand. For customers, a bill can represent anything from a confusing reconciliation headache to a refreshingly painless and reliable data source.
  • Monetize360 is building a community focused on the monetization space. Finance, billing, and revenue leaders share their insights around creative, data-driven monetization strategies.

 

Now let’s dive a bit deeper.

Research Spotlight

A white sign with arrows

Survival of the Fittest: Managing Extreme Economic Uncertainty

The early months of 2023 have been marked by relatively high inflation, uneven GDP growth, and growing anxiety about a possible economic collapse. Within the technology sector, valuations are crashing, VC funding for Series C-F companies is drying up, and C-suites are tightening their belts with multiple rounds of RIFs.

Why it matters | Scenario planning gives strategy teams and executives a tool for anticipating the unexpected – and having plans in place for all probable outcomes.

  • In times of economic uncertainty, it is crucial to adopt the “Vivaldi” approach – managing for success in all Four Seasons.

Zoom out | In the current economic slowdown, tech vendors face risks such as extreme competitive discounting, loss of key personnel, added scrutiny on large transactions, prolonged payment cycles, and of course, free-falling valuations and the IPO market all but frozen.

  • Tech buyers, meanwhile, face constrained budgets, organizational reluctance to start new initiatives, longer approval cycles, and a much stronger focus on ROI and TCO.

Our latest research note provides actionable advice for buyers and sellers to make the most of murky economic conditions. Download a companion research note to review our predictions for the 6 most likely global economic scenarios.

On the Horizon

A sunset with the text MGI 360 Ratings in Agile Billing

We’re putting the finishing touches on the upcoming series of 360 Ratings in Agile Billing. This round of ratings highlights new entrants, analyzes the future of wounded mega-vendors, and de-constructs the hype around usage and consumption billing models.

We expect to begin publishing individual ratings this month (May), with the full Agile Billing Buyer’s Guide & Market Ratings Report slated for publication in June.

How it works | MGI 360 Ratings are comprehensive vendor evaluations that assess tech vendors on their abilities to bring value and innovation to customers. These quantitative ratings score suppliers in five key dimensions (Product, Management, Strategy, Channel, and Finance) on a scale of 1-100.

Who should be excited | Buyers, sellers, and investors seeking to understand the billing market’s leaders and laggards – and the distinct capabilities that define them.

The comprehensive Agile Billing Buyer’s Guide & Market Ratings Report will include all 34 ratings, as well as 16 additional “Honorable Mention” vendors who will not receive formal ratings.

Stay tuned for 360 Ratings covering (partial list):

  • Recurly
  • LogiSense
  • Salesforce
  • BillingPlatform
  • Zuora
  • Chargebee
  • and more.

In the meantime, revisit our most recent 360 Ratings:

A Story You Can't Afford to Miss

The Alliance Bank building

Banking on Consolidation

Banking titans are collapsing. Small and medium-sized banks are also struggling. (Western Alliance, for instance, lost 11% of its deposits this year.)

  • To attract deposits, smaller banks will be forced to offer higher interest rates, while their cost of capital is also increasing. Meanwhile, the bigger players like JPMorgan Chase and Bank of America aren’t seeing an exodus of deposits – and they have bigger and stronger balance sheets.
  • The Fed, under pressure from the White House, is considering changing the rules for midsize banks.

Proposed changes could include stricter capital and liquidity requirements, curbed compensation packages, and tougher assessments to test banks’ hardiness in the event of a severe economic downturn. (Think Scenario C or D in our model of likely near-term economic scenarios.)

  • The cost of regulatory compliance may soon lead to a prolific period of consolidation. A finance sector consolidation will undoubtedly impact the tech sector – finance represents more than 10% of IT spend.

Between the lines | Expect to hear more about balance sheet quality and corporate liquidity.

  • Like SVB and First Republic, many companies are holding long-term Treasury notes that are presently underwater. If these notes are held to maturity, there is no problem.
  • However, if an exogenous event occurs and the company needs immediate cash liquidity, the notes will be sold at a loss.

Why you should care | The balance sheet quality issue could generate Black Swan (low probability, high impact) events that negatively affect tech companies’ ability to deliver reliably high-quality service.

  • What if 20% of your enterprise cloud services and SaaS providers were impacted by this balance sheet time bomb?
  • Would tech buyers be forced to pursue a more hybrid approach to cloud adoption?
  • Many companies are already re-thinking their approach to op-ex and cap-ex, with some orgs shifting back towards a preference for capital expenditures.

So What Have I Missed?

The Topical 20 | Our most recent and relevant research that will help you keep your finger on the pulse of AMP disciplines.

1. Going Global With E-Commerce

2. Tech Trends: Mapping the Software Industry

3. Configure-Price-Quote (CPQ) TAM Forecast 2022–2026

4. The Future of CLM Is Data-1st

5. Declouding: Will Curiosity Inspire Action?

6. Dirty Data Kills!

7. Q2C Success: What Does It Take To Achieve Excellence?

8. 2024 Tech Budgets Preview — Webinar

9. Here Comes Usage! Adopting & Optimizing Consumption Business Models — Webinar

10. The Agile Billing Top 50 Webinar

11. The Agile Billing Top 50: A Buyer’s Guide

12. MGI Forecasts: Service-as-a-Business (SaaB) Software Global TAM Forecast 2022–2026

13. MGI Forecasts: Finance Automation for Services Organizations (FASO) Software Global TAM Forecast 2022–2026

14. Survival of the Fittest: Managing Extreme Economic Uncertainty

15. The Global Tech Market Is Bigger Than You Think

16. Is Software Still Eating the World?

17. Not a Typical Recession: Making Sense of the Global Economy

18. Use Case Note™: Opencell in Agile Billing

19. 360 Rating™: Icertis in CLM

20. The 13 Deadly Sins of Agile Monetization

and 32 other Use Case Notes!

 

The Evergreen Archives | Curated past research that is still pertinent today.

1. Quote-to-Cash Is Dead; Long Live Prospect-to-Disclosure

2. What Every CEO Needs to Know About Subscription Business

3. Evolution of MoR into Monetization as a Service

4. Mediation 2.0: Taking on the Data Challenge in Agile Billing

5. The Six Stages of CLM

6. Headless eCommerce Architecture: Is eCommerce Losing Its Head?

7. How to Scale Monetization Globally

8. Ten Digital Payment Trends Every CEO Must Understand

Tune in to MGI | Don’t forget to check out MGI’s latest podcast appearance on Monetize360’s Monetization Masters.

As a frequent speaker at industry events and speakers, MGI is always open to new opportunities to facilitate more valuable discourse in the monetization landscape.

Feel free to contact us via the button below to discuss your next speaking engagement.

That’s all for this issue of The Margin. If you’ve made it this far, we’ll certainly see you next time.

Warm Wishes, MGI Research

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