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 | Agile Billing MarketLens™

Avoid wasted time and costly mistakes. With new 360 Ratings™ and Use Case Notes™ covering the billing space coming soon, it’s a good time to review the Agile Billing MarketLens reports.

A story you can’t afford to miss | Layoffpocalypse?

  • In 2023, US tech companies have announced more than 160K layoffs.
  • Meta and Amazon just laid off more staff than previously announced, and Salesforce continues to reduce headcount. Is this a long-term trend or is it just course correction from inflated hiring in 2020-2021?
  • Were FAAMG operating with unnecessary bloat? Is it time for the industry as a whole to follow their lead and get lean and mean?
  • Is there a silver lining? Or is this just the beginning of a lengthy battle for profitability? The reality is more nuanced than the headlines.

On the horizon | State of Usage Billing Survey

  • Usage and consumption billing models are in the industry spotlight. Is it just old wine in new bottles or is there a real potential to shake up the billing market?
  • We are conducting a survey of business leaders to assess how companies plan for and adopt new business and pricing models – and usage models in particular. The intermediate results are intriguing.
  • Please take 10 minutes to fill out the survey. The results will be published this quarter.

 

Now let’s dive a bit deeper.

Research Spotlight

A graph with volume on the x-axis and complexity on the y-axis

Agility, Complexity, Volume

Zoom out | MGI MarketLens™ reports plot a select group of suppliers by two key pairs of coordinates: Agility vs. Complexity or Complexity vs. Volume.

  • These research notes allow buyers to sift through the noise in the crowded agile billing market and zero in on a few suppliers that fit their specific needs.
  • They also provide qualitative and quantitative definitions for agility, complexity, and volume.

The intrigue | Even in as crowded a market as agile billing, no two vendors are the same. Our 360 Ratings™ evaluate billing vendors’ performance relative to the rest of the market.

  • Our Use Case Notes™ define their ICPs. And
  • MarketLens reports hone in on the specifics: the number of transactions a solution can handle, what type of transactions they process, and the speed at which they transact.
  • Together, these three categories of MGI research notes provide a comprehensive and granular view of the agile billing market.

On the Horizon

A blue background with the words SurveyMonkey

The agile billing market has matured significantly in the past five years. While billing was once viewed as a painful back-office necessity, it has evolved into more of a secret weapon – a strategic differentiator whose effects on revenues and profitability are certainly felt, even when they are not seen.

Usage, consumption, and other creative business models can provide pathways to engage with new customers without the friction of upfront costs. We are conducting a survey of business leaders to illuminate how companies plan for and adopt new billing and pricing models.

The results of this survey will be incorporated into a research note analyzing the state of usage billing today, the adoption of key trends (such as post-paid consumption and recurring models), and the primary obstacles billing vendors will grapple with in 2023 and beyond.

Please take 10 minutes to fill out the survey, and you will receive a copy of the results.

A Story You Can't Afford to Miss

Letter blocks that spell downsizing

Layoffocalypse?

Does the recent spat of mass layoffs mean the tech industry will nosedive in 2023? Or is it an unfortunate but necessary lifeboat to help keep tech companies afloat during uncertain economic conditions? Zuckerberg did call 2023 the “year of efficiency,” after all.

  • US tech headcount has dropped by 6% since the start of 2022. That may seem like a lot – but small beer when compared with the dotcom era’s 23% drop.
  • Sales, marketing, and HR workers are potentially at risk. But is it really so bad in the rest of the tech sector?
  • Just as FAAMG stocks made up a disproportionate share of NASDAQ total market capitalization, these same companies “over represent” when it comes to total job reductions. When Microsoft cuts 10,000 jobs, that number looks big – but it’s still just 5% of a very large workforce. Arguably, MSFT should be trimming the bottom 5% every year.
  • A number of these companies were operating with unnecessary bloat. Salesforce has attracted attention from activist shareholders for precisely this reason (among others).
  • Many tech employee benefit packages included unnecessarily generous perks. They should have been leaner to begin with. And the headline names – Meta and Google in particular – never focused on profitability. Ever.
  • There is a significant disconnect between what Meta and Google employees (among others) were being paid, and what the market will pay today. This expectation gap mirrors the chasm between private companies’ valuations last year and what investors and acquirers are willing to pay for them today. The market has yet to balance – FAAMG workers will find it hard to get equivalent comp packages.
  • We have yet to see the real bloodletting beyond FAAMG. Privately held, venture-backed Series C-F companies who have not grown into their inflated valuations will have to find a realistic path to profitability. Many will be forced to cut costs significantly deeper than the token 3-5% reductions announced so far.

The sunny side for tech workers:

  • As software becomes increasingly embedded in every economic vertical, tech jobs remain in high demand in other industries. The “war on talent” is a result of
    • an aging workforce
    • long-term demographic trend, and
    • an undersupply of graduates prepared for the software-driven digital economy.
  • Tech workers with AI/ML experience can exhale – with generative AI’s growing popularity, companies are looking to expand in this area.
  • Keep in mind that growth in the tech industry still far outpaces global GDP.

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

That’s all for this of 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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