PROS Outperform Conference 2023

Where Is Services Management Growing?

MGI Research recently assembled bottom-up TAM forecasts for three markets comprising the services management space: Service-as-a-Business (SaaB), Professional Services Automation (PSA), and Finance Automation for Services Organizations (FASO).

The Service-as-a-Business (SaaB) report aggregates the total projected spend for 14 services management markets over the next five years, filtereddown to only include spending that can be attributed to services-related revenues:

• Project Management, General Ledger, Skills Management, Automated Revenue Management, Time Management, Agile Billing, Resource Management, CPQ, Expense Management, FP&A, Order Management, Customer Success, Procurement Management, and Inventory Management.

These are the key functional components needed to manage automation of service delivery as well as the basic financial management elements to maintain an economic relationship with clients.

• This is not a complete list but represents the basic minimal set of capabilities needed to manage a services organization.
• The total, five-year SaaB spend (2022-2026) is projected to reach $283.40 billion.

The Professional Services Automation (PSA) report aggregates the total projected spend for eight professional services markets over the next five years, filtered down to only include spending that can be attributed to services-related revenues:

• Project Management, Skills Management, Automated Revenue Management, Time Management, Agile Billing, Resource Management, CPQ, and Expense Management.

While the SaaB framework addresses the broader use cases of digitally transforming services businesses, PSA is the main avenue for improving the productivity, efficiency, and precision of running a services organization.

• The total, five-year PSA spend (2022-2026) is projected to reach $173.55 billion.

The Finance Automation for Services Organizations (FASO) report aggregates the total projected spend for eight financial services markets over the next five years, filtered down to only include spending that can be attributed to services-related revenues:

• General Ledger, Automated Revenue Management, Agile Billing, Expense Management, FP&A, Order Management, Procurement Management, and Inventory Management.

These are the key functional components needed to automate the core financial elements of services management.

• The total, five-year FASO spend (2022-2026) is projected to reach $192.33 billion.

PROS Outperform Conference 2023

600 PROS customers and partners gathered in Denver last week to swap CPQ and price optimization stories and learn from PROS. Like at every other user conference, AI/ML, and generative AI in particular, were on the agenda. This will be the case at every industry event this year. After a standard intro to ChatGPT, PROS walked through a handful of use cases – good, bad, and so-so – for generative AI. Attendees found the discussion enlightening and useful.

PROS pioneered the revenue management and dynamic pricing software application space and today it serves nearly every airline in the world. The high concentration of transportation industry attendees can make Outperform feel like an airline industry event.

• Due to the long-standing connections between airline pricing execs and Operations Research (OR) academics, there is a willingness to share amongst attendees.
• This conference is exceptional for the depth of customer case studies presented.
• A few major airline trends are: a) shift to dynamic pricing, b) embrace of “willingness to pay” science, and c) ancillary revenue streams.

In CPQ (MGI 360 Rated: 53, Neutral Outlook), there were several announcements. The ICP for the CPQ product centers around a $100Mil to $1Bil revenue, midsize, physical goods manufacturing customer seeking a CRM-agnostic solution that emphasizes the “C” in CPQ. PROS aims at the value-oriented buyer. Although it has unique strengths overall, PROS has yet to unveil a comprehensive strategy for enabling end-to-end monetization (e.g., a vision for AMP or even an integrated quote-to-cash story). With a CMO now in place for a year, this vision may yet materialize.

Under the Hood | Attention in the business community will move very quickly from “what is AI/ML and generative AI?” to seeking concrete examples of use cases and risk/benefit analysis. Progressive user organizations we met with are seeing triple digit ROI in early POCs.

The airline industry historically has been in the vanguard of pricing innovations (customer sentiment towards carriers is a separate issue). Pricing leaders outside of transportation would be well-served to pay close attention to the methods and approaches being rolled out by airlines today.

PROS has multiple tailwinds:

• Inflation and continued supply chain disruptions are driving companies to adjust prices dynamically and manage margins carefully;
• AI is at the top of every CEO and CIO priority list;
• The airline business is flying high; and
• Other CPQ vendors are in flux.

Each of these alone would be enough to propel a CPQ/pricing vendor to outperform the industry average growth rate. While PROS recently increased financial guidance, the company’s projections are surprisingly modest in comparison to its opportunity.

The bottom line | As a leader in airline and commodities industry price optimization, PROS is uniquely positioned to bring revenue optimization models to a wide swath of B2B industries.

• To date, the synergies between its airline-focused pricing solutions and the CPQ solution have been limited.
• The company is betting on its re-vamped, cloud-native product architecture, the promise of delivering faster time to value, and buyer demand for AI to propel growth.

We’re putting the finishing touches on our new batch of 360 Ratings in Agile Billing, which will include quantitative and qualitative vendor evaluations of 35 leading billing providers. It also includes analysis of 16 Honorable Mention vendors who did not receive a 360 Rating.

We plan to publish all 35 new 360 Ratings on June 28. 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.

The comprehensive Agile Billing Buyer’s Guide & Market Ratings Report is slated for publication later this summer.

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.

Stay tuned for 360 Ratings covering (partial list):

• LogiSense
• Salesforce
• Evergent
• Certinia (formerly FinancialForce)
• BillingPlatform
• Chargebee
• Gotransverse
• Stripe
• and more.

In the meantime, revisit our most recent 360 Ratings:

• Icertis in Contract Lifecycle Management (CLM)
• Good Sign Solutions in Agile Billing