Zuora Inc Case Study

EXECUTIVE SUMMARY

Zuora Inc was founded by Tien Tzuo in December 2007. Zuora has the first-mover advantage in SaaS billing and payment industry. Their objective is to provide an efficient e-commerce platform in billing and payment system at a lower cost. Their first product was Z-Billing, then only within 9 months of operation, they already had 70 clients. Currently, they carry four product line. They found tremendous success in SaaS technology and now considering to expand in a new market segment. Their challenge is to figure out which market segment, small or large, will provide the quickest growth opportunity which entails limited funding, while continuing to strengthen its lead market position. Zuora is considering whether to continue to only focus in billing in SaaS industry, capture the broader cloud computing trend, or capture the broader subscription opportunities. There are business risks and economic issues that Zuora needs to consider before making the decision.

Upon further analysis of the available scenarios for Zuora and weighing down the pros and cons of each option, it is recommended to keep balanced strategy between risk and growth by going with the cloud computing trend. To mitigate the risks involved in implementing this, Zuora must still maintain the existing SaaS clients and provide quality products and services while the new product is being implemented. Also another thing to consider for this project to be successful is that this change will need involvement from the stakeholders in the company.

CURRENT SITUATION

Zuora was incorporated on 2007 by a team that were already working on building solutions for their respective employers. Because of their knowledge and of the system, they understand the market needs for affordable and scalable billing solutions. Their vision was to provide an e-commerce platform that provides this service at a low cost.

Zuora’s opted to go with SaaS strategy to achieve their vision. It eliminate the need for companies to invest a huge amount for a good billing software solution. The company first launched a product called Z-billing. This product create and handle different types of billing method. Within 9 months of their launch, they acquired 70 clients, which is a huge accomplishment at a very short span compared to their competitors.

The following are other products they have released successfully as well:

• Z – Payments: subscription payments businesses to manage recurring payment lifecycle.

• Z – Force: billing and payment services for Salesforce.com 51,800 customers

• Z – Commerce: this is for Java, Ruby and Force.com developers to tailor its billing, payments, and subscription service management needs.

Zuora has been a successful start-up business in the SaaS industry. In their first 14 months, they established themselves as the market leaders. Achieving something that some of their competitors who are already five years in the industry have failed to achieve. Presently, the economic downturn and rapid change in technology created some issues for them. The emergence of cloud computing has forced them to re-evaluate their future strategy. They have to identify the market segment that would provide the quickest growth. By tapping into a new market, Zuora also has to ensure the availability of funds. Since the economy is slow, funding cost is high and difficult to get. It is facing a choice between a too narrow market that would limit growth and too broad market that cause Zuora to lose focus.

Zuora’s struggles within the SaaS industry originates from the emergence of cloud computing. They have realized that billing processes are very complex and cloud computing can make this process easier for companies. It will provide their client accessibility to the system at a low cost and does not required an upfront cost. Also it eliminates the need for immediate upgrades. They have changed the way companies do business.

Zuora Inc.’s Strengths

• First-mover advantage in providing SaaS billing services

• Experienced and knowledgeable management team.

• The culture is built on consensus along with accountability with every decision

• Strong sales and marketing strategy.

• Ability to raise financing successfully

• Utilize low-cost, high value off shoring strategy

• Best in class billing solutions and payments processing

• Ability to release new versions of its applications every six to eight weeks

Zuora Inc.’s Weaknesses

• Uncertain about future financing due to economic crisis

• Do not have their own data centres

• Most employees hired are “jack-of-all-trades”, rather than having a staff with expertise to perform specific tasks

• Target market is difficult to determine since it has not been defined by the industry.

CRITERIA

Zuora needs to consider the following criteria to assess which scenario or project will successfully affect the growth of their company and achieve its key business objectives.

• Financial implications - It is important to analyze the cost and benefits of whichever route it takes. The benefits has to add value to the company so that it can achieve its financial objective. This is important because the objective of such decisions is to guarantee that the benefit of the new scenario will outweigh its implementation cost. Zuora also has to take into consideration how each scenario requires a minimal or vast amount of funding and how it will affect their future revenue before action is taken.

• Organizational Feasibility – Zuora has to realize that each scenario will affect its workforce, regardless if it decided to continue to focus on SaaS billing industry or go with the broader approach. The company is growing and it should be ready to expand its organizational structure.

• Market potential – SaaS adoption continues to accelerate. Zuora could face fierce competition from other SaaS upstarts looking to steal market share. However, as a leader in SaaS, Zuora has already