Disruptive Pricing

Disruptive Pricing

There have been comments with regard to the dangers of using Excel in the GRC environment. So what will make people move from Excel to cloud-based technology services? What will shift the inertia?

Perhaps people fear change. Perhaps companies have entrenched systems. One thing is certain. Technology will disrupt the way people do things in companies. The right factors have to be in place before a tipping point will be reached. One of the contributing factors in accelerating the role of technology in transforming the GRC landscape are pricing models that are truly pay-as-you-go.

Many companies are battling to understand what cloud computing can do for them and how this technology can be used in a far simpler way than current systems. Often these companies use outdated systems that are complex to use and offer complex and onerous pricing models. To disrupt these entrenched systems will require a lot more than efficient technology, rapid development and the ease of cloud based services. To disrupt the entrenched mind and systems, will require pricing models exciting enough and flexible so as to leave no choice.

Pricing is perhaps, more than the technology, both an obstacle and catalyst in disrupting the GRC landscape faster than current trends. An outdated pricing model will act as an obstacle and a new flexible pricing model will act as a catalyst.

To succeed in acting as a catalyst we need to offer a pay-as-you-go model that takes into account the scalable nature of cloud based technologies. Practically, pricing a pay-as-you-go model is very complex and needs to be supported by internal factors such as rapid development and a low cost base. This pricing model relies on scale.

The temptation is to recover build costs over the first few clients and to look at profit on the service over the first clients. This would be short sighted as service take up could be compromised by short term aggressive cost pay back models and greed to make profit on initial clients. Rather, we should be building our pricing models by looking at recovering build costs over a period and profit based on the total assumed client uptake, a more realistic pricing model and more attractive to the client. Encourage take up of the service by offering a pay-as-you-go model built on transaction usage and priced by amortising the costs over the total client take up.

To disrupt the status quo, it is not good enough to have a brilliant technology service. We need to insist that our pricing models are as light and fluid as the technology supporting it. Pricing models are complex and will no doubt evolve to support the technology.