When to Use This Approach

Recurring services with predefined plans (i.e., subscriptions) form one of the most common types of cloud services in the market. While we may be familiar with a subscription service from our personal or professional lives, there are specific characteristics that must be met in the context of the interworks.cloud platform to classify a service as a subscription.

For the interworks.cloud platform, for a service to qualify as a subscription, it must meet the following characteristics:

  • Fixed cost: the service must be offered at a fixed cost per available software unit (such as per unit, license, mailbox, user, etc.), usually charged in advance.
  • Fixed periodical time intervals: the service at regular intervals, usually monthly or annually, over a specific period of time (billing cycle).
  • Renewed automatically: at the end of each time interval, the service is automatically renewed and continues to be offered to the end-user without the need for prior intervention.
  • Offered perpetually: as part of the automatic renewal, the service is offered perpetually until the end-user cancels the subscription.

If your service is automatically renewed but under a conditional renewal process (e.g., auto-renewed for two years only as part of a contract), we will need to examine additional parameters of your service regarding billing, provisioning, etc.

Please note that if your main subscription product is complemented with add-ons, these are supported but should follow the same characteristics of the principal recurring service. Add-ons are activated inheriting the billing cycle of the basic product

A good example of a service that meets all the above criteria is the subscription product of Microsoft Office 365 as:

  • it is offered at a fixed cost, e.g., $20 per user
  • it is offered at a fixed billing cycle: per month
  • it is automatically renewed every month until the user cancels it
  • it is offered with several add-ons that inherit the same subscription characteristics.

If your service does not meet one or more of these criteria, then you need to create a different service manager, according to the type of service you want to offer:

  • Recurring Service (configurable service – no default products)
  • Consumption-based service (Pay-Per-Usage)
  • License-based services (Assets)

Decisions you need to make based on your distribution model (tier-1 or tier-2)

The way you distribute your services directly impacts the configuration of a service manager as it is related to how the various involved parties are synchronized with each other, which action takes place first if prior registration is required at the vendor’s website etc. For example, you may need to synchronize a reseller entity with the respective entity in the provisioning engine or only the end-user account (the account that will actually use the service) with an account in the provisioning service. Hereby, we distinguish two tiers of distribution models:

  • Tier 1: you sell directly to end customers, i.e., the final users of the service
  • Tier 2: you offer your services to resellers who, in turn, provide them to end customers

For example, if you are a Tier-2 reseller, then the configuration of your service manager needs to take into account specific implementation parameters, including the synchronization of actions of the entities involved (e.g., the activation of a service when a reseller orders it on behalf of the end customer may require various sync steps, for example, first the end customers is synced with the reseller, then the reseller with their distributor, or vice versa, etc.). In addition, in a Tier-2 model, the reseller may need to first register with the vendor before being eligible to purchase services. 

Clearly, the process is much simpler if you offer your services to end customers (i.e., the final users of the service).

So, before moving on, which is your distribution model?