At Bluewolf, we have had a front-row viewing of the rise of cloud computing. Over the past several years the cloud has completely disrupted enterprise software, providing a delivery model that has infinite advantages over the license, install, and support models of years past.

Yet customers today need more innovation, particularly in regards to costs of the cloud and how its various vendors charge for subscriptions to their technologies. Prices today are often set by a charge-as-much-as-possible mentality as opposed to a value-based approach. This should beg the question, "How much is this actually worth to my customer?"

The vast majority of cloud-based applications are sold on a per user subscription basis. However, given the troves of data that cloud application vendors collect about their customers, it is absurd that most subscription models are stuck in a per user construct. It is essential to note that a cloud application is a single database shared by all of its customers, and the interface is a web page where every single click and swipe is recorded as a transaction.

Couldn't that data be used to provide value?

If I were the CEO of a publicly traded cloud application vendor, I might shudder at such a thought. Perhaps I'd be paranoid that the truth in the data might reveal a latent customer discontent: that my customers are actually getting less value than the subscription fees that are filling my coffers. After all, even if a customer’s users are only 50% productive, I would still receive 100% of my fees. With this mentality, cloud vendors are overlooking the single most influential buyer in most companies: the CFO.

At Bluewolf, we have strong beliefs around two concepts. First; cloud-based applications, particularly ones in the "front office" that are truly driving customer engagement, are the primary catalysts behind the current growth in corporate profits. We see this everyday with our successful global enterprise clients, such as Glaxo-Smith Kline and Stanley Black and Decker. Second; we believe that these organizations do not acheive success by simply subscribing to cloud technologies, but rather by approaching their cloud usage with ROI-based formulas, and investing in the ongoing change management required to ensure both employee and customer engagement.

From our perspective, customers are driving incredible value from the cloud. Yet we rarely see a CFO presented with tangible measurements that justify that investment, primarily because much of the data that enables this exercise is locked up in the vendors’ hands. In contrast to traditional cloud leadership approaches, I believe that there are tremendous opportunities to use value-based pricing as a way to increase rates, and to challenge non-adopters to seek similar ROI gains in their businesses.

Cloud-based customer engagement engines have delivered incredible change for businesses. Increased pipeline velocity, marketing campaign ROI, shortened order and approval cycles, reduced customer churn, increased cross-sell, increased employee collaboration and retention — these are just a few of the processes that the cloud can support and measure. Moreover, these are all metrics that any progressive CFO would gladly invest capital in when presented with the facts. Even demonstrating that employees spend a high percentage of their time interacting with an application is ample proof that they are engaged and moving the chains forward in the best interest of a company.

Client server vendors became antiquated when technology and licensing models ceased to innovate. Surprisingly, this has given rise to the current contingency of cloud vendors who are no longer spring chickens, but are in many cases, publicly traded companies bound by ninety day SEC reporting requirements.

Whether this current crop of cloud vendors will capitalize on a new pricing approach — one that creates transparency, feedback, and ultimate measures of success — remains to be seen. One thing is certain: opportunity exists for someone, either today or in the future, to turn subscription-based pricing on its head and charge customers for what they truly want: value.

What do you think about this new cloud pricing model? Leave a comment below and start a conversation, or Tweet me at @EricBerridge.

To learn more about delivering value to engage your customers, contact us or refer to our guide, The Essential Guide to Customer Obession.