Service billing is hard. It’s hard to get invoicing and settlement overheads low. And billing is often one of the last and least thought of components of a for-fee online service systems. Billing at low overhead and high scale takes engineering and this often doesn’t get attention until after the service beta period. During a service beta period, you really don’t want to be only working out the service kinks. If you have a for-fee service or up-sell, then you should be beta testing the billing system and the business model at the same time as you beta test the service itself. It’s hard to get all three right, so get all three into beta testing as early as possible.
Billing being hard is not new news. The first notable internet service billing issue I recall was back in 1997 (http://news.cnet.com/MSN-faces-billing-problem/2100-1023_3-230402.html?tag=mncol) during which MSN was unable to scale the billing system and collect from users. Services weren’t interrupted but revenue certainly was. Losses at the time where estimated to be more than $22m.
One way to solve the problem of efficient, reliable, and low-overhead billing is to use a service that specializes in billing. It was recently announced that Microsoft Online Services (includes Exchange Online, Sharepoint Online, Office communicator online, and Office Live Meeting) has decided to use Metratech as billing and partner settlement system. The scope of partnership and whether it includes all geographies is not clear from the press release: Microsoft Online Services Utilizes MetraTech’s Billing and Partner Settlement Solution.
I suspect we’ll see more and more sub-service categories popping up over time and the pure own-the-entire stack, vertically integrated services model will only be used by the very largest services.
James Hamilton, Amazon Web Services
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