PwC: Shift to Service-Based Structure Disrupts Software Industry

By Rob Starr, Content Manager, Big4.com

PwC has released the first of a series of reports evaluating the significant shift in the enterprise software sales model from license to services. The first paper in the series is an introductory overview of the changing ways that software has been, and should be valued, priced and delivered. Over the next several months, PwC subsequent reports will explore the issues with concentration on how these changes have and will continue to disrupt the software industry.

The reports explore PwC’s four part pricing management framework including:

• Pricing strategy: including overall pricing goals, strategy and analysis;
• Price formulation: overall/segmented pricing and policies, pricing data and rules;
• Transaction management: requests and opportunities, prioritisation and allocation, quoting and deal management, policy enforcement;
• Performance management: Sales force and partner enablement, pricing performance and management and compliance.

Mark McCaffrey, PwC Global Software Leader comments:

“We are witnessing a formative movement from a singular, traditional pricing model to a market with five pricing models. The cumulative effect on the software industry should not be underestimated,he said. “Many companies are currently engaging two or more radically different types of business models, incurring the costs and complexities of both traditional and emerging models. Those seeking pricing excellence need to anticipate what customers are willing to pay and align internal functional areas to ensure products meet customer consumption needs at the right price.”