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Model N Inc., a maker of revenue management software, says it has adapted its products to deal with the pricing complexity of physical and digital services. This meant making a system that can incorporate all the different ways a product is priced, such as subscription, outcome-based and risk sharing.
To illustrate the problem Model N is addressing, Zack Rinat, the founder and CEO of the firm, described a vendor who sells a hospital bed with sensors that monitor patient movement and can detect falls. Instead of selling a bed as a one-time transaction, the bed is now sold as subscription, pricing which is also based on how well the bed reduces patient falls. The pricing model may include a sale as well for software that links the bed to nursing stations.
The primary market for San Mateo, Calif., Model N's revenue management software is life sciences, but it also serves high tech, the manufacturing and the semiconductor industries. It reported $131 million in revenue last year.
Michael Townsend, an industry analyst at IDC, said Model N is the biggest revenue management software vendor in the life sciences area, especially after acquiring Revitas Inc. last year, the number two vendor in this space.
A big push for this firm has been making revenue as a cloud-based service, or what it calls its Revenue Cloud. "The cloud is really the platform that will enable companies to digitally reinvent themselves," Rinat said.
Most of Model N's customers use SAP and Salesforce, but its revenue management software can work with other ERP systems. The products include Model N CPQ (Configure, Price and Quote) that allows taking better advantage of new financial management pricing models, as well as specific revenue clouds for its other verticals.
Townsend said it will be a productivity advantage for Model N customers to move to its cloud revenue management platform. "It's going to improve their ability to connect with other data [sources]," he said, as well as give them improved analytics.
Israel's Priority Software ERP adds Azure cloud
Another firm emphasizing the cloud is Priority Software Ltd., an ERP provider that largely serves the SMB market.
Founded in 1986, Priority is based in Israel. It has over 8,700 customers either on premises, or in the cloud, but is a relatively new arrival to the U.S. market.
Priority recently announced that its ERP platform will be deployed and managed as a "premier solution" on the Microsoft Azure cloud. Its platform is already available on Amazon Web Services (AWS), and the firm will continue to support that platform as well, according to a spokesman.
In January, Priority announced its acquisition of Acclivity, a New Jersey-based software developer known for its AccountEdge software, a small business accounting software platform for Mac and Windows desktops.
Ted Rohm, a senior ERP analyst at Technology Evaluation Centers, said the firm is a major ERP provider in Israel with a large market share in that country. The firm is trying to go after the same type of market other cloud-based ERP providers, such as NetSuite, are targeting, he said.
Rohm said Priority's pricing is reasonable, but they don't have a lot of U.S. resellers who know about them. "They really got to work to get into the U.S. market and there's so much competition," he said.