Case study: Cloud company bills for usage-based price model

Cloud provider Ninefold averted a potential headache trying to bill for a non-traditional self-service business model when it found Zuora, according to Ninefold chairman and co-founder, Peter James.

Ninefold, a Macquarie Telecom subsidiary launched in 2011, sells infrastructure-as-a-service (IaaS) and has more than 1,000 customers.

What separates Sydney-based Ninefold from other cloud companies is its self-service, “pay-only-for-what-you-use” business model, James told Computerworld Australia.

“Everything is metered, including storage, computing and other components,” he said. "There is no contract, minimum-spend commitment or account management, and customers can be up and running in a few minutes."

The service appeals particularly to Australian startups and other businesses that lack a large investment in legacy infrastructure, James said.

“Traditionally, in the IT world that I grew up in, you had rooms full of servers and equipment and you had a lot of people to look after it. But startups today “don’t need servers, and don’t expect to use their hard-earned cash on equipment,” he said.

However, this non-traditional business model posed a challenge for Ninefold: how to bill customers. “I always saw this as being one of the risk areas for the project.” Ninefold bills monthly, and employs complex rules for metering, he said.

James said Zuora was an attractive choice to handle billing because the California company has a similar emphasis on self-service.

Zuora, which has six staff in Sydney, also counts Servcorp, Box, Ustream and Tata Communications as customers. “I had been given the name Zuora when we were doing our market research,” James said. “The way they do business is the way we do business.”

Ninefold considered alternatives, but “Zuora was the only one we ever considered seriously,” he said. “We negotiated by phone” and in about two or three phone calls reached an agreement, he said.

Integrating Zuora’s billing platform with Ninefold’s systems went smoothly, James said. It was “done on a virtual basis ... We had their engineers in Kansas City and California working with our engineers” in Sydney, he said. “And guess what? It came in on time. It worked from day one.”

The Zuora billing system has required minimal maintenance since it was installed, James said. “While billing systems for major telcos are often an area of risk and headache, that hasn’t been the case with Zuora.”

Ninefold has barely had to take advantage of Zuora’s support, he added. The billing platform has been so “seamless” that “it’s below my radar screen,” he said. “It’s just there and sort of part of the woodwork.”

So far, Zuora has been able to scale with Ninefold’s growth, James said. “Our model is predicated on scalability, so [each customer] can scale in terms of their number of servers,” he said.

“On the individual level, the billing and metering needs to be able to scale. But also, at a company level, we’re continuing to grow.” Ninefold announced its third availability zone last week, “so we need the billing system to be able to scale with us and not to be a limiting factor.”

“So far, so good,” he said.

Follow Adam Bender on Twitter: @WatchAdam

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

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