Emersion chief gives short shrift to big subscription billers

Wanting to get into managed services but not sure how to bill? Subscription billing may be increasingly common but it is also one of the most complex areas for invoicing.

This is not limited to IT. Look at The Dollar Shave Club, which delivers razors to customers each month. Zuora – a global leader in enterprise subscription billing – often talks about the subscription economy in which business models shift from selling widgets to selling products as a service. If you’re in Australia, however, Zuora is not the only option for cloud-based subscription billing. In fact, talking to Paul Dundas, it’s not even the best option.

Dundas runs Emersion, a Melbourne-based subscription billing software company that sells to MSPs and telcos. Dundas sees Zuora as “simplistic” next to Emersion’s flagship Cumulus, as well as overpriced.

NetSuite, which recently added subscription billing, also gets short shrift from Dundas. “They haven’t built a platform for voice, SNMP (management protocol) and data feeds. We started in wholesale ISP and cut our teeth on millions of transactions a month while these other apps have come from a retail environment.”

It’s unusual to find a successful cloud accounting company in Australia operating since 2005 with barely a mention in the press. Unsurprisingly the biggest question most customers ask Dundas is “why haven’t we heard of you?”

Emersion scales from one man-band MSPs to telcos such as TeleChoice and NBN-style network operators, for which it handles the interfaces and processes for managing DSLAMs and IP address management.

Emersion goes quite deep on the tech stack. It handles accounting and CRM; website integrations for new customer sign-up and account management; activation of mobile phone SIM cards and more.

Impact of consolidation

Emersion’s home market of ISPs is tipped to shrink in Australia. The number of ISPs has stayed steady at 1100 but the big guys are on the acquisition trail, Dundas says. “It creates opportunities for us. The big guys need help because they’ve bought a new product suite or acquired companies with in-house solutions.”

Another booming area is in MSPs. The move to subscription products such as Microsoft Office 365 and Azure has made it easier to add other recurring billing services. Many of Emersion’s new customers are resellers of ISP services, such as VoIP and VPN. “MSPs are cognisant that the key relationship is the customer. Allowing another vendor in for voice or data is a threat to their growth,” Dundas says.

The key change in the MSP space is the move towards a per-seat environment rather than per machine or server. If a company employs 50 staff with an average of three devices, it only wants to pay for 50 licences. “People are moving aggressively to a per headcount model,” Dundas says.

There is no public record of the number of MSPs in Australia. Emersion has 500 MSPs in its prospect pipeline and dozens on its books. These customers make between $500,000 to $20 million a year and include Anittel and New Zealand-headquartered Datacom.

International expansion is planned for FY2017 through software partners. For example, Emersion is the first subscription billing program endorsed in the Xero platform. The deep integration covers bank reconciliation, two-way payments and general ledger.

Although Xero was built for small businesses, Emersion found a way around its soft transaction limits. The popular cloud accounting program tops out at 10,000 invoices a month. So Emersion tracks thousands of invoices every day in its own system and creates a summary transaction for Xero’s accounts receivable showing what’s been paid.

Xero CEO Rod Drury announced at Xerocon 2016 last week that the cloud accounting company was moving up the chain to companies with 200 seats. Good news for Emersion and its growing ambitions. 

Fact file:

Head office Melbourne
Established 2005
Top executives Paul Dundas (CEO), Martin Edge (CTO)
Headcount 15
Sector Subscription billing