This is another entry to our ongoing series of SaaS company profiles. To view more profiles click on The Players.

Zuora was founded earlier this year by former Salesforce and WebEx veterans, Tien Tzuo and K.V Rao. Taking a bit from each of their lastnames, you get “Zuora”. Based in Redwood City CA, Zuora provides a hosted billing solution for subscription businesses.

Today many companies are introducing subscription-based services rather than selling one time products. For example, Blockbuster is now offering movie rentals as a monthly subscription rather than a flat fee per movie. It is even more evident in the software industry as we have been seeing a huge shift towards SaaS and the subscription model. This is the market that Zuora hopes to capture with their Z-Billing product.

CEO Tien Tzuo was the 11th employee of Salesforce.com and spent 9 years in several executive positions including Chief Strategy Officer. During this time he helped Salesforce.com build their own subscription billing system. After a successful stint at Salesforce.com, Tien realized that the rise of SaaS would help fuel the demand for a billing system that could handle recurring payments. And so with the blessing of Marc Benioff (who is also an early investor); Tien and his co-founders started Zuora.

Z-Billing is Zuora’s baby. It’s a product that has been completely built from scratch and tailored for subscription-based billing. The solution consists of 3 modules: Product Catalog, Customer Subscriptions & Billing Operations.

The Product Catalog allows users to update the list of products/services that are available. Prices that can be fixed or variable and companies can specify whether billing should be in advance or in arrears. And most importantly, Z-Billing can handle multiple currencies.

The Customer Subscriptions module, allows support reps to manage and change subscriptions. Through this module, reps can provision, cancel or restart a subscription. The most compelling feature is that the product can keep an audit trail for those companies who require it by regulation.

Finally, the Billing Operations module automates all of the invoicing and processing of payments. Invoices are calculated and can be processed in batch or individually. It also integrates with Quickbooks and financial applications like Intacct. Of course, Z-Billing comes complete with a set of analytic tools to understand things metrics churn and Monthly Recurring Revenue.

This is a very comprehensive billing system and (surprise surprise!) it even integrates with Salesforce.com
The idea of selling products and services through a subscription is becoming more compelling for businesses. For one thing, subscriptions help companies accurately predict future revenue and cash flows. That’s why cell phone companies are so eager to sign you up for a 3 year contract. If this trend continues, Tien and his founders could be sitting on a potential gold mine.

In my opinion (and strictly my own opinion), I think this is a way for Benioff to groom Tzuo. Tien Tzuo gets the breathing room to run his own company and eventually such an application would fit nicely in Salesforce’s suite. It’s definitely another pipe for which Salesforce can gain sales but I never understood why their CRM stopped after a sale closed. Salesforce definitely does not handle transaction processing and it’s Product module feels clumsy and bolted on. I bet (and strictly only me betting) Zuora will swallowed by the Force in a couple of years.