In the rush to drive sales and expand customer acquisition, many firms overlook a fundamental question: are they holding onto the money they’ve already earned?
“[Our customers] generally always find revenue leakage,” said Ismail Nalwala, co-founder and CEO of IOTAP. The company runs subscription management platform Work 365.
Industry research backs Nalwala up. Deloitte has documented firms losing 3 to 4 per cent of revenue across tens of thousands of transactions due to misaligned billing and contracts. MGI Research found that around half of companies experienced revenue leakage, typically amounting to 3 to 7 per cent of top-line revenue each year. For a business with $50 million in annual recurring revenue, a 3 per cent leak equals $1.5 million in lost income.
Watch PartnerTalks’ interview with Ismail Nalwala.
Why leakage happens
Revenue leakage often begins small. A missed invoice here, a pricing update ignored there, or inconsistent record-keeping across sales and finance teams. Left unchecked, these small losses compound.
Leakage usually stems from manual processes, siloed systems and inconsistent enforcement of pricing rules, creating hidden losses for both SaaS and traditional service providers. Discount mismanagement, outdated pricing and missed renewals are frequent culprits.
From custom development to SaaS
Nalwala’s own path mirrors the sector’s evolution.
“When we set up IOTAP and we were doing the stuff that a lot of Microsoft Partners did back in the day, it was around customizations; it was development services,” he said. “And then, when the cloud came around, we started to resell the cloud… but we had a real challenge in how to manage all the growth and services that we were actually selling to our customers.”
That challenge led IOTAP to build an internal billing solution, later spun off as Work 365. The platform integrates with Dynamics 365 and the Power Platform, allowing Partners to manage subscription billing, automate renewals and provide customer self-service.
“A lot of [Partners] were on the same boat as me,” Nalwala recalled. “That’s really when I decided that what we had built would be a great opportunity to solve the problem.”
The automation fix
Work 365 is designed to tackle five challenges:
Product catalogue management
Subscription management
Self-service portals
Billing automation
Payments integration
Each function targets a common point of leakage, but Nalwala says that equally important is the cultural change an automated system engenders.
“We like to create a culture of efficiency in companies we work with,” Nalwala said. “Do the work you love doing, enjoy doing; add value instead of the mundane, repetitive work that a system can do for you.”
The bottom line
Driving sales while leaking revenue is like filling a bucket with holes. Rigorous data practices, automation, and cultural change toward efficiency can help plug these gaps, though. Closing even a 3 per cent gap can mean millions in recovered income for mid-sized and enterprise firms alike.
The C-suite has a responsibility to ensure that, as revenues grow, profits are not lost to avoidable leakage.
As Nalwala put it, “That’s really why we exist, actually.”
