This blog is part of the series on evolving new business model in the high tech industry and beyond. You can find the introductory blog detailing out some of the trends, responses and follow-up blog on the challenges that companies are facing to transform their business.
These are exciting times and being a first mover has both advantages and risks involved. High Tech companies not only innovate but are also early adopter of technologies. As we discussed in earlier blogs, it is no longer enough to be product or process innovator. Companies have to be nimble and innovate through business models to grow the market share. This interesting business model innovation paper from Boston Consulting Group shows superior total shareholders returns of 60X over 5 year period for business model innovators as compared to companies focusing only on product & process innovations.
High Tech Manufacturers and Software companies are taking advantage of the new technologies and are reinventing their new business models. You can find some examples in my previous blog.
The below graphic illustrates the complexity businesses have to deal to offer such a complex turn-key solutions that combines hardware, software and services. Companies have to act as single point of point, transparent to their customers. In addition, provide flexible payment options (subscription, pay-as-you-go model, lease etc.).
Here’s an example of a complex solutions that can consist of products, like hardware, software, supplies and repair parts, as well as services like consulting, installation, maintenance, operation, education, financing and other value adding services, all offered by the solution provider itself or in cooperation with business partners.
In this blog, we will focus on solution design, fulfillment and orchestration aspects of the solution sales end-to-end process (previous blog for details).
You need an intuitive modeling environment for the solution design. Sales and service organizations should be able to define basic rules and dependencies for all components of their solution offerings. This reduces errors caused by knowledge gaps of the sales teams, while accurately & quickly quote or capture solution order. To boost your sales, companies need to into on how you could propose up-sell components or alternative offers as part of the solution design to increase your revenue streams.
Since solutions can consist of products such as hardware, software and services, how these elements of fulfillment of these elements depends. You may want to automate these follow-up processes accordingly for logistics, service delivery, and control and accounting to streamline the processing and deliver a great customer experience.
Based on one survey that we did with few of our customers, more than 50% of the orders are changed after the initial order has been placed. It is due to multitude of reasons – unavailability of hardware components, changes to hardware configuration, manufacturing delay, newer version of software and so on. When you are dealing with complex offers, it is critical to ensure that before the changes can be allowed without impacting the promised delivery date
to the customers and the consistency of the solution assembled for your customers. You need to have a good framework for your reps to work with the customers on the probable changes and its impact.
See how IBM leverages SAP Solution Sales Configuration to offer complex solutions to their customers. Also, review this YouTube video to learn further about SAP Solution Sales Configuration capabilities and benefits that it can offer to design solutions. Also, check out how SAP can streamline and automate
these processes with Package and Solution Business by providing prebuilt transaction. This enables sales reps to process sales items, service items, and contract items in a single step and to handle all transaction follow-up processes accurately.
Some of the benefits that customer receives moving to the new model:
- Increase margins by moving from product toward solutions business
- Address new business models with flexible payment e.g. pay per use
- Win more deals with timely and well-priced quotes for complex solutions
- Increase customer loyalty and share of wallet – and offer a complete solution
- Increase predictability in revenue and with better insights into customers by establish long term customer relations with service based models
If you are interested to learn more about the evolving business models in High Tech – Solution Selling and Consumption Based models from other customers and what SAP has to offer, join us for High Tech Executive Value Network on September 18th, 2014 at our Pala Alto campus. For more details and how to register, please reach out to Judy Cubiss or Hemanth Garg.
Please share your thoughts on how you are addressing the solution business and consumption based business models at your enterprise.