Making business model transformation simpler
Global CEO’s believe that business model change is the number one cause of disruption, impacting their business, their industry and society at large according to PwC in the 17th Annual Global CEO Survey published January 2014. Today, many companies are designing new offerings in the cloud which will have brand new business models compared to business-as-usual. The pricing for such new models may comprise usage services, recurring subscriptions, products and one-time services. It is a challenge for them to set up a single quote and combined invoice for solution packages with new pricing models. Many companies still use manual processes for quoting and invoicing, resulting in a slow time to market for new offerings, and can also result in a high days sales outstanding (DSO). Slower innovation and longer payment cycles can reduce profitability.
To help companies transform their business models towards customer-centric solutions and outcome based billing, SAP has made it simpler for companies to bundle services and products together. It is now possible to deploy “quote-to-cash” processes for packaged solutions, enabling companies to sell and bill bundled solutions including usage based, recurring and one-time services along with products. Multiple invoicing streams including external systems can be combined into a single transparent invoice view to improve customer satisfaction and help ensure prompt payment.
EMC Corporation has adopted SAP Flexible Solution Billing to support their customers’ expansion into the third platform (a combination of cloud, mobile, big data and social as defined by IDC).
“As EMC continues its strategy to help customers maximize their existing IT platforms and rapidly expand into the 3rd IT platform we look to our SAP solution to support sales of our products, our services and our products as services. To support these offerings, as part of the Propel program we decided to make use of SAP Flexible Solution Billing, part of SAP Billing and Revenue Innovation Management,” said Doug Curren, Director, Propel Platform – Process Design, EMC. “Combining traditional product sales as well as 3rd platform offerings, PS projects, and maintenance into a single invoice view is an important component for our solution business. SAP Flexible Solution Billing will enable us to deliver accurate and timely billing to our customers for these various arrangements, thereby reducing DSO.”
“Companies with shorter time to market for new offerings have 45% higher operating margin, according to recent SAP Benchmarks. In fact, companies automating the quote-to-cash process chain can significantly reduce DSO,” said Simon Paris, executive vice president, Industry Cloud, SAP. “SAP Billing and Revenue Innovation Management enables professional services, high-tech and other contract-based B2B industries to reinvent the way they design, sell, and bill innovative solution packages by offering one quote and one converged invoice, increasing client retention.”
As demonstrated by EMC² and other visionary SAP customers in the B2B space, companies are changing their operating models quickly and at low cost to reconfigure the business model to take new offerings to market. As the cost to try something new decreases, the ability to tolerate failure goes up and business can become more nimble and agile. Business model transformation is not a single project, it is the new way of doing business.