I am excited to share information about Subscription Management with you, because subscription models continues to grow in popularity. From my perspective, it will be a great opportunity for companies to get stronger customer relationships, to strengthen and increase their revenue for a bigger timeline.
In this blog series, i will share with you information about Subscription Management in general and how software solutions from SAP can support the necessary business capabilities to implement new or existing business models based on subscription models.
What does Subscription Management mean?
Subscription Management supports business models which in general time-based contracted.
That means a subscription business model is a business model in which a customer have to pay for
- a recurring price at regular intervals for access a product or service
- a usage-based price for using products or services
In the digital age this is now used by many industries. Today subscription models are established in various industries, such as telecommunication, public transportation, streaming and food services.
From my perspective, there are three main models:
- Basic subscription
Only recurring fees for a service, billing in advance or for each period
Recurring fees based on subscribed quantity, billing for each period based on active quantity.
Usage-based pricing for the consumed services, billing at the end of each period.
At least the current offerings in the markets are a mixture of these three main models.
What are the challenges to consider to operate subscription business?
From my perspective there are three main challenges:
- Simplified and standardized business processes
Subscription Billing and Revenue Management processes needs to support a wide range of capabilities such as, service provisioning, mediation and rating, billing and invoicing, open-item and revenue management.
- Flexible and scalable architecture
Supporting various monetization models and revenue growth objectives should focus on a seamless integration and data consistency across the whole end-to-end process.
- Establish governance and operational structure
It requires an operational governance structure and well trained resources with highly intelligent automated processes.
What are the business capabilities for subscription management businesses?
The following figure shows an overview of the necessary business capabilities to operate subscription business models.
The most interesting topics to discuss from my perspective are:
How to establish a great customer experience, meaning simple and easy customer onboarding?
How to automate and streamline a customer-centric end-to-end processing?
Which requirements revenue recognition must be taken into account?
In the next weeks, i will talk in detail about how SAP Solutions support the necessary business capabilities of Subscription Management, including integration topics and some use-cases.