Subscription Knowledge Series #3 – Transform your business for Revenue Growth amid Covid19 crisis
The “new normal” during the pandemic
The Covid19 pandemic is the first and foremost crisis this century. While at the beginning of the corona pandemic, companies were facing many uncertainties and had to assure liquidity to survive, organizations are now forced to adapt their strategies to assure future business and growth.
No one knows how long this tunnel is. The good news is even amongst all uncertainties, the crisis also offers new opportunities. Therefore, use the crisis as a chance to emerge even stronger and prepared for the “New Normal” with and beyond Covid-19.
This uncertainty is the main driver for digital transformation. Companies require agile and flexible platforms to explore new business cases and to develop digital solutions beyond their core business. This is key to improve the speed-to-market for new and innovative business models and to generate new revenue streams.
Crisis drives companies move to Subscription and consumption-based Business models
Software as a service: Software is being sold as a service instead of a product, often including additional services such as maintenance or automatic upgrades. I have seen this change in many SW companies such as Adobe, HPE, Microsoft etc., and of course SAP itself.
Hardware as a service: Hardware devices or machinery can be sold as a service and customers do not need large upfront investments especially amid pandemic. As an example, new printers come with ink replacement subscriptions. Dell EMC On-Demand Subscription is an ideal solution for those on a tight schedule and budget during the pandemic
Media industry, especially during the current crisis, streaming service demands have increased tremendously for Disney+, Spectrum and PlayStation.
Consumer products enable online commerce opportunities. Tide smart button for automatic replenishment of your laundry liquid. Costco retail membership increasing additional consumer perks. Finally, in sportswear, Nike has been able to create new offers and services by integrating smart connected products. Smart Bosch compliance comes networked with the service.
Transportation and logistics are particularly impacted during this pandemic. Increased logistics challenges drive process automation, high performance and high availability, real time processing and rating high volume data. For instance, Deutsche Bahn, Post Netherland or NS Dutch railway have all optimized their landscape to weather the crisis.
Automotive is less and less about the vehicles themselves but the services that they can deliver as most cars come with navigation services. Care By Volvo provides vehicle insurance, roadside assistance, maintenance, as well as a 15,000 annual mileage allowance. Porsche has implemented a “pay for use “program.
Retail, as well as food and beverage: Auto-replenishment before you even realize that you are short of it. Panera CEO Niren Chaudhary said that subscribers’ monthly visits in test markets increased from about four to more than 10. Food sales increased 70% with those customers. Nearly a quarter of subscribers were new members to Panera’s loyalty program.
High Education and Research, the pandemic has disrupted learning for 1.5 billion students around the world. School goes digital is no longer an opt in perk, but the only way to operate business. Kroton has transformed the way of operation to an digital culture for the only chance of success. Houghton Mifflin Harcourt offers online contents and classroom solutions to shape the future.
Gaming, gaming companies have transferred products to services and provide digital contents. IGT delivers slot machines to the casinos. During the pandemic the company offers a complete portfolios of digital gaming products. Provide flexible and scalable technology to customer needs.
Moving to the cloud solution during pandemic
Despite the crisis, Gartner Forecasts Worldwide Public Cloud Revenue to Grow 17% in 2020.Cloud solutions support the customer need for digital transformation and software solutions are more and more sold based on subscription-based models in the public cloud. The picture provides evidence of this as a strategy, rather than a trend. Back in 2019, 43% of the total software revenue results were from subscriptions and software being sold “as-a-service”.
All these factors provide an agile approach for customers to adapt to changing conditions as quickly as possible and to operate as an innovative player on the market, being able to explore and offer new business models and to proactively deal with possible disruptions. Especially during uncertain times, cloud solutions offer a predictable cost structure that adapts and scales with the current needs.
SAP Billing and Revenue Innovation Management focus on end to end order to cash solutions to handle increased complexity through transformation of subscription and service-based business.
Want to find more about how SAP helps customers weather this crisis? Please Attend our SAP Billing and Revenue Innovation Management Live 2020 event and listen to many more customer stories who have been going through this journey with SAP. To learn more about the product to support your transformation, please visit https://www.sap.com/brim
This blog is part of a blogs series. Please find the other blogs here:
- Subscription Knowledge Series #1 Subscription Knowledge Series #1 – Optimize Your Business and Easily Manage 1 Million Bills a Month
- Subscription Knowledge Series #2 – Start Small, Plan Big: How to Embrace Successfully the World of Subscriptions