Agile Monetization Engines – The next logical evolution of Commerce
The transformation of commerce continues at a relentless pace. If you look at commerce innovation from a historical perspective, the biggest enablers for companies to innovate and take their business to the next level of productivity were ERP and Supply Chain Management the 90’s, and CRM, Analytics and E-Commerce systems in the early 2000’s. So what will be the next big category to emerge along the established players? I believe that category to be Agile Monetization Engines. Let me explain.
Most of the commercial systems deployed in the market today still are following the paradigm of customers consuming a product or service based on relatively stable contracts. The idea of engaging with the market based on metered usage, resource consumption or even outcomes is still a fairly new concept, mainly originating in very large enterprises, for example Utilities or Software Companies.
When we engage with customers, the problems arising from new ways of creating and monetizing value are still framed in the established terminology like Billing, Quote to Cash, Charging, Revenue Recognition, etc. The word monetization is still mostly used in the context of purely digital products. But there is a shift happening from what I can perceive in the conversations and content I monitor as part of my Solution Management role in the Quote to Cash team at SAP.
- Subscription as a business model is moving out from a niche status into a mainstream concern for companies in any industry and any size as customers get used to the consumption models based on usage or outcomes.
- There is a disruptive conceptual shift from revenue to recurring revenue streams
- Most companies still operate on decades-old business models, brittle compliance frameworks and fragile integration interfaces that are not ready to “snap into” a consumption based monetization model.
- The Quote-to-Cash process in transforming companies is under duress, and has to be reviewed and adapted end-to-end to achieve integrated compliance, automation and scalability, including a holistic view of the connected modules that make up an agile monetization engine including:
- Configure Price Quote (CPQ)
- Variant Configuration
- Order Management
- Subscription Billing
- Entitlement Management
- Usage Data Collection and Mediation
- Contract Accounting and Invoicing
- Revenue Recognition
- Cash Management
Here is a link to a video from a analyst specialized on the topic of agile monetization platforms
What is the main take away? What does this mean for the rest of the 2020’s?
- The transformation to an agile monetization model is a cross-functional effort on the customer side involving the executive office, as well as sales, product marketing, product management, strategy, finance, development, supply chain management and partners
- The transformation is not trivial. Just adding-on disconnected functional modules will not achieve the transparency and scalability needed for a mission-critical transformation of the order to cash process
- Just like customers in the 90’s replaced their home-grown, patchwork systems with integrated ERP systems, the 2020’s will see the emergence of integrated Agile Monetization Engines that cover the end-to-end process of Quote-To-Cash with a holistic approach
Analogy: The move to an Agile Monetization approach is like building an autopilot into an aircraft. Unlike a GPS system in a car, that can just be attached to the windscreen as add-on, an autopilot is harder to add-on since it need to be connected to all systems that keep the airplane safely in the air. Built-in is better than bolt-on, especially when it comes to mission-critical systems that need to achieve the balance of being able to change course in mid-flight without compromising safety and compliance.
What do you think? What am I missing? Will Agile Monetization Engines (AME) a new three-letter-acronym to stand next to the giants of ERP, CRM and SCM?
I’d like to hear your feedback and also know what aspects of the AME topic we should drill down on next.