As we all know, changing consumer demands are forcing companies to change their business models and adopt digital transformation strategies to stay competitive. IDC predicts that by 2022, over 60% of global GDP will be from digitally enhanced offerings, operations, and relationships (Source: Digital Business and Ecosystem‐Enabled Innovation Requires a New Kind of IT; March 2019).
Digital leaders who strive to position themselves ahead of the competition will gain marketshare and improve customer loyalty in the short and long-term. This blog discusses two key business aspects that digital transformation impacts the most:
1. The Order-to-Revenue process benefits significantly
- Faster time-to-market
- Better customer and employee experience
- Agility to respond to changes in business environment
- Improved operational efficiency
- Revenue growth and profitability
A modern monetization platform that can deliver both billing and revenue recognition capabilities on a single platform, enables transparency and complete auditability throughout the revenue cycle. However, compared to modern, agile monetization platforms, a custom homegrown system comes up short. Prolonged design, development, testing, and redeployment cycles cannot keep up with today’s pace of business, surely not in a budget-efficient way. The rapidly evolving nature of the diverse business models emerging today underscores how businesses must emphasize agility in processes and systems to adapt to changing market and economic conditions. Unfortunately, the finance department’s existing systems simply cannot support the speedy innovations in bundling and pricing that new business models demand.
A recent MGI research report shares some common challenges that finance teams face with a legacy order-to-revenue system, which are:
- It takes longer than 90 days to introduce new offers
- Unable to handle subscription/recurring or usage pricing
- Have to recode billing system for each new offering
- Significant revenue leakage
- Heavy dependence on Excel and manual data entries
- Financial close is longer than 14 days
- Challenges in producing accurate financial forecasts
- SKU sprawl – no single product catalog
- No single ‘price book’ or ‘price list’ owner
- No single ‘source of truth’
ERP customizations and in-house systems have grown over the years, which leaves most finance departments with dozens of new data sources, manual extracts and workarounds, and an unwieldy process to create basic reports about historical performance. On the other hand, companies that use an integrated billing platform that houses all the relevant data, enables usage of meaningful dashboards and analyses across the entire monetization process so you can spot upsell and expansion opportunities, optimize pricing models, determine the most profitable contracts, and mitigate lurking churn issues.
Shortcomings of most commercial offerings:
- They cannot support mixed revenue on a contract
- System breaks down with pricing complexity and frequent amendments
- Solutions can’t support self-billing or payment splits
- They cannot support scale and are not built for the enterprise
- Fragmented insights and reporting
- Requires a separate revenue management system
Limitations of a homegrown system:
- Much higher costs
- Lengthy time-to-market
- Greater compliance costs (and risks)
- Limited scalability and analysis
However by adopting a platform like RecVue during a digital transformation initiative, it can be a game-changer in terms of leveraging technology and expertise to deliver performance optimization and cost and time savings. Here is why RecVue’s next generation order-to-cash automation platform, which is built from the ground up for optimal flexibility, is critical for the enterprise:
- Uses a single contract for downstream processes
- Supports multiple order types
- Enables one-off bundling
- Supports customer-specific pricing
- Delivers control at the line-item level
- Enables unified reporting on AR and AP associated with every order
While digital transformation is essential for any business looking to grow and stay ahead of the competition, it is imperative to choose the right O2C platform for your business to scale. The other key area that benefits from digital transformation and takes your business to the next level is:
2. Unique customer experience and engagement
Digital technology has transformed consumer habits. Mobile devices, apps, machine learning, and automation allow customers to get what they want, when they want it, and how they want it. The digitally conscious, engaged customer is a lot more likely to indulge in a new product or service offered by their preferred brand; refer and patronize the brand and even willingly re-purchase at a price higher than the competition. To help you succeed in your transformation journey and create that bond with your customers, here are a few insights:
Adopt an agile IT environment
Having the right technology to power up digital strategies is fundamental in today’s business world. The cloud enables companies to be fast, dynamic and flexible, enabling the business to meet customer demands quicker.
Personalize customer experiences
Appropriate investment in CRM enables businesses to provide its customers a highly personal and tailored experience. The data from CRM can be used to create 1:1 targeted messages resulting in more personal and effective communications.
Offer a seamless multi-channel experience
Businesses need to respond with immediacy and in real time. Digital transformation offers organizations an opportunity to engage today’s digitally savvy buyers and meet their expectations regardless of channel.
Thus, measuring usage is critical in understanding how customers are using your products and services. With this information, an organization can improve how they price, package and deliver product offerings.
By focusing on these factors, organization’s can embrace the new digital landscape and improve customer satisfaction, while optimizing revenue management. As companies adopt or expand their reliance on recurring revenue, they need a modern monetization platform that supports the entire order-to-cash process. When finance deploys a flexible monetization platform, they can help to promote experimentation with business models and pricing and allow the organization to operationalize successful practices and change their approach as they learn what works. Moreover, RecVue’s usage and rating capabilities mean you do not need to spend time with spreadsheets and detailed accounting calculations. RecVue monitors and collects usage data in real-time so you can see how your products are being used and apply a cost to this usage. And then with the power of big data, you can tap into predictive insights and analysis to strategically price, bundle, and package your products and services. RecVue’s customers are mastering hybrid subscription and high-volume usage-based models with sophisticated pricing and rating scenarios, while gaining operational efficiencies, expanding their business footprint and exceeding customer expectations.
Contact us to learn how the RecVue platform gives companies the smart monetization edge that makes it easy to put the customer first.