Getting Ahead of the Natural Forces of Continuous Transformation
We’ve come to expect that a beginning is followed by an end. Nature continually illustrates this notion. Seasons come and go, bringing life, and eventually falling quietly to rest on the footprints of generations past.
A different perspective would aptly note that nature represents continual transformation. As John Irving wrote in The World According to Garp, “You only grow by coming to the end of something and by beginning something else.” So it is, sandbars are formed by the tides and seedlings take root with the retreat of a winter's snow.
Business, Much Like Life
Business models are also subject to a set of natural forces apparent in customer expectations, evolving technologies, mergers & acquisitions. It's difficult to gauge which of these forces presents the most significant transformational force. Each presents an immediate impact that will vary based on the conditions which exist in a given moment. However, the long-term consequences are subject to speculation. With uncertainty as to what those long-term consequences may be, is it then an imperative to think strategically rather than tactically?
Sunil Gupta, a professor at Harvard Business School, addresses this question with a simple example. In an episode of the Harvard Business Review’s IdeaCast podcast series, he observed that reductions in operational expenses through process improvement are not enough to enable a company to survive in a highly volatile business climate. Gupta continued by stating that a company may realize significant efficiencies through process improvement, and could at the same time also become irrelevant.
With this example in mind, you might ask the following:
- Is your order-to-cash initiative more tactical than strategic?
- Worse yet, is your current initiative putting your business at risk for being irrelevant?
- Lastly, what are the factors to consider when evaluating your approach to an order-to-cash transformation?
The Evolution of Expectations
As mentioned previously, customer expectations, evolving technologies, mergers & acquisitions all shape business models and the competitive landscape. If we accept these factors to be dynamic and evolving, then it would follow that order-to-cash ecosystems are impacted and subject to continuous transformation.
Management consulting firm McKinsey & Company illustrates this point through research findings that highlight the value of understanding evolving customer expectations. The published research found that 73% of revenue from higher-growth companies comes from value-based billing, where the customer only pays for what they consume. This value-based billing model is in contrast to traditional flat fee static billing models. Taking this point a step further, consider how innovation in the car rental industry is driving change within order-to-cash ecosystems.
The Continuity of Car Hire Changes
Peer-to-peer car rentals are disrupting traditional car rental companies and potentially their transformational initiatives. Peer-to-peer car rental companies offer hourly or daily rentals using personally owned vehicles that can be booked on a 24-hour basis. Conveniently, the customer can pick up the rental car in a short-term parking area, thus avoiding a shuttle ride to an offsite rental facility. The owner of the vehicle obviously profits from the rental transaction and the customer pays a lower rate without the overhead imposed by the rental car company. The billing and commissioning requirements associated with this type of rental transaction are complex.
Traditional car rental companies entering the peer-to-peer rental market will face significant challenges in evolving legacy order-to-cash systems to be able to support a new set of requirements. The variability of pricing scenarios and massive volume of transactions will challenge traditional CRM and ERP systems. This challenge, however, represents an opportunity for the middle office. Complex billing and commission calculations can be processed by the middle office, thus closing functional gaps in existing CRM and ERP applications.
The Right Fit
RecVue is a middle-office solution offering substantial flexibility in support of complex billing and commissioning requirements. The RecVue platform integrates with existing CRM and ERP systems to leverage existing customer and pricing data thereby eliminating data redundancy. In such a configuration where RecVue is aligned with existing CRM and ERP solutions, the heavy lifting to support complex billing and commissioning scenarios is itself supported by RecVue. This is done while preserving the existing investment in ancillary CRM and ERP systems.
Business models are in a continuous state of transformation as are the order-to-cash systems that support them. The accelerating pace of innovation, customer expectations and technology will challenge enterprises that are focused on solutions designed for current state requirements. Middle-office functionality offers support for continuous transformation through agility and scale. And remember, falling behind the curve of continuous transformation comes at the risk of becoming irrelevant.
Contact us today to learn how RecVue’s order-to-cash solutions can help your organization keep up with innovation and achieve the necessary goals for long-term growth and stability.
By: Geoff Robles
Geoff Robles has supported large enterprise order-to-cash transformational initiatives in the United States and abroad for more than 25 years, representing billing and revenue solutions developed by companies including RecVue, AppZen, Zuora, Oracle and Concentrix.