August 17 by Eric Dreshfield
Driving profitable growth in today’s business environment is anything but easy. There are many external forces which are out of our control, like competition, regulations, rapidly evolving technological capabilities, and a scarcity of resources. When evaluating the challenges within our control, internal processes and company procedures continually narrow it down to the most impactful area – Revenue. Here’s 6 ways to tell if your Revenue Management System is killing your growth.
How long does it take your company to launch new products or services?
If it takes your company more than a quarter to launch a new product, because finance isn’t ready to bill customers for it, your ERP or Financial Accounting system is likely not flexible enough to bill properly. Time-to-Market, or Time-to-Money, as some call it, is sometimes hamstringed by research and development, but often delayed by limitations in financial systems. According to a recent MGI study, 56% of companies surveyed want to introduce new pricing plans in less than 4 weeks, yet only 37% achieve that level of agility.
When your product team is ready and finance is not, this gap indicates your revenue management solution may be the problem and is slowing down your growth opportunity.
Do you have to implement custom code to bring a new product to market?
Congratulations! You launched your first subscription-based product. Well done. Did you have to create custom code for your ERP system to handle this? That’s fine, if you only have one product, but that’s not scalable. Now you are seeing growth and your R&D team is ready to launch the next-generation product. Great! All you have to do is re-code your ERP system so it can handle an additional subscription-based product. A 2017 survey on business rationale by MGI Research indicated that 77% of respondent stated the ability to support new priding models is critical, and 76% responded that the ability to configure and sell new product bundles is critical.
If your monetization solution for revenue management is inflexible, it could be killing your growth.
Are Finance and Sales Ops Relying on Spreadsheets?
Spreadsheets have been a part of business solutions ever since the first spreadsheet was invented, and this goes back to before computers existed. Accountants have used spreadsheets for hundreds of years. With the advent of computers, the electronic spreadsheet opened the door for more business departments to manage operations, development, inventories and more, quickly and easily. However, to get a true picture of an an organizations health, someone had to manually tie all the information together into yet another spreadsheet. Manual processes like this are prone to error, and nearly impossible to scale with business growth.
Spreadsheets are favorites of Finance because they can handle complex analysis, but data on new products, pricing and discounts, along with customer information, including order details should all reside in a central data model. A spreadsheet-focused revenue management system is a growth killer.
Can You Sell Products and Charge on a Usage-Basis?
Business customers have personal lives, and in those personal lives they experience interactions with other businesses where they get charged only for what they use. Ride-sharing like Uber and Lyft, on-demand video content and even the Dash buttons on Amazon are all examples of this. These buyers come to work expecting to do business in the same manner: instant on & pay only for what is used. If your revenue management system can handle these types of transactions, you have at your disposal, a way to unlock more value to your customers while maximizing your revenue.
A revenue management system that is disconnected from provisioning and unable to monetize usage-based services can kill your growth.
Can You Easily See Financial Forecasts?
In most organizations, financial data is stored in the ERP system, and only those on the Finance team have access to that data. Growth though acquisition often causes larger enterprises to have multiple ERP systems, one for each business entity. The user experience in some ERP systems is challenging at best, which causes many to generate reports and create visualizations using spreadsheets. This creates even more data siloes, and perpetuates the existence of disconnected systems. This can have a direct impact on your customers in the form of delays in pricing, order fulfillment and billing. This complexity causes delays in generating forecasts and recognizing revenue.
When your revenue management system is not a single source of truth regrading the business you do with your customers, your growth is limited.
Does Your Revenue Management System Have a Leak?
Do you provide products and services to your customers but do not invoice them? That’s revenue leakage, and it can be a big problem. If and when you discover these errors, correcting them can involve costly inventory returns or service deactivation. It can also cause uncomfortable negotiations with customers, and typically only part of the lost revenue is reclaimed. Worse yet, the customer experience can cause your customer to look elsewhere for the products and services you once provided them.
Is your customer loyalty and goodwill worth having a revenue management system that does not automate transactions using a single data model? The inability to stop revenue leakage is hurting your growth.
Apttus Revenue Management leverages a single revenue data model for managing accounts, products, prices, contracts, orders, assets, billing and revenue recognition data. It automates order management, billing, renewals, and revenue recognition. You recognize revenue and report results in accordance with accounting standards including ASC 605, ASC 606, and IFRS 15. Apttus Revenue Management drives growth by rapidly launching new business models combining subscriptions, physical goods, and professional services, and eliminates the cost of data management and multiple system integration projects, and costly errors from disintegrated systems.