Are you losing customers because of poorly run operations?
One of the main reasons for churn is poorly run operations in sales, projects and logistics and customer services. Customers today are more demanding than ever, and want to be able to shift gears as fast as possible.
If your operations can’t cope with customer expectations, you will end up losing them, resulting in a damaged reputation and lost revenue.
With that in mind, how can you steer towards smoother operating operations?
The main definition of your operational processes is a key element to start with. Let’s review an overview of the order-to-cash process to sketch out the different elements:
- Capturing new subscription orders from new customers
- Capturing subscription change orders (upgrades or downgrades)
- Capturing deposits or pre-payments
- Capturing online payments
- Billing of new or changed subscription orders
- Subscription renewal billing
- Price updates and indexing
- 3rd party purchasing subscriptions for customers
- Managing subscription project hour entitlements
- Managing box subscription delivery schemes
- Managing subscription product entitlements
- Processing revenue recognition
- Processing cost recognition
- Managing subscription cash flow analysis
- Managing paused subscriptions
- Managing subscription credit notes
- Credit and collections
- Monitoring pay-per-use consumption schemes and data integrations
- Manage owned supplier subscriptions
- Manage project-based subscriptions
- Churn subscription
- Future date churning subscriptions or changes
The above is a subset of the activities, and highly depends on the type of subscriptions operated in the business, but it does illustrate the need for a highly data driven approach backed by strong customer focus. Understanding and process mapping the subscription daily activities is paramount, so is the deployment of a business application or ERP (enterprise resource planning) application that is tuned to master the above business activities.
Understanding the need for a subscription-based ERP application
To dive into the matter, quite a few ERP applications do not really support subscriptions to the level of business capabilities we outline above. Most ERPs focus on capabilities in finance, supply chain, warehousing and purchasing as well as project management capabilities. In fact, the business application space for subscription-oriented solutions is mostly composed of point solutions that could integrate with ERPs.
However, to create maximum synergy with the expected ERP capabilities, it makes a lot of sense to have subscription operations as a native ERP capability.
Running subscriptions as a data model and business capability in ERP will provide the following benefits:
- Direct integration into accounts receivable, credit and collections or cash flow view.
- When subscriptions require use of projects, products, assets, retail channels, payment processing, procurement, and CRM capabilities the natural flow of the process and its related data becomes much more fluent and logical.
- Data warehousing is simplified, as the main contributor to data comes from ERP, not from other applications.
- No need to manage or customise integrations between stand-alone subscription apps and ERP (or CRM).
- Better, more simplified application and security management, as it is consolidated in ERP already and does not require management in other apps.
- Compound result of the above is a better return on investment.
How does that give me a better orchestrated subscription operation?
Once you control your business activities in a data driven way, using a consolidated business platform, you can continuously improve your operations. Start with the core business flows, and once established, develop and deliver a roadmap that finetunes your performance in processes in a step-by-step manner. Since you use master data from ERP, you manage your business data in one location, rather than having master data silos.
As always, a subscription-based ERP application is a fantastic business capability, however it must reflect and follow your day to day reality. Therefore, like with any ERP deployment, people are the critical success factor. As Grady Booch once said,
“a fool with a tool is still a fool”.
To reap the benefits of an end-to-end subscription process approach using ERP, companies must adhere to the best practices in ERP projects.