By Annie Kennedy, Editor, SAPinsider
During the COVID-19 pandemic that forced many companies to re-imagine how they did business, a provider of IT infrastructure — upon which its applications serve healthcare, retail, state government, and other industries — redesigned its sales approach to accommodate customer Software-as-a-Service (SaaS) needs.
This changed the company’s billing model to a subscription-based model where it bills customers on a periodic basis, rather than just once a year, increasing customer touchpoints and requiring a reworking of the sales team. The company’s Director of Corporate Applications sat down with SAPinsider to share his experience with how the company enabled this transformation with the help of SAP and other tech partners.
Unlocked Growth During the Pandemic
The pandemic presented the company with a challenge universal to many other businesses: employees were physically unable to get together to conduct business, which had a tremendous impact on operations and was a major concern for leadership, managers, employees, and customers. Day-to-day operational changes were needed in order for the organization to adapt, he says.
Those operational changes turned out to be advantageous. The company is not just surviving, but thriving, and is anticipating at least a 20% growth increase in 2021.
The company implemented two strategies to unlock growth during the pandemic:
- While already a strong presence in the eastern and central U.S., the organization completed an acquisition that positioned the company — in line with its market direction — to increase its footprint into the West Coast and become a true coast-to-coast business.
- Its sales team pivoted to focus on customers willing to spend during the pandemic. For example, the organization quickly realized that airlines weren’t going to invest in infrastructure, but tech service providers were expanding into 5G networks, and the company strategized operations to align with the businesses that were growing.
The second strategy succeeded because of organizational alignment among everyone from the sales team to leadership to understand the revenue streams and customers. “Due to our annual growth, the company is always in a state of flux in terms of solutions,” he says. Therefore, the organization relied on day-to-day reporting that showed leaders the numbers, the market, and the latest position in order to make informed decisions.
Integrations for the Future
Although SAP software has been a backbone for the company to run its business operations and handle events such as mergers and acquisitions, technology-powered innovation is still a work in progress for the organization. “The major thing we did this year was to make sure that all group companies were on the same platform,” he says.
The company had upgraded to SAP S/4HANA 1809 in 2019, and it brought all smaller SAP and non-SAP software onto the new platform as a solid ERP foundation. Thanks to its investment, he says, integrating SAP and non-SAP solutions are much easier because of the way SAP S/4HANA is structured.
The organization also invested resources in identifying and improving processes that were a bottleneck, focusing on how to make solutions scalable. “We know we have to make technology investments to align with the market direction of the cloud,” he says. “That alignment meant focusing on business-to-business (B2B) integration, seeking any gaps in solutions that need to be addressed, and ensuring process optimization are all supported by technology investments.”
Products the company sold previously as capital expenditures are now becoming SAP and cloud products, which creates changes in the sales and billing cycles of its business model. Knowing it needs to employ methods, such as usage-based billing, the company has been narrowing its solution choices for billing innovations and revenue management.
The company wants to implement these solutions with a new commission model and build an EPA-based integration with the original equipment manufacturer (OEM) so there are fewer manual touchpoints between the accounting department and partners or customers.
The company’s main focus was ensuring that customer data was consistent across SAP Cloud for Customer and SAP S/4HANA. The organization successfully achieved that thanks to the integration of the solutions.
Now, the organization has a creative process and a workflow that allows the company to create a customer master that is evaluated to determine whether it’s truly a new customer or an existing customer, while any changes in SAP S/4HANA automatically flow to SAP Cloud for Customer. “SAP S/4HANA has really allowed us to streamline the customer master process,” he says. “And that helped us bring some discipline and improvements into our whole lead-to-cash process.”
When Change is Necessary
The organization used to depend on its single partner Cisco for 90% of its revenue, and the company had amazing expertise in Cisco technology across the board. With companies migrating to SAP S/4HANA, companies like Cisco are targeting more revenue coming from SaaS product sales, meaning that solutions are being sold as a subscription rather than a one-time investment. In following that model, he says, when selling Cisco solutions, the organization could be billing customers on any periodic basis from quarterly to monthly to yearly, making the customer experience more important. “One bad invoice could jeopardize the whole relationship,” he says.
Thus, the company transitioned its processes to work more easily with external accounting and purchasing departments to place orders or receive invoices efficiently.
As for the organization’s sales cycles, he says, “We used to sell a million dollars worth of products and then not see that customer again until they’re ready to refresh the hardware five years later. That’s not the case anymore. We see customers every year now, or even if they have a two-year contract, they may want to change those contracts to add more capacity to do something.”
Thus, the company’s whole sales cycle on the SaaS product is completely new and changing. “So is our entire solution,” he says, “since our SAP solution was based on product sales.”
The current solution was not scalable or sustainable as a SaaS solution, so the organization determined that it needed to be re-architected from the business process perspective to ensure the solution aligned with what was happening on the ground. The company took the time to analyze and devise a solution that would be both scalable and sustainable.
What Does This Mean for SAPinsiders
- Include agility in your decision-making process. Ensure that Finance, IT, and other teams are included in overall decision-making to meet business objectives.
- Re-evaluate whether your business model is ready for disruption. Disruptions aren’t going away, and every organization needs to be armed to survive and thrive amidst change.
- Slow down. Take advantage of the effects of the pandemic to look closely at your current processes and solutions.
- Know your assets. Locate and utilize strength and expertise within your organization to prepare for when growth will start.