davebeach
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5 years ago SAP HANA S4 Results in Increased Revenue Growth and Competitive Margins
Long Standing Business Running SAP ECC Challenges
Our client in the hi-tech IT services industry was struggling to adapt their 17-year-old SAP ECC system to support the vision for their business. Senior leadership recognized the need to adapt their customer offerings to support a recurring revenue, subscription-based offering. Traditionally, their services business revolved around supporting their technology-based devices sold to end clients with remote monitoring, remote and onsite repair services. Through a series of acquisitions, our client was rapidly moving into the managed IT services space and required the flexibility to sell and deliver professional services alongside software and physical devices in a bundled contract – something their highly customized ECC system was incapable of supporting. Without solving this problem, they would be highly constrained in what offerings they could bring to the market as well as severely hindering the integration of acquisitions as they grew.
Ketch Partners Assists Business To Gain Insight
Ketch partnered with our client in three major areas to deliver an optimized business process:
- Configurable service: we delivered a structured, configurable service that bundled the nine current pillar services options and various values to allow a platform for offering all services through a configurable user experience.
- CPQ (configurable pricing and quotation): the configurable service was leveraged by SAP’s SSC (Solution Sales Configurator) to deliver guided selling along with configuring the contract terms.
- A recurring revenue contract model: finally, we defined a contract document in SAP that allowed variable quantity, value-based recurring revenue services, professional services projects, along with software and technology sales to be sold and delivered whether the transaction was classified an outright sale, a recurring service offering or both.
Solution Leveraging SAP HANA S4 New Business Models
Ketch leveraged SAP functionality, commonly applied in the manufacturing industry (think of automobile options/appointment packages, HVAC systems, or specialized industrial pumps) to the customer’s services offerings. The SAP functionality to model configurable materials allows multiple options and choices to be selected during the sales process. We delivered a structured (nested), configurable service that made quoting recurring services straightforward and consistent. Due to the priority ongoing business model transformation, the business leads took months to define how they wanted to go to market. Creating this configurable service was a significant effort and proof of concept services was modeled affording key decision makers to see the trade-offs based on each approach. Once defined, the option values created in the configurable model are mapped to the recurring service “entitlement” that appears on the quote, e.g., if the customer wanted backup service, for a Linux server, 500GB.
Ketch utilized the structure of the SAP Quote document to easily bundle materials, services, software and projects all within the same document, giving the salesperson the flexibility at the line item to choose outright sale, internal lease, or external lease to quickly optimize margin and flexibility in pricing, also improving both Customer Experience and Employee Experience.
We then leveraged SAP Solution Sales Configurator to create a completely custom user experience delivering guided selling in an easy to understand the solution. The team used an agile approach to prototyping process flows and screens in Axure and then transitioning to custom developed web apps to support the process. These apps were then connected to the CRM SQL database for storing and updating transactional data before it was synchronized with S/4HANA.
Finally, the recurring revenue contract was a challenge because the client wanted a single contract model to support any type of service – in some cases services were quantity based (Qty of 2 ea. Backup, Linux Server, 500 GB) and in other cases, they were value-based ($10,000 of on-site support). SAP provides different contract documents to handle value and quantity contracts, but Ketch was able to combine all offerings onto a single contract making servicing and maintenance of the customer much simpler over the lifecycle of the contract term.
Solution Delivers Competitive Edge, Increasing Revenue and Margins
Because of this innovative solution and their collaboration with Ketch, the client has leaped ahead of their competition in the market and have been able to drive significant margin gains by bundling offerings and mixing sale, lease and recurring revenue components all in the same offering. Additionally, contracts are now managed by their customers, including capabilities to add on or remove any part of their service coverage, automatically reflected in the next month’s invoice, ultimately improving the customer's overall experience.
Below is short version:
Giving Clients a Path to Expand New Business Models in S/4
CHALLENGES
- The client wants to add new business models to their existing SAP applications and their sales offerings but has found customizations have prohibited the desired expansion.
- Client sells 200 products today and plans to add just as many services to their offerings tomorrow
SOLUTION
- Ketch built a quantity-versatile contract that allows for measurement of any unit type for their customer services business, commercial project management, and variant product configurations
RESULTS
- The client can sell a monthly recurring revenue product/service which has helped increase margins and gives an advantage over a competitor’s ability to serve their clients with comparable flexibility
- Ketch has helped increase margins in product packages that service the customer (just what customers want) where contracts are managed by their customers—including capabilities to add on or remove any part of their orders under contract – ultimately improving the customer's experience;
Below is full article:
Ketch Client Achieves Significant Revenue and Margin Growth through Path to Expand New Business Models in S/4
CHALLENGES
Our client in the hi-tech IT services industry was struggling to adapt their 17-year-old SAP ECC system to support the vision for their business. Senior leadership recognized the need to adapt their customer offerings to support a recurring revenue, subscription-based offering. Traditionally, their services business revolved around supporting their technology-based devices sold to end clients with remote monitoring, remote and onsite repair services. Through a series of acquisitions, our client was rapidly moving into the managed IT services space and required the flexibility to sell and deliver professional services alongside software and physical devices in a bundled contract – something their highly customized ECC system was incapable of supporting. Without solving this problem, they would be highly constrained in what offerings they could bring to the market as well as severely hindering the integration of acquisitions as they grew.
INSIGHT
Ketch partnered with our client in three major areas to deliver an optimized business process:
SOLUTION
Ketch leveraged SAP functionality, commonly applied in the manufacturing industry (think of automobile options/appointment packages, HVAC systems, or specialized industrial pumps) to the customer’s services offerings. The SAP functionality to model configurable materials allows multiple options and choices to be selected during the sales process. We delivered a structured (nested), configurable service that made quoting recurring services straight forward and consistent. Due to the priority ongoing business model transformation the business leads took months to define how they wanted to go to market. Creating this configurable service was a significant effort and several proof of concept services were modeled affording key decision makers to see the trade-offs based on each approach. Once defined, the option values created in the configurable model are mapped to the recurring service “entitlement” that appears on the quote, e.g., if the customer wanted backup service, for a Linux server, 500GB.
Ketch utilized the structure of the SAP Quote document to easily bundle materials, services, software and projects all within the same document, giving the sales person the flexibility at the line item to choose outright sale, internal lease, or external lease to quickly optimize margin and flexibility in pricing, also improving both Customer Experience and Employee Experience.
We then leveraged SAP Solution Sales Configurator to create a completely custom user experience delivering guided selling in an easy to understand solution. The team used an agile approach to prototyping process flows and screens in Axure and then transitioning to custom developed web apps to support the process. These apps were then connected to the CRM SQL database for storing and updating transactional data before it was synchronized with S/4HANA.
Finally, the recurring revenue contract was a challenge because the client wanted a single contract model to support any type of service – in some cases services were quantity based (Qty of 2 ea. Backup, Linux Server, 500 GB) and in other cases they were value based ($10,000 of on-site support). SAP provides different contract documents to handle value and quantity contracts, but Ketch was able to combine all offerings onto a single contract making servicing and maintenance of the customer much simpler over the lifecycle of the contract term.
RESULTS
Because of this innovative solution and their collaboration with Ketch, the client has leapt ahead of their competition in the market and have been able to drive significant margin gains by bundling offerings and mixing sale, lease and recurring revenue components all in the same offering. Additionally, contracts are now managed by their customers, including capabilities to add on or remove any part of their service coverage, automatically reflected in the next month’s invoice, ultimately improving the customer's overall experience.
Below is short version:
Giving Clients a Path to Expand New Business Models in S/4
CHALLENGES
SOLUTION
RESULTS