By: Peter Getchell, EVP, ERP Practice, Navint
Are You Relying On The Sales Order in Your Recurring Revenue Operations? You Shouldn’t.
We talk with many CFOs, CROs, and CEOs who are frustrated by the internal friction their teams experience in day-to-day business operations. They’re experiencing billing disputes and mushrooming headcount in sales operations, and a growing reliance upon manual work arounds in Excel® or email. In many cases these symptoms perplexingly persist even after investments in and deployment of various improvement initiatives including updates to their technology stack and processes.
We hear “I’ve streamlined processes. I’ve brought in new technology. I’ve adopted best practices. But the issues keep popping up. I fix one, and another rears its head. What is going on?” There are many ways I respond, but sometimes
I start with a seemingly simple question, “How reliant on the sales order are your business processes and improvement projects?”
It’s a question that gets straight into the weeds, and often clients don’t immediately know the answer. But asking the question creates action, and often it pulls the first string that unravels something larger.
Here’s the point: companies have leveraged the sales order for decades, becoming masters at optimizing business processes and driving efficiencies based upon its existence. In traditional business models, the sales order triggers everything in the supply chain from production to distribution to billing to financial planning and reporting.
The foundational assumption is that the sales order captures the commercial relationship with the customer. Based upon that assumption, books have been written, methodologies developed, best practices shared, and whole systems of ERP, CPQ, and billing software built—all to streamline the organization to meet the obligations of the sales order.
The sales order is a trusted artifact of a linear, item-based, revenue model. The sales order is created when the sale is made, and it contains all the “intelligence” needed to build, ship, invoice, collect, and account for the sale. Each functional business area can work in isolation to complete their portion of the transaction, with little to no interaction between each other.
But as companies move to recurring, relationship based revenue models where the customer is “always on,” the linear business operations driven by sales orders (with line items of SKUs, quantities, and prices) fall apart.
Usage – quantity, duration, frequency, etc.
Requests – upgrades, downgrades, add-ons, cancelations, etc.
Preferences – any number of personalized attributes specific to the service being provided.
In a recurring, relationship-based revenue model, what a company provides and what customers expect are much more dynamic than what the limited scope of a sales order can represent. More and more, the seller provides value to a service that can be consumed on frequencies and terms that the customer controls and initiates. The attributes of the relationship, at any given moment in time, dynamically drive the activity within the organization.
Company functions such as selling, delivering, collecting, accounting, and supporting customers are highly interconnected and continuously interacting with one another. The static artifact of a sales order can’t possibly keep up.
The pain and internal friction that executives often experience are precisely because an old paradigm—managing business processes with sales orders and SKUs—is being applied to a new way of meeting customer demand.
To solve this challenge, we need to break apart the linear operations that the sales order enforces. Rather than siloed
departments functioning sequentially, each business function becomes service oriented, interacting more like a neural net. The services “listen” for triggers, accept inputs, produce expected outputs, and publish the occurrence of events— cooperating in realtime and collectively working to manage the customer interactions throughout the customer lifecycle.
Creating service-oriented business functions requires a new approach in business process design and technology architecture. At Navint, we have helped some of the worlds largest brands break their dependence on the sales order and transformed their traditional revenue operations to business services that drive revenue growth. We use proven recurring, relationship-based strategies, operational best practices, and appropriate ERP, CRM, CPQ, Billing and Salesforce technologies to design a revenue engine unique to a clients’ distinctive competitive differentiators and tailored to best manage the dynamic nature of their customer relationships over time.
So, ask yourself—to what degree do your company’s improvement initiatives rely on the sales order? It’s a tricky question, but the answer may set you on a path towards a new, more holistic view of the business services and interactions that impact your company’s operations.