SAP Community - SAP Entitlement Management

Future Proof Your Business with SAP Media Industry Cloud

2021-10-18T22:30:28+02:00

Streaming is here to stay. Consumers have embraced it.

According to eMarketer.com, by year-end 2021 3.26 billion people will be “digital video viewers” - over 40% of the global population now watches streaming or downloaded video at least once per month in some capacity. Subscription OTT video service user growth exceeded 1.5 billion users in 2020 and it is expected to pass 2 billion in 2024. It’s safe to say that the media industry has changed – and the evolution is continuing at an unprecedented pace.

Digital Transformation in overdrive or else…

That said, for the past few years the Media industry has been trying to shift business models to be at the forefront of innovation. This rapid transformation has, at the same time, been challenged by the sheer scale of how things were done in the past; with platforms and technologies designed to support much simpler business models (and even then, they weren’t “that simple”!).

With “digital viewing” in overdrive, the pandemic solidified the shift towards streaming and a new business paradigm. According to PWC this came with a drop in revenue of $81bn in 2020 (more than the value of 2020s’ entire music, radio and podcasts segment), a -3.8% decrease year on year. While some segments of the industry are expected to keep contracting, the direct-to-consumer trend is here to stay - and we are seeing it with the proliferation of streaming services and digital marketplaces. Monetizing content in a context of fragmentation across distribution channels and devices will require constant investment and innovation, not only in content development and audience engagement but also to enable new business models and to automate and modernize processes. Media companies must become intelligent, efficient, and automated - digital transformation in overdrive…or else.

Future proof your business

Typical pain points we hear from Media companies include a lack of a central integrated system that able to scale and support new business development ideas, an inability to enable complex hybrid revenue sourcing models, manual and labor-intensive processes, and an inability to make data driven decisions due to a lack of comprehensive visibility into the business with granularity. Put yourself in the shoes of these companies. It must be daunting. You wouldn’t want to have to weather the 80-foot typhoon in a makeshift dinghy. It is scary… and then, think again, and it is exciting! It’s exciting because SAP is in the forefront helping the industry’s biggest brands navigate the turbulent waters into safety. SAP is helping many companies, in many industries, transform their businesses, none of which are shifting at the speed that Media is experiencing its transformation. It is a once in a generation opportunity to reinvent an industry that touches us all on a deep level, daily.

SAP is known for providing the capabilities to manage changing businesses on a global scale. Now, with SAP’s Media Industry Cloud and the commitment to an open platform architecture to co-innovate with customers and partners, Media companies benefit from faster innovation cycles, a lower TCO, and industry specific capabilities that are fully integrated and can be added in a modular and flexible way. These out-of-the-box solutions and accelerators delivered in hybrid and / or diversified cloud environments, will greatly reduce the complexity and cost of adopting the industry’s best practices to future proof your business.

Transformation won’t be driven in the time frame needed by large rigid platforms. They simply cannot provide the flexibility, time to value and industry specific capabilities that worked in the past. Media companies are demanding that their technology partners power their transformations, bring to the table pre-integrated cloud-based solutions that can use common, fresh data. Data that is used to make insight led decisions, not stale data that provides a rear-view mirror view of the business. These applications are part of an Industry Cloud, a cloud built around an intelligent core. Extensions that build on the core and can be moved in and out with relative ease as the business changes. This is the SAP Media Industry Cloud.

SAP Media Industry Cloud, today and tomorrow

Disney is restructuring to accelerate its direct-to-consumer business as it becomes the company’s growth engine. Are you getting ready for an existential evolution? Not only you will need SAP’s marquee enterprise solutions that are the backbone of almost 90% of the world’s commercial activity (SAP customers generate 87% of total global commerce, $46 trillion) but also solutions encapsulating critical specialized industry expertise; for instance:

Managing all processes and tools needed to monetize IP and manage the lifecycle of intellectual properties in one single enterprise class real time platform with SAP Rights and royalty management by Vistex; from planning, R&D, contracting, production, exploitation, sales & distribution to royalty settlement.

Monetizing subscription and usage-based business models with agility with the revenue management and recurring billing capabilities in SAP Subscription Billing

Capitalizing on your digital and direct-to-consumer offerings, converting usage and transactional data into revenue and supporting new business models alongside existing ones in your financial systems with SAP Convergent Mediation by DigitalRoute.

Making faster and better financial decisions by creating a streamlined, automated process to increase financial efficiency throughout the content creation, acquisition and utilization process with Invenio’s Content Financials accelerator; a solution with a services package that extends SAP’s core to help content driven businesses be make data driven decisions.

These are only few examples of SAP’s industry cloud for media, but it doesn’t stop here. Industry lines are blurring and with SAP’s industry cloud, Media customers can also benefit from SAP’s and its ecosystem’s innovations solving the toughest challenges across 25 other industries.

So what do you need to do to bring this level of transformative potential to your business? We can assume that you have a clear business strategy in place. We can assume that you do not have the luxury of replacing all your business applications and technologies overnight. Exactly, why we at SAP have developed the Industry Cloud – to allow you to take a less radical approach to achieving radical business results. To learn more about the SAP Media Industry Cloud story watch this session.

"Software As A Service" in SAP S/4 HANA Public Cloud

2022-05-18T14:03:43+02:00

In this blog post, we intend to cover an overview of 'Software as a Service' in SAP S/4 HANA Public Cloud, which enables Digital Asset Providers to sell Subscription software and monetize the revenue.

Please expect the following in this blog post:

Industry trend

Value Proposition

Functional Overview of each solution

Simple Use Case

Shift in Today’s time

Today, while customers desire to have predictable costs that grow with the value they receive, vendors aspire to have predictable revenue streams that grow with opportunity. While customers want great value with money, vendors look for revenues that scale with delivered customer value. On one side, if Quick ‘Time-to-value’ is the customer’s expectation, delighted customers paying on time is the vendors’ expectation on the other side. One model which satisfies all these expectations of both customers and vendors is the Subscription Economy.

Due to the success of businesses like Netflix and Spotify, increased companies are turning to subscription business models to generate revenue. Needless to say, subscriptions are becoming an integral part of our daily lives, changing the way we purchase and consume products. Not just consumer goods, this change in consumer behavior is slowly moving to everything an end-user buys for personal and professional lives. Hence, enterprises have started jumping into this hot market to build software and services required to support the delivery of offerings based on outcomes/usage rather than a one-time sale of a single “thing.” That gave birth to a globally acknowledged concept called “Everything as a Service.” Be assured that this will be a learning journey for both companies and customers and more importantly, will enable recurring revenue for the companies

Value Proposition of SAP “Software as a Service” for Software Providers

SAP has always been at the forefront of providing enterprise-grade software solutions, accommodating the changing customer needs and expectations. From a comprehensive R/3 to “Software as a Service”, SAP has been embracing the wants of the time. After SaaS (Software as a Service) unbundling, where SAP helped companies to free from the need to install it, run it, maintain it, and upgrade it, SAP is venturing into putting things back together with a difference that this consuming would be as-a-service, rather than functionality-rich applications. It is a huge opportunity for SAP to integrate the best solutions and provide anything that customers need as a service.

SAP is geared up to enable Digital Asset Providers to sell Subscription software and monetize the revenue. We provide an End-to-End Offer-to-Cash Process for Software Providers, which covers master data for software, services, and business partners, solution order and subscription order capturing, software entitlement tracking, billing, and revenue recognition in an integrated solution. We cater to both pure SaaS and Embedded software solutions.

Customer Segments:

Net New: Mid-Market; High Growth

Existing SAP Customers: ME, LE and up – Digital Units (Two-Tier), ProServ XaaS, Media

B2B focus

The Key Benefits of Software As A Service:

Higher Margins: Software companies are increasingly adopting the as-a-service approach and transaction-based business models to capture higher margins. The software-as-a-service focuses on key functions, improving total customer lifetime value through reduced churn and increased upselling and cross-selling.

Ease of Use for end-users: Process simplifies customer purchases and renewals.

Increased efficiency and effectiveness in a maturing business

SAP S/4HANA Public Cloud Digital Asset Providers- End-to-end Process for Solution and Subscription Business

Differentiating Cloud Solutions in this E2E Scenario

SAP Solution Order Management:

Solution Order supports business transformation from selling products to higher-margin solutions. It has a business scope to include consumption-based business by integrating with SAP Subscription Billing. It is enabled to offer/bundle distinct product sales/physical items, services, maintenance contracts, subscriptions, and projects in a single order and invoice. In a nutshell, Solution Order allows ‘one-stop shop’ solutions that address complex end-customer problems.

SAP Subscription Billing:

The shift from traditional one-time fixed price sales to consumption-based business by integrating with SAP Subscription Billing. This provides a range of aftersales and value-adding subscriptions for services and software-based offerings, with recurring and usage-based billing Subscription Billing Items in Solution Orders It drives success through outcome-based customer experience.

SAP Subscription Billing core capabilities include:

Model subscription-based (digital) products

Manage the order for subscription components and Control subscriptions throughout their lifecycle

Generate subscription billing data in various formats: one time, recurring and consumption charges

With SAP Subscription Billing, customers can now transform from selling equipment to paying per subscription of the equipment and the associated services. This would enable customers with different value monetization methods such as leasing with recurrent subscription, usage-based subscription-like pay per machine hours, or outcome-based subscription on no. of units produced or throughput of the machine, etc.

SAP Entitlement Management:

In Subscription business models where physical products, digital assets, and other services are bundled together, the ownership of entitlements of each item, usage data, and 360degree view of customers becomes business imperative. SAP Entitlement Management manages any right of usage, authorization, access, or permission that is given to a customer. These “rights of usage” are called entitlements and can be software specific, such as licenses, downloads, updates, free trial periods, etc., and can also relate to maintenance and support services, training, as well as warranties for physical hardware.

Here Customers can automate the entitlement management process, providing “right to use” based on contracts and dynamic authorization management.

Below is a use case to elucidate:

Use Cases-a)Subscription Business Model b)Perpetual Software Sales

The demo shows the process of selling digital assets from the perspective of a customer and brings light to the automated backend processes supported by SAP solutions, which allows companies to run a flexible and highly automated software business.

Key customer requirements highlighted:

Orchestration of various order elements

Tracking of related entitlements for an offering (define entitlement offering with multiple rights, automated creation, fulfillment orchestration)

Flexible pricing plans and subscription modeling – example: seat-based pricing or volume-based (with pre-payment)

Dynamic handling of changes during subscription lifecycle

Automated finance incl. revenue recognition consolidated billing, and invoicing

Profitability analysis of the offering

Scenario A: Subscription Business Model

The company say ‘Xeta’ requires a new software say ‘CAD Tool Box’. After the vendor selection and trial period of 2 months, the Xeta decides to subscribe to CAD ToolBox Pro from the chosen vendor. Sales Rep can bundle Software, Deployment/installation, IT support, and some add-ons and creates a Solution Order by entering software material of two types: ‘Software Installation Service’ billed once with an initial set up charge of $99 and Subscription Billing Item called ‘CAD Tool Box’ with a recurring fee of $599 per month in a S/4HANA public cloud system.

The software comes with different pricing models: A subscription model with a fixed fee per user with a tiered pricing and different payment durations as well as a Flexible pay-as-you-go offering with a 24h access possibility per token consumption with monthly billing.

Furthermore, the vendor offers flexible support plans such as:

Plan 1: 8x5 support

Plan 2: 24x7 support

Plan 3: Managed Success Plan

Initial Software Purchase by Customer - Purchase and Automatic creation of backend objects

Customer: Mr. Paul Stimson from Xeta (Purchaser Digital services) selects the respective offering on a commerce portal.

What happens in the backend automatically?
1. Creation of solution order, showing two related times for software access and support plan (emphasis flexibility of various elements and orchestration of execution)
2. Automatically a subscription is created that has a respective pricing plan assigned - focus on Subscription
3. Entitlements are created:Emphasis on offering – with software access comes a trial for the training platform

Customer: Paul Stimson sees his subscriptions and entitlements in the commerce portal

Month-end financial activities

Software Subscription – automatically based on usage monthly subscription is calculated and revenue recognition did (QUARTERLY BILLING)

Support – automatically monthly billing is done based on usage and revenue is recognized immediately

Scenario B - Perpetual Software license Sales

Contract period: 3 years, 2 years extended maintenance and support

Sales employee creates a Sales Order in S/4HANA Public Cloud by entering a perpetual sales item with a fixed price “List Price” and saves the Sales order.

The saved sales order will result in the creation of multiple entitlements that are managed in the linked entitlement management system.

One entitlement represents the use of a software license, and another entitlement represents temporary trial access to a training environment and other information.

Conclusion

If you want to transition seamlessly from traditional one-time fixed price sales to consumption-based business Models, XaaS for Digital Asset Providers is your go-to solution. Hope you benefit with this first blog post series. In the following blog post series, we will provide deep-dive sessions for different use cases and detailed pricing models in subscription business. Stay tuned !

Many thanks to romit_lakra and srinivasa.raghavachar for valuable inputs 🙂

Reference

Solution Order https://blogs.sap.com/2021/06/02/solution-order-management-in-sap-s-4-hana-cloud-2105/

Service Management: Service in SAP S/4HANA Cloud 2102

SAP Subscription Billing:https://blogs.sap.com/2021/10/08/sap-subscription-billing-integration-with-sap-s-4hana-cloud-beginners-guide/

https://blogs.sap.com/2021/10/08/sap-subscription-billing-integration-with-sap-s-4hana-cloud-beginners-guide/

https://blogs.sap.com/2021/02/10/new-features-in-sap-subscription-billing-2021-02-03/

SAP Entitlement Management: https://blogs.sap.com/2018/07/02/from-product-sales-to-entitlements-sap-launches-entitlement-management-in-the-cloud/

https://blogs.sap.com/2018/11/13/have-you-mastered-your-entitlements-they-are-way-too-important-for-manufacturers-to-ignore/

https://www.asug.com/insights/everything-as-a-service-top-seven-for-sap-customers

Top 3 #IndustryCloud Content from Last Week – Week 20, 2022

2022-05-25T06:07:14+02:00

Here are the three Industry Cloud Content (Articles/ News Items) from last week. All the content are from SAP Community for Industry Cloud.

“Software As A Service” in SAP S/4 HANA Public Cloud

Excerpts: In this blog post, we intend to cover an overview of ‘Software as a Service’ in SAP S/4 HANA Public Cloud, which enables Digital Asset Providers to sell Subscription software and monetize the revenue.

Read the blog post here:

The Three Circles of SAP’s Industry Cloud

Excerpts: The Olympic games’ logo has five circles, one for each participating continent. The Audi logo has four circles, one for each of the four car manufactures who joined forces in 1932. For me, SAP’s industry cloud for channel business has three circles, one that represents each of our key stakeholders.

Read the blog post here:

Industry Cloud in Manufacturing: A shift towards cloud and edge computing

Excerpts: Customers are deciding to collaboratively work in open and flexible ecosystem – hence, they need solutions that can be well orchestrated, even if the various bricks are coming from different vendors. Those bricks can run either on the edge or in the cloud.

Read the blog post here:

This is a weekly blog of top articles / blogs and documents on Industry Cloud topic. You can follow the tag here to stay updated with the latest blogs/ events/ announcements on SAP’s Industry Cloud.

For more information on Industry Cloud, follow SAP Community for Industry Cloud.

You can get the earlier issues of this weekly blog here:

You can provide your comments/ feedback on the comments section below.

Disclaimer: This blog post is based on my personal insights only.

XaaS Digital Assets with SAP S/4HANA Public Cloud

2022-07-21T20:56:39+02:00

In our previous blog we saw an overview of SAP S/4HANA Software-as-a-Service Business Model.

In this blog let us go in more details of various possible business models and corresponding pricing models that we can have as part of XaaS Digital Assets. Our focus will be on E2E business process for Subscription based products in SAP S/4HANA Public Cloud with an out of the box integration with SAP Subscription Billing & Entitlement Management solutions.

Let us imagine that there is a Digital Assets Software company having a software portfolio including various software & different pricing models like:

Fixed Recurring Charge

Tier Based Pricing

Volume/Usage Based Pricing

They may also have a one-time charge for services like software installation or activation of the software's etc.

This company wants an E2E (End to End) solution for "offer to cash" where a software can be ordered, fulfilled, priced appropriately, they can track all the relevant entitlements, invoice, and recognize revenue as per IFRS 15 standards at period end.

XaaS Digital Assets product portfolio including SAP S/4HANA Cloud, Subscription Billing & Entitlement Management is a good fit and can do much more to help our customers realize various emerging business models as part of anything-as-a-service or XaaS.

*In this blog we will focus on “Fixed recurring charges” pricing model and other pricing models will be covered in further blogs of this series.

Current Scope of XaaS Digital Assets:

Products:

SAP S/4HANA Cloud with SAP Subscription Billing & SAP Entitlement Management.

Partner-integration WIBU & Digital Route*

Target Companies:

Companies that are running Everything-as-a-Service (XaaS) business models in a B2B environment.

Target Market:

Mid-Market Enterprises

Business Scenario:

Software-as-a-Service (SaaS)

Steps involved in an E2E Business Process:

Solution Order creation in SAP S/4HANA Cloud.

Subscription Creation & Activation in SAP Subscription Billing

Automatic Entitlement creation in SAP Entitlement Management

Bill creation in Subscription Billing & transfer to SAP S/4HANA Cloud

Invoice creation in SAP S/4HANA Cloud

Revenue recognition with Event-Based Revenue Recognition

E2E Business Process Flow

Before we start with business processes, we need to make sure that we have the right Org structure, Configurations, Master data & IFlows available in SAP S/4HANA Cloud, SAP Subscription Billing & Entitlement Management Products.

Then we start the process of creating Solution order in SAP S/4HANA Cloud with a software item along with service items. The software item is sold as a Subscription with item category Subscription Billing item.

In SAP Subscription Billing solution we can leverage different pricing models like Recurring, Usage based and One time charge. We need to configure the Rate Plan template to accommodate these pricing models.

The simplest use case for recurring pricing model is Fixed Recurring Charges per month for the software sold.

We can also combine a one time charge & usage based charges with a recurring price as per the pricing configurations in Subscription Billing.

In case of Tiered Based pricing we will take an example of number of licenses that can be used for a software, based on these licenses subscription price will be calculate at the transaction level. And for usage based pricing model we will take an example of number of Tokens for the software. Based on the usage of these tokens the customer will be charged.

Let's get started with our first simplest use case of Fixed Recurring Charges

Use Case - Fixed Recurring Charges for the software sold as subscription

Solution Order in SAP S/4HANA Cloud (Scope item 4GT😞

Item 10. CAD_TOOLBOX_PRO is the software based on subscription with fixed recurring charge.

Item 20. SOFT_INSTAL_SERV is a service item with one-time charge for software installation.

Solution Order in SAP S/4HANA Cloud

Automatic Subscription creation in SAP Subscription Billing (Scope Item 57Z😞

Subscription SB775 created with price of 100 USD per month.

Subscription Terms like a minimum term & term start, end date was copied from Solution Order & monthly Billing Cycle is derived from Rate Plan Template in Subscription billing.

Subscription in Subscription Billing

Monthly Rate is defined at item level of Subscription in pricing tab.

Automatic Entitlements created in SAP Entitlement Management System:

Two Entitlements 162 & 163 created for the software item with Entitlement Type as License.

One entitlement for e-Learning Training.

Another one for Trial Access.

You can configure any number of entitlements for a product with zero code as per modeling.

Trial Access Entitlement

Training Material Entitlement

Subscription Bill must be Transfer from SAP Subscription Billing to SAP S/4HANA Cloud for Invoicing

Bill must be transferred to S/4HANA along with other bills – if the billing date & customer is same.

Under Rat Plan Template in Subscription Billing, we have selected Billing in advance & Pro-rate first cycle.

Bill for Subscription Contracts

As the bill is prorated for the first month, 56.67 USD was calculated automatically as Net amount for the first month.

Charge Details at item level

Invoice Creation in SAP S/4HANA based on Subscription Billing document request (SDBR):

Services confirmation & service order completion is also required for the service item.

Create the invoice via Create Billing App:

Invoice 90270003 created for Subscription – 56.67 USD for the first month - as proration is selected for the first month.

Invoice 90270004 created for installation Service – 150 USD one time charge.

Invoice for Subscription Item

Invoice for Service Item

Revenue Recognition in SAP S/4HANA for Subscription (Scope item 5DQ) & for Service (Scope Item 3M3)

For the Subscription item the revenue will be deferred under contract liabilities and will be recognized at the period end or after manual rev rec run.

Provider contract before Revenue Recognition

After Rev Rec Run for Subscription – Program result:

Rev Rec Run result for Subscription

Revenue of 56.67 USD recognized for the software item and deferred revenue is zero.

In the same way for the Service item the revenue will be deferred under contract liabilities and will be recognized at the period end or after manual rev rec run.

After Rev Rec Run for Service - Program Results:

Rev Rec Run result for Service

Revenue of 150 USD is recognized for installation service & deferred revenue is zero.

We can also check the overall document progress in SAP S/4HANA Cloud under View Progress in Solution Order.

Overall Document Progress:

Overall Document Progress

In Conclusion, our customers can have a seamless user experience to manage digital assets sales with an E2E Business process using SAP S/4HANA Public Cloud with very powerful BTP Applications like Subscription Billing & Entitlement Management.

Thank you for reading today’s blog post!

Stay tuned for more advanced Pricing Models.

Please like this post if you found it useful, and don’t hesitate to leave us your feedback in the comment section.

In case of questions, feel free to ask them in our Q&A section using the tag Subscription Billing and/or XaaS.

Take care!

Romit

XaaS Digital Assets with Tiered Pricing Model in SAP S/4HANA Public Cloud

2022-08-04T10:11:25+02:00

In our previous blog XaaS Digital Assets with SAP S/4HANA Public Cloud we saw an E2E Business process for XaaS Digital Assets with Fixed Recurring Charges for the software sold as a Subscription.

In this blog let's take a look at E2E Business Process for "Tiered Pricing Model based on number of Licenses" in SAP S/4HANA Public Cloud & connected BTP applications including SAP Subscription billing & SAP Entitlement Management.

We'll take the same example of a Digital Assets Company, having a software portfolio including various software's & different pricing models.

Apart from software's with Fixed Recurring Charges, this company also have a Digital Asset portfolio where customer is billed based on number of Licenses they use & pricing is Tiered Pricing Model.

End-to-End Business Process Includes:

E2E Process Steps

By definition, A tiered pricing model refers to the cost of goods going down — or discounts increasing — based on the quantity/licenses purchased.

For the Software, Billing period is "Quarterly on reference date" & "Billing in Advance" is selected in SAP Subscription Billing Rate plan template.

Rate Plan Template in Subscription Billing:

Rate Plan Template for Tiered Pricing

Example Pricing Tiers configured in SAP:

From 0 to 10 licenses customer to pay 200 USD per license.

From 10 to 50 licenses customer to pay 160 USD per license.

From 50 to 100 licenses customer to pay 140 USD per license.

Above 100 licenses customer to pay 120 USD per license.

As the number of licenses increase, the price per license will go down.

Assuming we have all the relevant configurations, Org structure, Master Data & IFlows in place. We can get started with an E2E Business process with Tiered Pricing Model.

As part of E2E business process, we start with creation of a Solution Order in SAP S/4HANA Public Cloud.

Similar our previous blog, we create a Solution Order with two line items - one for software & another one for one time installation service.

We can also have a 24*7 Support Plan for this software, which is also a Subscription item based on number of license but Fixed price of 5 USD per license.

Only thing different in this case is, we have to enter the number of licenses required at the line item level under Subscription parameter in the Solution Order.

Subscription Parameter at item level

Imagine that customer needs 25 licenses for the Software & for 24*7 Support Plan.

For 25 licenses, the price for the software will be 200 USD for first 10 licenses + 160 USD for remaining 15 licenses. Which is 2000 + 2400 = 4400 USD per quarter.

And for 25 licenses, the price for 24*7 Support plan is fixed recurring = 25*5 USD = 125 USD per month.

As soon as we release the items in Solution Order, the order distribution will take place. Resulting in an Automatic Subscription Contracts for Software & Support Plan and a Service Order.

Example Solution Order

We can check the follow up transactions in Transaction History of the Solution Order.

Subscriptions SB772 for Support Plan & SB773 for PCAD_TOOLBOX_TIER software were created.

Subscription for the Software

Subscription for the Support Plan

If needed, customers can also increase or decrease the number of licenses. And the corresponding credit/debit will be automatically taken care by SAP Subscription Billing in the next billing cycle.

Similar to our previous blog, we also have Entitlements created for this software in SAP Entitlement Management.

One entitlement for Trial Access & another for E-Learning access.

We can model as many number of entitlements as we want in SAP Entitlement Management System for a specific offering.

Entitlements in SAP Entitlement Management System

Once the Billing due date is reached the Bills from Subscription Billing will get transferred to SAP S/4HANA Cloud for Invoicing.

Bill transfer from SAP Subscription Billing to SAP S/4HANA Cloud

For Reference, We can find Tiered Pricing Calculation at the item level in Bills.

Tiered Pricing Calculation for the transaction

Subscription Billing Document Request is created in SAP S/4HANA & can be invoiced as a standard F2 Sales Invoice.

Then we create invoices from BDR for Subscriptions & service item. Assuming service confirmation and other relevant steps are done.

Invoice for Subscriptions

Invoice for Service

Once the Sales & Service Invoices are created, Revenue has to be recognized at the period end using EBRR (Event-Based Revenue Recognition)

The Revenue Recognition program will recognize the revenue & keep certain amount as deferred revenue after the first Rev Rec Run. As the Billing period for software item is "Quarterly on reference date".

Revenue Recognition (Event-Based) Provider Contracts Results

Only after the quarter ends, the whole revenue will be recognized for the software subscribed.

After the Rev Rec run - we can check the provider contract in Event-Based Revenue Recognition - Provider Contract Fiori Tile.

Similarly for Services the revenue will be recognized after the Rev Rec Run.

Revenue Recognition (Event-Based) Service Documents Results

The Overall Document progress can be seen under Solution Order Progress.

Solution Order Progress

In conclusion, SAP Customers can run E2E Business Process for Digital Assets providers with Tiered Pricing Model using SAP S/4HANA Public Cloud & its connected BTP applications like SAP Subscription Billing & SAP Entitlement Management.

Thank you for reading this blog post!

Please like this post if you found it useful, and don’t hesitate to leave us your feedback in the comment section.

In case of questions, feel free to ask them in our Q&A section using the tag Subscription Billing and/or XaaS.

Stay tuned for more advanced Pricing Models.

Take care!

Romit

Quote-to-Cash - What's in a Name? What's in it for you?

2022-11-16T14:38:38+01:00

When you ask people what they understand when they hear the term "Quote-to-Cash", you will get a very broad range of reactions and responses. The reaction will typically depend on your experience, perspective, your role, as well as your experience with the topic. This is not surprising.

What is surprising how wide and deep the topic of "Quote-to-Cash" is, and how many deep and significant connections it has to the objective of Business Transformation and Business Innovation across all industries.

You will hear a variety of definitions for Quote-to-Cash (which I will might shorten to Q2C for this blog), which all have a justification and connection to the topic, including, but not limited to:

"It is a subset of the much larger End-to-End Process Lead to Cash."

"It is a portfolio of solutions that delivers customers tools and engines to manage their quote to cash processes."

"Integrated set of activities to convert sales opportunities into paying, profitable, repeat customers."

"An Information Technology Term for the integration and automation management of end-to-end business processes on the sell side."

"Software Capabilities that encompass many sales, account management, order fulfillment billing and accounts receivables functions."

The list is by no means complete and could go on for a bit longer, since Q2C covers so many aspects and roles, from Sales, to Marketing, to Product Management, Finance, Service, Fulfillment and more. And, because it sounds so generic, after all, every business has a quote to cash process, it is often underestimated how important the process steps of Quote to Cash are for businesses to respond to the rapidly changing ways customers prefer to buy and consume a product or service. The move to a more outcome- or usage-based approach to pricing, packaging and charging for assets, products and services is an industry-wide trend that continues to accelerate and spread across companies of all types, sizes and locations.

An excellent introduction to the topic can be found in this blog by Jan Gilg.

Equipping Businesses to Stay Ahead of Change

Why am I posting this blog?

I have several reasons for posting this blog and I would really enjoy to receive your feedback and your questions

Introducing myself as a new member of the Solution Management team for SAP Quote to Cash, which covers a broad set of solutions including SAP CPQ (Configure, Price Quote) as well as the solution components in the SAP Billing and Revenue Innovation Management portfolio (Often referred to as BRIM)

Getting feedback. As a new member I am tasked to help with the standard taxonomy regarding this topic (names, concepts, terms, icons, graphics) as well as with making sure our key assets that explain the topic are easy to find and easy to understand. Of the key goals of this role is to make the topic more broadly understood and accessible, and to achieve better integration into the overall information landscape of SAP including SAP.COM, the SAP Community, SAP News and other information sources that will be accessible via the newly introduced SAP Universal ID, that will allow the community to register and subscribe to specific topics based on their interest domain.

Inviting your contribution or questions. If you are an expert in this area, I would welcome your input (or questions) in terms of interesting pointers to information sources, tips and tricks, key innovations or any other interesting pieces of knowledge that might help out team communicate the significance of the Quote to Cash topic to a wider audience. I am interested in your specific areas of interest, including, but not limited to:
- Configure, Price, Quote (CPQ)
- Subscription Billing and Lifecycle Management
- Entitlement Management
- Usage Data Collection (Digital Mediation)
- Rating, Charging and Pre-Billing
- Billing, Invoicing and Payment Management
- Cash Automation
- etc.

So, to keep it short as my introductory blog to this topic, look forward to any and all feedback and questions.

CHHO, Munich, 16.11.2022

Agile Monetization Engines - The next logical evolution of Commerce

2022-12-09T11:46:01+01:00

The transformation of commerce continues at a relentless pace. If you look at commerce innovation from a historical perspective, the biggest enablers for companies to innovate and take their business to the next level of productivity were ERP and Supply Chain Management the 90's, and CRM, Analytics and E-Commerce systems in the early 2000's. So what will be the next big category to emerge along the established players? I believe that category to be Agile Monetization Engines. Let me explain.

Most of the commercial systems deployed in the market today still are following the paradigm of customers consuming a product or service based on relatively stable contracts. The idea of engaging with the market based on metered usage, resource consumption or even outcomes is still a fairly new concept, mainly originating in very large enterprises, for example Utilities or Software Companies.

When we engage with customers, the problems arising from new ways of creating and monetizing value are still framed in the established terminology like Billing, Quote to Cash, Charging, Revenue Recognition, etc. The word monetization is still mostly used in the context of purely digital products. But there is a shift happening from what I can perceive in the conversations and content I monitor as part of my Solution Management role in the Quote to Cash team at SAP.

Subscription as a business model is moving out from a niche status into a mainstream concern for companies in any industry and any size as customers get used to the consumption models based on usage or outcomes.

There is a disruptive conceptual shift from revenue to recurring revenue streams

Most companies still operate on decades-old business models, brittle compliance frameworks and fragile integration interfaces that are not ready to "snap into" a consumption based monetization model.

The Quote-to-Cash process in transforming companies is under duress, and has to be reviewed and adapted end-to-end to achieve integrated compliance, automation and scalability, including a holistic view of the connected modules that make up an agile monetization engine including:
- Configure Price Quote (CPQ)
- Variant Configuration
- Order Management
- Subscription Billing
- Entitlement Management
- Usage Data Collection and Mediation
- Contract Accounting and Invoicing
- Revenue Recognition
- Cash Management
- ...

Here is a link to a video from a analyst specialized on the topic of agile monetization platforms

https://mgiresearch.com/agile-monetization-platform/

What is the main take away? What does this mean for the rest of the 2020's?

The transformation to an agile monetization model is a cross-functional effort on the customer side involving the executive office, as well as sales, product marketing, product management, strategy, finance, development, supply chain management and partners

The transformation is not trivial. Just adding-on disconnected functional modules will not achieve the transparency and scalability needed for a mission-critical transformation of the order to cash process

Just like customers in the 90's replaced their home-grown, patchwork systems with integrated ERP systems, the 2020's will see the emergence of integrated Agile Monetization Engines that cover the end-to-end process of Quote-To-Cash with a holistic approach

Analogy: The move to an Agile Monetization approach is like building an autopilot into an aircraft. Unlike a GPS system in a car, that can just be attached to the windscreen as add-on, an autopilot is harder to add-on since it need to be connected to all systems that keep the airplane safely in the air. Built-in is better than bolt-on, especially when it comes to mission-critical systems that need to achieve the balance of being able to change course in mid-flight without compromising safety and compliance.

https://en.wikipedia.org/wiki/Autopilot#/media/File:A340_FCU.jpg

What do you think? What am I missing? Will Agile Monetization Engines (AME) a new three-letter-acronym to stand next to the giants of ERP, CRM and SCM?

I'd like to hear your feedback and also know what aspects of the AME topic we should drill down on next.

SAP Entitlement Management 2022 – The Link Collection

2023-02-23T01:17:26+01:00

SAP Entitlement Management 2022 – The Link Collection

SAP Entitlement Management assists customers in their move to a "Everything as a Service" and/or subscription business. 

The solution provides a flexible modeling tool to define and track any type of entitlement including product, license, service, training, warranty, digital content, etc. to future proof business offerings. A central repository of entitlements provides a 360-degree view of entitlement status to track consumption with audit trail to eliminate churn and drive-upsell\cross-sell opportunities, as well as minimize risk and drive compliance.

SAP Entitlement Management is a public cloud solution which requires no sap backend. It comes with pre-delivered integration scenarios to: Order Management in SAP S/4HANA On-Premise, SAP Subscription Billing, SAP Commerce Cloud, SAP Analytics Cloud for reporting, SAP BRIM / Subscription Order Management, and SAP S/4 HANA Cloud Order Management and provides seamless integration to other order management, license key, consumption, etc. solutions via publicly available APIs. With all these aspects, SAP Entitlement Management can help to reduce revenue leakage, accelerate new revenue streams, and optimize digital delivery.

Picture: SAP Entitlement Management Overview

In this blog, you can find the latest collection of all new capabilities, highlights, and win stories for SAP Entitlement Management.

SAP Entitlement Management – Highlight Videos

Highlight Video

EMS for High-Tech Video - Spanish

EMS for High-Tech Video - Portuguese

EMS for High-Tech Video - English

Highlight Video - Japanese

Highlight Video - Chinese

Highlight Video - Korean

EMS WIBU POC Demo Video

Overview Presentation and Demo Recording

Video Short - What is Entitlement Management

SAP Entitlement Management Information Sheet

Solution Brochure

SAP Entitlement Management Customer Stories

SAP IT Public Reference

ServiceNow Public Reference

ServiceNow Customer Testimonial Video 2022

TA Cook 2022 – Roche’s Software Monetization Platform: Transforming the Commercialization of Digital Products

TA Cook 2022 – How ServiceNow is Using SAP to Transform Entitlement Management

Thanks for reading this blog post – stay tuned for more to come!

If you have any questions and want to actively engage with SAP EMS experts, feel free to post questions on our Entitlement Management Q&A Forum on SAP Community.

For more information on SAP Entitlement Management, check out Entitlement Management on SAP.com.

Revolutionizing the Medical Device Industry with SAP BRIM Solutions

2023-03-30T13:53:51+02:00

Revolutionizing the Medical Device Industry with SAP BRIM Solutions

The medical device industry is undergoing a significant shift away from traditional capital equipment acquisition models. This shift is due to increasing cost pressures, longer equipment approval cycles, tighter service margins, and the move toward outcome-based medical insurance reimbursements.

To adapt to this new environment, medical device makers are turning to digital solutions like SAP Billing and Revenue Innovation Management (BRIM) and SAP Entitlement Management (EMS) to enable a smooth transition from equipment sales models to new subscription-based offerings. SAP BRIM allows medical device companies to monetize subscription and usage-based business models with agility with the solutions' revenue management and recurring billing capabilities. SAP EMS allows medical device companies to manage their customers rights to use these new subscription offerings and services, to ensure over-use is not happening. The solution also automates downstream processes such as provisioning, and revenue recognition to ensure the operational aspects of these new business models are supported in a cost-efficient manner.

Other related solutions in the SAP ecosystem, like SAP Revenue Accounting & Reporting (RAR) and SAP Contract & Lease Management (CLM), streamline and simplify accounting and reporting of complex revenue streams. These solutions are key to helping medical device companies make the transition to new business models as accounting requirements are substantially different for recurring revenues versus a one-time product purchase.

One example of a successful subscription-based model in the medical device industry is Hillrom's SmartCare service. This service provides hospitals and clinics with turnkey management of their patient care equipment using a subscription-based model.

By embracing advanced digital solution economy capabilities like SAP BRIM, medical device manufacturers can enhance their competitive standing by giving providers more flexibility, improving their revenue predictability, increasing loyalty, create new revenue streams, and deepen ongoing partnering relationships. As the medical device industry continues to evolve, companies that are quick to embrace these digital solutions will be better positioned to succeed in this dynamic market and improve their business results.

To learn more, read original article here: How the Digital Solutions Economy is Impacting the Medical Devices Industry (bramasol.com).

Where can I find learning materials on SAP Entitlement Management features and functions?

2024-04-19T13:45:18.037000+02:00

We recommend to access our Managing SAP Entitlement Management learning journey.

Overview
This learning journey will guide you through the steps to get started with Managing Entitlements with SAP Entitlement Management.

Learning objectives
After completing this learning journey, beginner users will be able to explain the importance of entitlement management for maintaining accurate entitlement records, how to check and review basic entitlement configurations, perform frontend reviews and lifecycle relevant operations of entitlements, and other maintenance tasks in support of properly configured entitlements.

Pass all the quizzes and receive a digital badge

Please ask a question related to the digital learning Journey in the Q&A area.

Our SAP Learning Experts will get back to you as soon as possible! We are here to support you.

We appreciate your feedback and we will make sure to continue sharing interesting topics.