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A deeper look at “product to Cash” for technology & managed service providers

Firstly why “Product to Cash” and not “Quote to Cash”, the answer to this is simple, the journey starts with well-defined products and services, from units of sale, to cost & price management, sales logic and their journey to cash. Getting this right is essential to obtaining a highly performing business.

Most service providers have established mature Client Relationship Management (CRM) and Enterprise Resource Planning (ERP) solutions. For many, the solution that connects the two is a little more challenging to describe and for good reason. CRM and ERP are industry mature solutions with the terms coined many years ago, the solution that joins the two is Configure Price Quote “CPQ” a more recent development and only coined in 2007 in industry and recognised by Gartner in 2010.

Helping set the scene, here is a high-level history of ERP, CRM and CPQ, this helps to understand why for many there is a complex answer as to what connects CRM with ERP.

Of course, many people are new to CPQ, with many service providers having plugged the gap with complex Microsoft Excel sheets or homegrown systems. With today’s world of increased expectations, unprecedented technical innovation, complex business environments and competition, service providers need to properly address their product to cash capability.

The reasons for this are many

Business Operation

· Improve decision making, client intelligence and reporting

· Create an environment for people to succeed and flourish

· Unburden people from low-value activity

· Enable people to respond quickly and perform higher value activity

· Obtain a more friction-free efficient operation

Sales & Client account management

· Reduce time and effort to quote

· Make it easy for clients to buy and consume

· Automate sales administration

· Enable selling of more services, guided selling, cross and upsell

· Improve Client Solution life-cycle management

· Prevent revenue and profit leakage

Product Management

· Better standardise and control non-standard sales

· Simplify the sale of complex products and services

· Improve portfolio, cost and pricing management

· Better enable and connect product management with sales

Service Delivery to Cash

· Automation as a result of structured data and systems integration

· Improved revenue reporting

· Efficiency through consistent quality, process and standards

Addressing these “product to cash” challenges are not an if, but a when. In order to be successful, it's important to understand this is far from just a tool implementation, the focus must be given to

· Organisational operating model

· Product strategy, portfolio content, packaging & outputs

· Business process, from product management through sales to fulfilment and invoicing

· Reporting

· Systems and integration

· Change readiness and approach

To help visualise this here is a view of product to cash landscape with benefits and how the various systems fit with stages and processes, noting how intrinsic CPQ is throughout the journey helping address the challenges.

Flows to billing

When questioning this subject deeper you will discover many facets of product to cash, one of which is the “flows-to-billing”. Service providers typically have many options to consider, it's important to understand the business operation, offerings, scenarios, volume, systems and constraints to get this right. It's also worth noting the nirvana solution may well not be reached in one step and require clear vision, roadmap and understanding of constraints.

The picture below depicts various flows into invoicing, typically providers have a mix of one time and recurring revenues streams. Some will be vendor/partner resale or rental, others will be order-based and some usage metered. Product management needs to consider many aspects when packaging products and services for sale, from enabling ease of sale to the journey to cash and importantly not just for the first sale but also for subsequent change as the two journeys can be very different.

Not evolving or getting this wrong can have a dramatic impact on business operation with people battling high order volumes, process, systems and content in order to do their job, ultimately impacting performance, creating leakage and impacting the bottom line.

It’s important to be crystal clear on your billing strategy this may differ depending on the nature of offerings as some will be well suited to some and not others, here is a flavour along with considerations.


· Order based

Volume, systems, process and methods of processing

· Metered usage

Data sources, Process, reporting systems, setup and maintenance

· Regular Instance counts

Data sources, constructs, reports, process, standards, setup and maintenance

· Hybrid of some or all of the above

Level of granularity

· High level through to break down billing

Options, standards and guidance

A last note, looking back at the history of ERP, CRM and CPQ one thing is for sure with today’s world of unprecedented innovation and the nature of cloud SaaS, vendors are laser-focused on innovating their capabilities ultimately better enabling you as service providers, taking advantage of this will be critical to future business performance.

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