The Growing Popularity of Subscription Models

Subscription Billing:
A Driver for Growth and Innovation

Subscription business models are in vogue. Won over by the opportunities offered by innovative product applications, companies are increasingly turning to subscription billing to generate recurring revenue and secure long-term customer relationships. It thus falls on SAP S/4HANA users to integrate these new billing processes within their system landscape.

Deloitte study has confirmed that subscription models are becoming increasingly attractive to companies compared to traditional one-time sales. It found, for example, that providers were able to generate additional revenue from 57 percent of the customers taking out subscription or usage-based business models. In addition, 40 percent of customers who took out a subscription used fewer competing offers afterward. This shows that the contracts concluded paid off not only in terms of increased cash flow, but also in terms of greater customer loyalty and brand retention. 

What New Product Innovations Are Resulting from Subscription Billing?

The trend toward subscription billing is being driven by the digital transformation, which is opening up completely new product opportunities and addressing new customer needs. The integration of software-based functions into physical products is leading to new and innovative solutions. One example is smart home devices, such as thermostats or lighting systems, that are controlled via an app and enable the automation of everyday things. 

Vehicle users are benefiting from modern cars with integrated software functions that can be operated via the infotainment system, including GPS navigation, automatic emergency braking, adaptive cruise control, and entertainment apps. In the manufacturing industry, software-controlled functions in machines enable improved automation, diagnostics, and maintenance. These machines can be connected to one another over the Internet to transmit real-time data and perform remote maintenance, significantly increasing productivity. 

The list of innovative products resulting from integrated software functions could go on and on. All enable companies to improve product performance, address new customer needs, and react flexibly to changing market requirements. Software-specific individualization also enables much shorter delivery times courtesy of advance production and storage closer to the consumer. 

However, the new products often require new subscription and usage-based business models that enable companies to maximize the potential of the integrated software functions and strengthen customer loyalty.

Why Is Subscription Billing a Particular Challenge for SAP S/4HANA Customers? 

The efficient modelling, billing, and management of recurring or usage-based fees is key. The management of payment flows also has to be seamlessly integrated into existing processes and IT systems. This poses a particular challenge for companies that use SAP S/4HANA, however, as the current SAP S/4HANA standard does not offer a suitable solution for subscription billing models. SAP S/4HANA customers are therefore well advised to rely on support from an experienced partner such as XEPTUM. 

Why Should You Choose XEPTUM as your Project Partner for Subscription Billing? 

With XEPTUM, you have an SAP consulting company at your side that has dealt intensively with the options available in the SAP environment for implementing subscription and usage-based business models. These include, for example, SAP Subscription Billing and the Zuora subscription solution

Our team of consultants will provide you with expert support in design and planning and help you to successfully integrate the selected subscription billing solution into your IT and process landscape. Take advantage of our many years of SAP project experience and open up new opportunities for growth and innovation with subscription business models.