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ajaytungala
Explorer
Organizations across the globe are looking to transform their business model from a traditional pay-per product/service model into a subscription model. The main objective of this transition is to drive long-term customer value while meeting personalized requirements of the consumer.

Revenues generated by firms from subscription-based business models have grown over 400% over nearly a decade as preferences of consumer purchases have shifted from ownership to usership. 1

According to a survey The Harris Poll conducted on behalf of Zuora’s Subscribed Institute, it was found that the growing consumer preferences for use of subscription service over the ownership of physical products. In addition, the survey also found that around 64% of the survey respondents among 13,626 adults from 12 countries, said they feel connected to companies whom they have direct subscription experience vs companies whose products they simply purchase as one-off transactions. It was also found that around 72% of the consumers would prefer to pay for what they use, rather than just a flat fee.1

According to an article published by UBS, the Subscription economy is expected to grow to USD1.5 Tn by 2025, at an average annual growth rate of 18%, more than double the USD 650 Bn it’s estimated to be in 2020.2

How Business Across Industries are Shifting to Subscription Based Economy


In 2011-12, Adobe moved from selling boxes of software to selling Software-as-a-Service subscriptions, which helped the company to increase its subscription-based revenue increased 2,075% to USD 14.57 Bn for FY2021 from USD0.67 Bn in FY2012.3

In 2020, Maruti Suzuki introduced Maruti Suzuki Subscribe, a solution that allows customers to opt from a range of its vehicle models, for multiple tenure options, for an all-inclusive fixed monthly rental. The subscription based model witnessed a 800% within two years.4

In addition, companies such as Peloton (fitness classes and equipment), Dollar Shave Club (grooming), and Enercare (HVAC and water heaters) also transitioned to subscription-based model.5

What is SAP BRIM?


SAP Billing and Revenue Innovation Management (SAP BRIM), formerly SAP Hybris, is an end-to-end cross-industry solution that helps businesses dealing with high-volume billing and invoicing complexities to optimize the business lifecycle process of design, sales, delivery, and billing.

The solution aids businesses across various industries to create and deliver highly personalized products and services, contract, and order management, and handles billing and invoice processing.  Overall, the solution allows businesses to adopt to changing business dynamics and help them to push products into the market more quickly.

Core Components


SAP BRIM, allows firms to manage product catalog and offers, order capture, order distribution, contracts, and customer care operations, and is integral part of SAP BRIM solution.

SAP Convergent Charging provides organizations with pricing flexibility when charging customers. The two main components in SAP Convergent Charging: Charging and Rating. Charging component determines which exact customer will be charged, while Rating component handles the calculation mechanism to determine the total amount to be charged in the billing document.

SAP Convergent Invoicing handles the process of uploading consumption detail records, storage of billing items, aggregation of billable items, invoice creation, and invoicing the customer. The solution is part of Contract Accounts Receivable and Payable, which is included as part of the core SAP S/4HANA portfolio.

Contract Accounts Receivable and Payable (FI-CA), is the financial backend that provides subledger accounting postings tailored to accommodate the requirements of industry sectors in which companies must interact with multiple customers and many transactions. FI-CA offers taxation, tax calculations, and country-specific processes, such as accounting principles, payment processing, collection management, and partner settlement, among others.

SAP BRIM also offers Peripheral Solutions such as SAP Convergent Mediation by Digital Route, OpenText, Payment Gateways, SAP Customer Financial Management, SAP Revenue Accounting and Reporting, SAP Flexible Solution Billing, and SAP Entitlement Management, which are implemented as needed per business requirements and complement the core SAP BRIM solution.

Customer Stories of SAP BRIM


 

  • CTT Correios de Portugal, a largest postal service provider in Portugal, has adopted SAP BRIM, SAP S/4HANA, SAP Fiori, and SAP Convergent Mediation by DigitalRoute. Through the adoption of SAP solutions, the company was able to standardize business processes by 80%, achieved 10X improvement in invoice creation, and achieved a 100% traceability of billing processes from invoice to contract.6

  • Ingram Micro, a distributor of IT products, logistics, and services, has selected Capgemini to implement complete SAP BRIM suite along with SAP RAR revenue recognition, credit management, and integration to multiple systems to enable its as-a-service business and manage high-volume, usage-based payments.7

  • Elseco, a high-technology insurance underwriting agency, has adopted SAP BRIM solution to manage different kinds of commissions and revenue-sharing schemas for insurers front as well as for insured business partners. Through the adoption of SAP BRIM, Elseco could define different types of invoicing and complex billing cycles, improve customer experience and consolidate account receivables and statements, and consolidate invoicing/AR.8


Sample use Cases of Billing and Revenue Management Solutions by Industry



  • Telecommunication: Handling billing and invoicing related aspects of prepaid and postpaid products, calls, text messages, and Internet.

  • Sharing Economy: Charging customers rentals of cars, motorcycles, bikes, scooters based on usage.

  • Software Licenses: Software subscription licenses billing (Example: One-Time free trials, monthly/yearly subscription, or based on various pricing tiers and features).

  • Equipment-as-a-Service – Digital Services for tracking assets real-time, predictive maintenance.

  • Fleet-as-a-Service – Offering fleet operators a pay-by-the kilometer service.

  • Device-as-a-Service – Remote monitoring and maintenance.

  • Lighting-as-a-Service – Handling installation repair, maintenance, and end of life management.

  • Hardware-as-a-Service – In Hardware-as-a-Service model, the customer pays for the services rendered by the hardware rather than purchasing it.


 

Summary


The blog highlights growing importance of subscription-based business models and examples of business that have moved from traditional pay-per product/service model into a subscription model to drive long-term customer value while meeting personalized requirements of its consumers. In addition, the blog also provides details around the SAP BRIM solution and its components that allow business users to handle high-volume billing and invoicing complexities and sample use case of firms that have adopted SAP BRIM solution handle high volume billing and usage-based payments.

References:

1Businesswire

2UBS Wealth Management

3LinkedIn

4The Hindu Business Line

5Forbes

6 SAP Portal

7 SAP Portal

8 Seidor Portal

9 Research and Markets