Implementing Cloud-Based Quote to Cash in Large Enterprises
L arge companies in many industries have implemented or are considering the implementation of cloud-based solutions for their back-office. The driver to change may be a compelling event, such as the end of life of existing back-office applications. Sometimes, the driver is an upstart competitor causing serious revenue disruption for a large player when they use the new monetization techniques available out-of-the-box in the cloud-based ecosystem, such as:
Dynamic Product & Services Environment
Dynamic Selling Environment
Dynamic Billing Environment
Dynamic Partner Environment
Making technology choices from the vast array of cloud solutions and configurations is complicated by the size of the enterprise’s employee and customer base, public-versus-private ownership, and regulatory obligations. These considerations add different dimensions of risk to mitigate for large enterprises when considering the move to cloud-based multi-tenant packages.
Here are the six most important considerations that I’ve heard come up when discussing the move to an off-the-shelf cloud-based Quote to Cash solution with leadership teams.
Consideration #1: Data Security
Large enterprises have strict policies guiding the management and security of their data when it goes off-premise. Leaders worry about the segmentation of data in multi-tenant cloud-based solutions. The key to addressing this is to carefully review and understand the type of security needed. Cloud vendors bring their own security to the table, and other applications can add layers of authentication based on factors such as data available in a specific geographical region. Data can be locked at the field level based on specific authentication factors with some solutions.
Some leaders in highly regulated industries avoid a multi-tenant cloud solution, choosing to run applications in private clouds, where that option is available. This is an expensive option, but it is sometimes the only option.
Structured data warehouses and data lakes are crucial parts of creating your enterprise’s cloud strategy. The same data security considerations that apply to the application will apply to the structures in place for reporting and analysis. Does the security for the solution provide the right level of configuration for controlling access? How is the data segmented? Can you configure row and/or field level locking? You must ensure that your organization doesn’t create a security hole through via the reporting infrastructure.
Consideration #2: Ability to Control the Roadmap
Traditionally, almost all enterprise systems were installed on premise, using in-house servers that required monitoring and maintenance. Often, those in-house servers moved to dedicated and then co-located data centers, while software updates for business applications were still controlled by internal IT teams. Technical managers had complete control over when and how updates were pushed out to the enterprise. With cloud-based solutions, updates and changes are pushed on regular basis, and in a multi-tenant hosted solution, individual enterprises have less control over when releases are deployed.
The obvious disadvantage to this model is the lack of control. The advantage that most enterprise leaders see are cost savings, which come from having a smaller IT staff concerned with items like server maintenance and release deployment. Many leaders prefer to invest dollars in items that evolve their core competencies and offerings, instead of spending these dollars in the routine maintenance of their IT infrastructure.
Consideration #3: Flexibility of Configuration & Interfacing with Other Applications
A cloud Quote to Cash solution must be flexible enough to sustain your enterprise workflow. It is important to evaluate flexibility for key use cases during the sandbox phase of an RFP process with vendors.
Most cloud vendors will customize a demo with your important use cases. When you evaluate the demo, be sure to understand if the solution can be configurable to work within your enterprise’s existing processes and systems. Does it appear that your processes need significant modification to fit within the solution’s pre-determined workflow? Will you need to program custom objects for your implementation? If customization is required, will the custom work you do have to be re-written when your vendor updates their software?
Flexibility of the solution is also defined by how it is set up to interact with other parts of your application stack. How will you handle the interface to other applications in your ecosystem? Are their connectors available out of the box to connect elements of your stack? How well do these connectors work? Are they bidirectional? Will you need to consider an iPaaS solution?
The elements of configurability and security often consume the most resources when an enterprise determines fit.
Consideration #4: Migrating Historical Data
Maintaining the integrity and accessibility of historical data is a paramount concern. Most enterprises have historical data that is retained to do analysis, or to fulfill a regulatory requirement. When moving to new cloud-based quote to cash solution, vendors seldom provide the ability to bring historical on-premise data into the application.
Most enterprises will work to establish a data warehouse or data lake that ingests all historical data from their on-premise solution, and then continue that same practice with the new data that comes from the cloud solution. This makes the data available in one place for reporting, analytics, and compliance purposes.
In the case of historical data, the implementation team must consider data security and interfacing with other applications.
Consideration #5: Ability to Create Parallel Runs
To test the feasibility of new systems implementations, some clients run parallel solutions for a period of time. This concept of parallel runs comes from the billing domain, and typically clients strategically sample data that becomes part of the parallel run of the systems.
When implementing a cloud based biller, enterprises will often run bills in the old and new system, and compare the two bills to test for accuracy of all calculations. They will also note any issues that are caused by a new presentation format. By leveraging the subject matter expertise of key line-level employees with real-world daily use cases, you can develop a sampling paradigm that addresses each type of bill.
Running two systems at the same time, even for a limited amount of time, requires funding. The most important consideration when evaluating the ability to run parallel systems is to consider the costs involved if a mistake arises by not running the systems in parallel.
Consideration #6: Flipping from a CapEx to an OpEx Culture
Monthly subscriptions to SaaS are considered OpEx (operational expenditure). This is a change from the traditional capital expenditure (CapEx) treatment of IT software licenses. Large enterprises are heavily capitalized and prefer the accounting treatment of licenses and IT work conducted on platform enhancements as CapEx. Small companies prefer the monthly subscription model, as fees are related to customer success factors such as percentage of revenue or usage.
If your enterprise is having a hard time with accounting treatment, you are not alone! The decision to have more of your company’s resources focused on your core competency instead of developing IT systems and leveraging the innovation that comes with the cloud-based ecosystem will take time and business justification.
Transitioning to Cloud Quote to Cash Can Be Challenging Before It Is Rewarding
The transition to cloud-based Quote to Cash solutions must be managed on many levels. You must consider not only data security and product roadmap development, but also how the solution will work within your enterprise.
Considerations such as the configurability of the solution or solutions and how to manage historical data have a big impact on the overall success of your project. Making sure the output is correct from your new ecosystem cannot be trivialized, and building business cases that show the value of this change long-term, given the concerns over CapEx vs. OpEx can be daunting.
In my experience, these types of changes are best handled with a clear end-state roadmap that takes years to put in place, where success is built one application at a time. Segmentation of who rolls onto which solution - and when - is a key a part of the strategy that guarantees corporate adoption and the eventual success of cloud package implementation initiatives.
Compelling events, such as a smaller competitor threatening a larger competitors market share through the disruptive use of cloud based back-office can also create momentum within your large enterprise to embrace and implement cloud technologies. Whatever the motivation, I wish your enterprise every success on your journey to the cloud.