InsightaaS: On several occasions, we have highlighted posts on the Enterprise Irregulars blog site by leading software analyst Denis Pombriant. Here, we visit Pombriant’s ‘home’ site, Beagle Research Group, to review a post on the differences between SaaS and conventional software approaches to the “order to cash” process.
Subscription companies face many of the same challenges that more conventional companies face but the nature of these businesses puts an entirely different spin on the challenges.
All companies have to acquire new customers, make products and price them attractively without leaving money on the table. Also, once a product is purchased, a company needs to get the cash in house as quickly as possible. If you think of this as the order to cash process, you’d be pretty close depending on how far up the sales trail your definition of acquisition goes. But while these ideas seem familiar there are major differences between how they are implemented and supported conventionally and in a subscription environment.
Order to cash in a conventional company is relatively simple. A conventional company makes products, its sales team sells them and operations produces an invoice that finance tracks all the way to collection. A subscription company is just like a conventional company in that respect but it is different because the subscription company needs to reacquire its subscribers all the time. For a subscription company the sale is never complete because there’s always next week, next month, next year – you get the idea.
Subscription companies are always in acquisition mode, which means much more than always be selling or always be closing…
Read the entire post: http://beagleresearch.com/the-order-to-cash-subscription-process/