Stephen Hurrell's Analyst Perspectives

What’s New in Technology for Office of Revenue?

Written by Stephen Hurrell | Jul 31, 2024 10:00:00 AM

Spring and fall are conference seasons, and this spring I was fortunate to be invited to several software provider events that are part of my coverage of the Office of Revenue.

And while artificial intelligence (AI) and generative AI (GenAI) were front and center, there were other announcements where the focus was more on the potential changes that these technologies would enable within enterprises and their revenue teams.

By now, the shift from a focus on purely new business and logo acquisition to existing customers is firmly underway for many organizations and has spurred a series of new announcements and product releases.

As background to one of the more interesting announcements from SugarCRM, it’s worth acknowledging that most businesses and industries operate in mature markets where innovation in new digital products and services will complement existing physical products, creating additional bundled offerings to offer to existing customers, not only new ones. These incremental digital products and services are typically billed on a subscription and, increasingly, usage basis, contrasting with the traditional one-time sales many industries are used to and organized to serve. This means that an increasing proportion of revenue will be from annual recurring revenue and not from more traditional one-time sales. So, for many organizations, growth will come not only from a singular pursuit of new customers, but from innovation in new products and services to sell to existing customers. This requires enterprises to change how they organize and operationalize revenue generation activities.

Seeking to address the need to focus as much on existing as new customers, SugarCRM’s announcement of the acquisition of sales-i points towards supporting a shift in how to identify opportunities by facilitating the merger of traditional account and opportunity CRM data with data from outside the CRM. This could be data from such systems as ERP, billing and service, and support to help identify cross-sell and upsell opportunities both within the original purchasing organization and from other related organizations within a larger enterprise. This seeks to address a key need for many enterprises: to create more profitable growth paths with better margins from existing relationships, avoiding the much higher cost involved with new customer acquisition. The capabilities and approach showcased by the SugarCRM acquisition have the additional potential to address the perennial issue of the distribution and partnership models where access to the end buyer can become contentious between manufacturer and distributor, reducing overall revenue growth potential.

Another area of software provider development effort is in the general area of optimizing pricing. Long the preserve of industries dependent on market spot prices, such as manufacturing based on primary goods, or for those industries with constrained supply, such as airlines and hotels, we are seeing an interest from a broader range of buying organizations. Several factors are at play here: more focus on margin, having to deal with additional complexity in multiple selling channels, and the rise of B2C and especially B2B digital commerce. Many providers, including PROS, are looking at AI-based capability development, combining predictive AI for predictive numeric models with GenAI for attribute analytics. In this way, propensity-to-buy considerations can be combined with pricing recommendations that incorporate margin, market share and product substitution considerations for both B2B and B2C enterprises.

The third area of provider announcements relates to the contemporary, “always on” business environment, where relying on lengthy decision chains involving human review and approvals can lead to a competitive disadvantage in the sales and renewal process. Often referred to as the revenue lifecycle management (RLM) approach, this new approach announced by several software providers, including Salesforce, Conga and BillingPlatform, offers more integrated process and data alignment across all revenue-supporting and customer-facing employees, including not just the obvious marketing, sales and customer service but also finance and legal as well as distribution and fulfillment. The greater the number of activities that can be enabled as self-service for customers or for sales and customer service representatives to be more empowered at the point-of-sale, the better to meet the customer where they are. But these need to be enabled within the context of guardrails. These providers have launched applications and platforms that better serve the more iterative and connected process of the RLM approach as contrasted with the more traditional quote-to-cash processes. In fact, we assert that by 2025, this new category of Revenue Lifecycle Management will emerge that covers technology that supports the modern lead-to-cash process to enable a positive customer experience, leading to sustained, profitable engagements.

So, amidst the almost daily announcements of new GenAI developments, there is a need for enterprises to not lose sight of the need to continuously review existing technology and business processes to better support the transition from yesterday’s one-time sales and linear approach to the contemporary always-on business model. Whether B2B or B2C, the iterative and cyclical approach better meets the needs of today’s customers, contributing to a sustained and profitable business engagement. I expect the pace of announcements to increase, and though AI will capture much of the limelight, new technologies are best used to enable enterprises to more efficiently and effectively improve the customer experience so that customers keep returning for more products and services.

Regards,

Stephen Hurrell