In focus: Oracle CPQ + Subscription Management Cloud

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Subscription Management Cloud

Subscription management is the process (and technology) required to support dynamic purchasing, ownership, and maintenance models. These are complex models that require an entirely new level of real-time oversight to connect, track, and manage every possible variable for efficient and accurate solutions and services fulfilment and revenue recognition.

The distinct advantage of Oracle’s CPQ + Subscription Management Cloud offering is that it provides the ability for a seamless flow of data supporting recurring revenue cycles across the end-to-end business process flow. In the lead-to-cash cycle a ‘lead’ could come from any sales channel: direct staff, channel partners, resellers, or customers themselves. The resulting opportunities go through the appropriate solution configuration of goods/services to be delivered or provisioned which are then priced with any price type or revenue model desired. The approved quote should result in an order which then flows to the contracted stage where it triggers changes to the booking/revenue forecasting and sends the order for fulfilment which may include shipping of assets or enablement of digital assets such as software and services. This also triggers the appropriate billing events for the period of the contracted agreement whether that be one-time charges, recurring fees, usage-based billing etc.   

Then, on the reverse side of this flow for the renewals of existing contracts, the design of the subscription management solution enables the triggers for the renewal cycle to be based on a wide number of factors including date or time, over- or under-usage, billing events, product changes, specific contract terms or other relevant factors. The subscription-based agreement, along with the related asset lines moves back to the evaluation stage where any changes to the associated assets, usage metrics or updated pricing can be used either in an automated self-service interaction or routed to the right sales channel to handle the follow-up. The renewed agreement then flows back to the contracted stage to complete the full cycle. 

The CPQ and subscription management middle office functions provide a consistent user experience as well as data flow from the front office to the back office and back again to the front office in the case of changes or renewals. The key highlight is that each of the elements (as part of a single master data flow) are standardised to meet common-practice subscription use case scenarios. You can swap different vendors or assets in or out as you venture along your journey here. Also, if you are on a journey to the cloud, these pieces can move from on-prem to the cloud. In any case, the CPQ subscription management process provides a single repeatable flow maintaining the predictable relationship between each of its constituting elements. 

A typical Oracle Subscription Cloud Management foundation implementation includes the following elements: 

·      Product/services description 

·      Subscription item set-up

·      Subscription quote management

·      Subscription activation/cancellation

·      Subscription change management

·      Subscription and balance review

·      Subscription renewal management

·      Amendment process (assets and output)

·      Integration of CPQ/Subscription Management Cloud with CRM and ERP

·      Bidirectional interaction between CPQ and Subscription Management Cloud

These subscription management elements form part of the transactional journey as follows:

Step 1 – In the sales process, we start out with an opportunity. This could come from a traditional CRM, it may be a self-service request, from a channel partner portal or entered as a service request. That opportunity moves to the quoting stage where it is determined who you are selling to, what you are selling, and how that is to be priced. Those are the three primary elements here. 

Step 2 – Once the order is agreed upon, it moves to fulfilment. Fulfilment can mean many different things such as simply turning on access, starting to bill for usage, etc. The basic idea here is when the customer gets ownership which is important when you move to revenue recognition. 

Step 3 – The order moves through the fulfilment/provisioning stage as needed, the lines and contract that are going to be used at time of billing. We show this here as ‘Subscription’.

Step 4 – Revenue recognition is where future revenue projections are realized. Forecasts are updated in a pending state, and any asset changes are written to the Installed Base asset as needed. 

Step 5 – Once the fulfilment has been completed, it is time for the order to be updated to note the actions needed such as an invoice going to the customer. This requires a referral to the subscription agreement to make the alignment of what needs to be on that invoice as far as the invoice lines are concerned. Revenue recognition is also updated to reflect the status change and start recognising revenue as applicable.

Step 6 – When it comes to renewals, that same subscription data of what the customer is paying for what they agreed to originally, is now used to trigger the creation of a new opportunity allowing to create a new or updated quote. The opportunity creation is triggered even if the agreement is evergreen because this will update the forecasting analysis. 

Step 7 – Going back into the quoting process can be flexible and include low touch renewals or high tough interaction where negations need to be conducted prior to the updated quote approval and subsequent order entry. 

Step 8 – In the case of a subscription service, the asset is also updated to be used as the basis for any changes to the service that may happen during negotiation such as upgrades, downgrades, changes, additions, suspensions, modifications, etc. These will all be reflected in the asset record. This is then used to calculate the order value even for future changes or changes that are based on subsequent changes.

Step 9 – From there, the (re)order process is enabled to start all over again.

The Oracle CPQ Cloud and Subscription Management Cloud benefits are numerous and include:

·      Complete Security Model, Authorization and Authentication

·      Integration with CRM and ERP/Financials, interfacing common objects such as opportunities, contracts, orders and billing documents

·      Architecture to receive (pre)structured data, supporting a longer term IT landscape vision

·      Consolidated architecture and leverage of Oracle footprint

·      SaaS solution, scalable, flexible incl. tenancy

·      First Phase Foundation release(s) to replace legacy solution(s)

·      Reduction of manual effort, data entry and re-keying of same date into different systems

Our mission here at Walpole Partnership is to make sure every one of our customers can take full control of their subscription business. We are helping our customers to offer new and existing products and services ranging from recurring charges to usage-based subscriptions, and even mixed orders of goods and subscription services. We are empowering both their sales and service teams as well as their end customers to configure, manage and renew subscriptions at any point in the lifecycle. And we are focused on helping our customers reduce churn and optimize renewal cycles with a complete overview of their subscription portfolio and adoption. 

Increase awareness of your Opportunity-to-Cash lifecycle by completing our diagnostic tool and receiving a 100% customised report.

This post was written by Walpole Partnership’s Senior Managing Partner Consultant, Ingmar Hermans.

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