“Moving to an as-a-service model dramatically changes how an organization does business and keeps customers satisfied, starting with product design and pricing through synchronized order fulfillment, revenue recognition and sharing, invoicing, and contract management,” said Mirjam Wittmann, director of Product Marketing, High Technology at SAP. “We’re seeing our customers begin with a targeted pilot in one line of business, followed by refinements and expansion to monetize XaaS packages for greatest competitive advantage.”

XaaS-Driven Growth at Lenovo: Go Bigger Than Back Office

Everything-as-a-service business models are essential to growth plans. Long recognized for laptops, phones, tablets, data center servers, and business solutions, the company’s service-led transformation has been a catalyst for significant expansion in its non-PC business, accounting for over 42% of the company’s revenue.

“We’re in a phase of rapid acceleration, focusing our efforts on the expansion and refinement of our XaaS capabilities and business infrastructure,” said Arthur Hu, senior vice president and chief information officer at Lenovo and chief technology and delivery officer at ł˘±đ˛Ô´Ç±ą´Ç’s Solutions and Services Group. “This journey involves a multifaceted approach, combining agile development, strategic partnerships, and continuous optimization to ensure that our XaaS offerings meet the evolving needs of our clients.”

Hu said that  provides Lenovo with the flexibility to monetize services through pay-as-you-go, subscription, consumption-based, outcome-based, and other models. For example, the company can structure pay-as-you-go packages priced by the customer’s power consumption, storage of gigabytes, utilization, and number of nodes in an installation.

“Redefine your product hierarchies to fit the as-a-service world. Update financial accounting for managed services, such as revenue recognition and costing. Provide the sales team with a clear understanding of the offerings so they can articulate the value to customers,” Hu said. “Make sure that every impacted system has the integrated data for accurate and timely fulfillment and entitlement that delivers the optimal customer experience and desired outcomes.”

Personalized XaaS Offerings Generate Revenue at Autodesk

offers customers both subscription- and usage-based models for nearly all products across 50 countries. As a global leader in the design and software industry for media, construction, and engineering, Autodesk is using XaaS to future-proof the company.

“As-a-service provides us with a scalable, nimble foundation that drives better outcomes for customers and generates a steady stream of revenue for the company. We can quickly offer customers personalized products and pricing combinations for faster go-to-market,” said Sudhir Misal, senior director of Engineering at Autodesk. “51·çÁ÷solutions are the backbone of our as-a-service business model, helping us cost-efficiently manage orders, converged invoicing, contract accounting, and the financial supply chain. For example, we’ve reduced quarterly financial closing times by over 80%.”

Misal agreed that a successful XaaS strategy requires a mindset shift.

“You need to partner closely with your system provider, in our case it was SAP, to understand the business context behind the offering. We focused on standardizing as much as possible,” Misal said. “Change management was a priority as we went through this journey that included all stakeholders. By talking with peer companies to hear their learnings, we avoided repeating mistakes that others have made.”

Generative AI Promises Dynamic Innovation

No discussion of high-tech innovation would be complete without addressing the significance of generative AI. Misal said that Autodesk was exploring how AI can help companies quickly test and adopt value-added XaaS offerings.

“Generative AI can analyze data to help organizations see how customers are behaving depending on the services they’re using,” said Wittmann. “Data from generative AI can help companies cross sell and upsell personalized services that meet individual customer preferences, increasing customer loyalty. With faster market demand insights, companies can dynamically adjust XaaS bundles and iterate fresh ideas to take advantage of emerging opportunities before the competition.”

The immediate outcomes of cloud-based services are obvious. Manufacturers gain continuous monetization from a steady stream of revenue, while their customers have new payment flexibilities to better control cash flow. However, as-a-service business models are not just a different way of doing business. They are also a relationship-building lever between manufacturers and customers – whether consumers or businesses. Two market leaders in the manufacturing industry shared their service-based strategies during a session held at this year’s that was hosted by Heidi Zhao, director of Global Billing and Revenue Solution Management at SAP.

Service-Based Innovation at Align Technology Is Reason to Smile

Global medical device company manufactures Invisalign clear aligners and 3D digital scanners that improve the smiles of millions of people each year. A longtime pioneer in advanced orthodontics, Align is constantly innovating to serve doctors in over 120 markets worldwide. The company is on a digitalization journey with 51·çÁ÷that will support monetization from as-a-service offerings for orthodontics care professionals and their patients.

“We selected to help evolve our monetization models providing outcome-based services to our customers,” said Mary Kumar, senior vice president of Enterprise Engineering at Align Technology. “Customers will gain the ease of subscription-based options on a consumption or on-demand service model. In addition, having the ability to meet the country-specific needs of orthodontists and dentists in our global markets is super important.”

Align is undergoing the same business transformation as every traditional high technology company, exploring as-a-service choices such as leasing scanners to orthodontists and subscription-based packages that combine aligners and treatment planning.

“Customers don’t always want to pay larger amounts up front to purchase our scanners or diagnostic orthodontic software. They want to modernize their practice using our advanced technology, but with manageable monthly payments,” said Kumar. “These market demands are driving pay-as-you-go and subscription-based models with our customers who prefer to pay as they scan instead of paying for the scanner itself. Similarly, we produce four million aligners each day with automatic treatment planning. They may want to purchase a set number of aligners and mix and match treatment.”

51·çÁ÷Is Central to ł˘±đ˛Ô´Ç±ą´Ç’s As-a-Service Transformation

Services are an important part of vision to provide smarter technology for all through personal computers, smartphones, televisions, and wearable devices. As the world’s top PC manufacturer, providing the building blocks of modern IT, the US$70 billion company transformed itself two years ago to bring service-based solutions to meet customers where they are.

“Consumers and businesses want more flexibility in how they consume our products,” said Arthur Hu, senior vice president and CIO at Lenovo. “In the process of taking our portfolio and offering it as a service, 51·çÁ÷Billing and Revenue Innovation Management helped us evolve to a pay-as-you-go service model, providing the technology capabilities that underpin our business model transformation.”

Historically, Lenovo has sold hardware devices like laptops, phones, and tablets on a one-time basis. Now customers want to reduce the overhead surrounding the purchase and maintenance of ł˘±đ˛Ô´Ç±ą´Ç’s computing and edge devices and networking and storage solutions.

“Having an understanding of what your customers and their customers are doing drives innovation. Building a new business model is about exploring ideas, using technology to iterate quickly with insights from integrated data,” said Hu. “Customers are interested in a more managed service model for our devices across hundreds of countries and tens of thousands of seats. They want a secure computer experience for end users. Infrastructure-as-a-service is also on the rise. We can support everything-as-a-service, providing customers with different ways to consume our solutions, helping them be more nimble by reducing capital expenditures.”

Getting closer to customers may well be among the most positive unintended consequences of as-a-service business models. Manufacturers know precisely how customers are using their products and can continuously innovate services to better serve them, opening up greater revenue streams and delivering stronger experiences.

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During a panel discussion held at this year’s 51·çÁ÷Sapphire & ASUG Annual Conference Orlando, three industry leaders shared their XaaS experiences, including business drivers and results, lessons learned, and future strategies.

HPE: Broad Service-Based Mix Gives Customers Flexibility

Shifting customer expectations are behind the decision of most organizations to innovate with service-based offerings, and global infrastructure leader is no exception. HPE provides customers with a range of software-as-a-service (SaaS) and infrastructure-as-a-service (IaaS) offerings.

“Our industry is going through an incredible amount of transformation in terms of how our customers, from large enterprises all the way down to individual developers, consume services and infrastructure,” said Dave Carlisle, chief technology officer of Global IT at HPE. “Having a broad mix of service-based options means that customers can choose what works best for their business. You need to balance flexible customer options with standardization guardrails to manage complexity.”

For a 75-year-old organization like HPE, moving to a subscription-based business model has involved every part of the organization.

“You have to be fully aligned, between developing new offers and capabilities to the customer experience and partner engagements,” said Carlisle. “Using as the foundation for our service-based business, we’ve radically simplified our end-to-end move to a subscription-based model. What used to take days or weeks to quote is now minutes. Overall, it’s a tremendous opportunity for us to evolve and innovate our business models.”

Autodesk: XaaS Data Drives Business Growth

Sudhir Misal, senior director of Engineering at , agreed that the XaaS business decision was primarily customer-driven.

Transforming to a service-based model has helped the global design and software company better meet the needs of its customers in the architecture, engineering, construction, product design and manufacturing, and media and entertainment industries.

“We have multiple subscription-based offerings that reflect how our customers want to buy,” said Misal. “It’s also a mindset shift for the whole company, as well as partners and customers. You have to make sure everyone comes along on this journey from planning to execution. gives us a connected system of record to run the business, and 51·çÁ÷Billing and Revenue Innovation Management provides us with subscription-based order management capabilities.”

Besides boosting speed to market, XaaS is surfacing valuable data for business expansion and scale.

“This digital transformation informs our investments for future growth,” said Misal. “We have collected a lot of data over the years and can use that to reinvest for new market opportunities. With a strong foundation in place, we can roll out new business models quickly worldwide.”

SAP: Start Small for Big Impact from Subscription-Based Offerings

At , transitioning to a cloud-based business model has made perfect sense for this market leader in enterprise application software across an unrivaled swath of industries.

“Just about every industry is extending the reach of their products to get closer to their customers with embedded software and services,” said Stefan Krauss, senior vice president and general manager for Discrete Industries and Energy & Natural Resources at SAP. “For us, this meant creating new software-as-a-service offerings like and , where we support companies of all sizes that are making the move to the cloud on their transformation journeys.”

Krauss explained how one 51·çÁ÷customer, a power tools manufacturer, embedded sensors in its products, allowing it to charge by actual usage, sell predictive maintenance as a service, and track items throughout the entire lifecycle, including design and recycling for a circular economy. He advised companies to carefully pinpoint where service-based offerings can generate the greatest results and involve the entire organization in the shift from selling products to services.

“One manufacturer in Germany had to reeducate salespeople to not sell products but sell solutions,” he said. “Most companies start somewhere small. Sometimes there’s a crisis that forces companies to rethink how they do business. For example, subscription-based offerings can help customers that may be struggling because of unexpected market disruptions.”

researchers predict that digital products, services, and experiences will generate 40% of total revenue for G2000 organizations by 2026. Introducing XaaS is a strategic business decision that, when done right, is a win-win for companies and their partners.

Susan Galer is a communications director at SAP.

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According to the IDC MarketScape report, companies should consider 51·çÁ÷when they “need a highly scalable subscription and usage management application built into [their] ERP platform for the benefits of analytics, integration, procurement, and vendor relationship.” The report cites that customers are happy with the 51·çÁ÷platform and services to monetize their businesses and confident of 51·çÁ÷as “their subscription and usage management vendor of choice for the future.”

Organizations across a variety of industries use the 51·çÁ÷Billing and Revenue Innovation Management solution to quickly launch innovative subscriptions and usage-based offerings that can be easily updated to meet changing customer needs and market disruptions. With a native integration to 51·çÁ÷S/4HANA, customers get the added benefit of achieving end-to-end automation across their business processes.

is a 100% sustainable, green energy leader with more than 300,000 customers across Italy. The company is leveraging together with 51·çÁ÷Billing and Revenue Innovation Management to modernize and transform its business. With SAP, Alperia can offer new business models with fast time to market, such as subscriptions and personalized product and service bundles based on customer preferences and consumption behaviors. Alperia is leveraging 51·çÁ÷solutions to drive new business models as it develops new turnkey green energy services for its customers.

The largest postal service provider in Portugal, is working with 51·çÁ÷to transform the 500-year company into an agile, future-ready enterprise. 51·çÁ÷Billing and Revenue Innovation Management is simplifying the once complex, time-consuming billing process. There is greater visibility with billing data from multiple sources consolidated into a single view, helping mitigate revenue leakage and providing greater visibility to the billing process. Invoicing and accounting processes are automated to reduce errors and empower employees to be more productive. With 51·çÁ÷S/4HANA and 51·çÁ÷Billing and Revenue Innovation Management, core business processes are connected and powered by automated workflows, cutting complexity, increasing efficiency, and enabling CTT to respond more rapidly to new business requirements and revenue opportunities.

Another customer using 51·çÁ÷to transform into a subscription business is a leading supplier of high-quality window, door, and facade systems with millions of products used all over the world. With SAP, the company transitioned from offering a fixed contract to a flexible one for its digital products. It can offer customers fast time to value with instant activation and access to newly purchased products with the flexibility to offer different pricing models, such as scaled pricing, usage fees, and one-time fees. SchĂĽco will be taking advantage of the ability to directly integrate with other 51·çÁ÷solutions used by sales, services, commerce, and marketing teams in order to support a seamless customer experience and end-to-end automation of key business processes.

51·çÁ÷Billing and Revenue Innovation Management is an integral component of the 51·çÁ÷portfolio of products that automate the quote-to-cash process. Leveraging a modular cloud approach, 51·çÁ÷brings together 51·çÁ÷S/4HANA Cloud, 51·çÁ÷Billing and Revenue Innovation Management, 51·çÁ÷CPQ, and 51·çÁ÷Business Technology Platform (51·çÁ÷BTP) to create an end-to-end quote-to-cash process and enable organizations to accelerate monetization of subscriptions and other recurring revenue business models.

Hear from other customers and learn more about how 51·çÁ÷helps to automate quote-to-cash with , , and .

Si-Mohamed Said is global head ERP and Finance Product Marketing at SAP.

*”IDC MarketScape: Worldwide Enterprise-Focused Subscription and Usage Management Applications 2022 Vendor Assessment” by Mark Thomason, September 2022, IDC #US48786022

Seeking answers, this media company looked to with the for a single, pre-integrated solution with the business scalability to support growth for the company’s new and existing streaming services.

After an impressive project launch and only seven months to market – aided by the tremendous flexibility, rich out-of-the-box functionality, and configuration-driven deployment of 51·çÁ÷Billing and Revenue Innovation Management and 51·çÁ÷Convergent Mediation by DigitalRoute – this company was reaping a host of benefits, starting with automated revenue management via eliminating ad hoc tools and manual processes, improved back-end revenue management, and faster financial reporting. Benefits also included auditability and traceability across the organization and elimination of revenue loss and incorrect reporting, all while improving overall margins. Finally, the company emerged with a greatly increased ability to expand across different regions and global financial institutions.

While this media company’s scale is impressive, the challenges it faced and the opportunities it seized are not unique. In this digital era, data volume is increasing exponentially and organizations of every size and stripe are adapting to the new reality.

Businesses that shift from a product to a subscription model and from indirect to direct sales will encounter a dramatic increase in the number of consumer transactions they must track – from the thousands into the hundreds of millions, even billions, of transactions. In addition to producing incredible data volume, these transactions can occur on multiple commerce platforms, requiring that data from various sources be integrated into one accounting system.

All businesses face increasingly complex billing and mediation requirements, and there are myriad solutions available. But as businesses grow, they can end up with a complex, unwieldy ecosystem of billing and mediation software that leads to its own set of challenges, from the inability of legacy platforms to keep pace with usage data growth to labor-intensive, error-prone manual processes to the technical limitations inherent in disparate systems.

51·çÁ÷Billing and Revenue Innovation Management, in conjunction with 51·çÁ÷Convergent Mediation by DigitalRoute, helps eliminate the inefficiencies inherent in sprawling, fragmented commerce, sales, and billing landscapes and helps ensure streamlined, agile, error-free billing and revenue management.

51·çÁ÷Billing and Revenue Innovation Management is a comprehensive, modular solution for the high-volume consumption businesses typical in the media and entertainment space. Designed to optimize the business life cycle processes of design, sales, delivery, and billing, 51·çÁ÷Billing and Revenue Innovation Management enables various flexible consumption models and uses highly automated and optimized processes to help tackle huge volumes of data with limited manual intervention while maintaining full financial transparency.

First developed for the telecommunications industry, where complex data management and demanding performance capabilities are a must, 51·çÁ÷Billing and Revenue Innovation Management now helps diverse organizations all over the world, including many of the major media streaming companies, to monetize their digital journeys as they create innovative new offerings, seamlessly blending the content acquired and created with subscription and usage-based services.

51·çÁ÷Convergent Mediation by DigitalRoute collects data from any stream or source and can provide unified control and visibility of revenue stream processes across an enterprise. Together with 51·çÁ÷Billing and Revenue Innovation Management, it can enable 51·çÁ÷customers to:

• Process large volumes of raw data quickly and accurately, eliminating cumbersome manual processes and errors
• Bring multiple data sources together to simplify, secure, and automate data processing for billing and revenue management.

Automated, secure, accurate billing processes are a must for today’s media companies. Learn more about how and can help your organization thrive in today’s landscape and be ready to grow into whatever tomorrow brings.

Richard Whittington is global head of Media at SAP.

This trend challenges traditional ways of doing business as it focuses on keeping customers for life by establishing longer term recurring revenue streams. Business models like these allow products and services to be offered in a completely new way instead of adapting or optimizing existing business processes.

How can your company or line of business achieve this? To remain successful, businesses across industries continuously re-evaluate how to create additional value for their customers. At SAP, we are working with our customers to reimagine business processes that increase productivity and unveil growth opportunities. This includes, among other things, how new offerings are sold to customers in order to increase customer loyalty at the end of the day.

From Selling Products and Services to Providing Bundled Solutions

While traditional business models are about selling physical goods and services, solution business models are built around the customers’ needs. Companies embracing these modern business models offer a combination of physical goods, services, and subscriptions to serve their customers’ needs holistically. And customers benefit from a one-stop-shop solution.

Whether offering products or services, these new models expand the responsibility of companies beyond the initial sale to include all elements of a solution along the entire life cycle; for example, the delivery of a machine, its installation, and corresponding maintenance services. The technical and the business processes must support the customer on this journey and minimize the business risk for the solution provider. Delivering this kind of solution-based value maximizes customer satisfaction and drives margin growth by selling higher value services.

This requires an that recognizes all the components of the order and has the ability to administer each step in the process — from capture to fulfillment, service, billing, and managing the profitability of the bundled solution.

The enables businesses to sell bundled solutions, including subscriptions, and leverage innovative capabilities for intelligent quote-to-cash. Let me highlight three impressive key capabilities.

Combining Products, Services, Projects, and Subscriptions in a Single Order

As a first step, 51·çÁ÷S/4HANA Cloud makes it possible to quickly design and sell holistic offerings, integrated into the order-to-cash process.  Take, for example, our customer AAF Lufttechnik GmbH, a company that manufactures air filter systems, which have been in increased demand over the last couple of months. With 51·çÁ÷S/4HANA Cloud and solution order management, AAF Lufttechnik GmbH plans to combine the sales of the air filter systems together with the corresponding installation and maintenance services as a one-stop-shop solution.

Monetizing Services With “Pay-As-You Go” Subscription Models

With 51·çÁ÷S/4HANA Cloud, customers can facilitate new business models by offering a variety of different pricing models. These include subscriptions for one-time, recurring, and pay-per-use offerings. 51·çÁ÷Subscription Billing enables the design of flexible price plans, rating, and charging of metered usage data from technical systems, such as sensors from the Internet of Things (IoT). Subscriptions are now part of the end-to-end quote-to-cash process, built into 51·çÁ÷S/4HANA Cloud. All subscriptions can be managed end-to-end.

Rethinking Flexible Billing, Measuring Solution Profitability, and Automating Revenue Recognition

With the help of 51·çÁ÷S/4HANA Cloud, billing data from different sources can be flexibly integrated — from one-time orders, long-running contracts, deliveries, and external data — into a single invoice, which is consistent with the order. Because companies also need to carefully guard the profitability of solutions, 51·çÁ÷S/4HANA Cloud provides margin analysis for orders, including all elements of the bundle. It also automates revenue recognition for sales products, service contracts, recurring subscriptions, and projects, and supports a simplified period-end closing.

Today, solution and subscription models are top of mind for businesses across industries. Solution order management illustrates that significant added value comes from business process innovation. By integrating order-to-cash processes using the latest technology innovations, customers can unlock new opportunities for growth. That is why to enable end-to-end processes and deliver business value to our customers.

Thomas Saueressig is a member of the Executive Board of 51·çÁ÷SE.
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