Who said Transitioning to a Recurring Revenue Model for Software Companies Would Be Easy?

While it may not be easy to transition from a license-based model to a recurring revenue model, the benefits are clear.  And, more importantly, it isn’t really an option for most software developers and resellers.  If you own or manage a software company and want to remain competitive in a subscription economy, it is imperative.

For that matter, it isn’t just software companies that are facing a fundamental change to the way revenue is captured and recognized.  From software and computing power to healthcare, specialty manufacturing and retail products like razors, we’re seeing a constant stream of new subscription-based offerings.  Most B2B professional services companies have added subscription options to the list, and many have moved to it entirely.  SBS Group has helped a wide range of Dynamics AX customers in the software sales and the reselling sector as well as other B2B firms like online survey companies and industrial equipment service providers.

Even the music industry has been entirely reinvented in the wake of the subscription frenzy.

Digital Experiences Are What the Fans Want

A report published by the Recording Industry Association of America (RIAA) said music streaming revenues for the first half of 2016 reached $1.6 billion—a year-on-year increase of 57%. According to the 2016 Mid-Year RIAA Shipment and Revenue Statistics report, revenues from subscription streaming services more than made up for a continued decline in physical product, with streaming accounting for 47% of all music industry revenue for the year to date.

Paid subscriptions to services such as Spotify, Apple Music and Google Play Music have cumulatively doubled in the last year, RIAA said.

Around 18.3 million people have signed up for a subscription-based plan from music streaming services—a year-on-year increase of 101%. Subscriptions were responsible for 30% of all music industry revenues in the first six months of the year, with revenues from a permanent digital download falling by 17%, the report said.

See “How Paid Subscriptions Are Saving the Music Labels”, an article written by David Bolton in September 2016.

Love that title: “Digital Experiences Are What the Fans Want”.  I couldn’t have said it better.  In our case, the “Fans” may be consumers or businesses looking to acquire access to software in a way that they’re most comfortable with.  And if software companies want to stay in business, they need to adapt their business model in a way that gives the fans what they want.

Of course, this isn’t entirely about giving the fans what they want.  While accessibility, cost and ease-of-use are some of the more commonly cited reasons for the subscription approach, there are many other benefits like:

  • Increasing the likelihood of a successful IPO or Acquisition
  • Lowering barriers to customer engagement (lower up-front costs)
  • Allowing customers to scale more easily
  • Adopting a more agile development and update cycle
  • Maximizing customer lifetime value (CLV) and brand loyalty
  • Driving a predictable, recurring revenue stream

Of all these things, it is the seller’s path to a predictable, recurring revenue stream which may be the most enticing reason to move forward under a subscription model.  The transition from traditional license and maintenance models to cloud subscription and consumption usage is not easy and requires adjustments to future revenue expectations, recreating sales compensation plans and more.

Either way, it is a trend that has been changing the face of revenue management for the last decade and will continue to do so.  Adapting systems, processes, and policies to help your organization thrive in a subscription world is often a challenge for most established technology companies.

I can’t help you figure out how to replace revenue that used to come up front.  You’re on your own there (with the rest of us).  I can provide an option for optimizing the way you collect and recognizing your new recurring revenue stream.

 

AXIO for Professional Services - The New Microsoft Dynamics AX

Fig 1: Finance, Professional Services and Distribution for AX7

 

Adapting ERP to Subscription / Recurring Revenues for Software Firms

Dynamics AX is one of the most attractive enterprise ERP solutions that lends itself to a recurring revenue model, but not everything a software developer, publisher or reseller requires is provided in the solution right out of the box.  No worries, because we have already tackled this one for you.  SBS Group has created AXIO for Professional Services, an enhanced version of Dynamics AX that caters to the needs of enterprise professional services firms.

To my knowledge, AXIO is the only partner solution capable of managing the entire business process and handling the complexities of the latest revenue recognition standards and subscription billing on AX7.

Some 3rd party providers have created add-ons to AX 2012 but have yet to update or rewrite their solutions to work in the pure cloud environment of AX7.  To my knowledge, SBS Group is still leading the charge here with a fully functional solution that not only caters to project-oriented technology company using AX 7, but provides the ability to meet IFRS15 and ASC 606 accounting standards requirements for revenue recognition.

I have another post on IFRS 15 and ASC 606 if you would like to learn more on this topic.

 

Contract and Revenue Management Workspace with AXIO for Dynamics AX

Contract and Revenue Management Workspace

Tools in AXIO Professional Services for AX7 and Dynamics 365 can streamline you revenue management process

AXIO Professional Services for AX7 and Dynamics 365 not only handles the complexities of the license to subscription pricing evolution that software sellers will experience.  Our Revenue Management Module effectively manages a contract lifecycle within AX. This module tracks a contract from the time of negotiation to acceptance, works-in-process, and then retirement.

It helps them to address key issues like:

Contract Initiation

After contracts have been accepted and signed by the customer, it is imperative that your ERP system is capable of helping your team accurately manage revenue throughout the life of the relationships.  AXIO can automate one-time billing or recurring periodic billing by month, quarter or annually. Advanced payments, payments in arrears or even partial payments are easily managed.

Managing Renewals

Our renewals management features not only help to manage contract renewals after a contract term has ended, but helps to drive customer renewals as they near expiration.  Contract managers or sales team members can utilize consolidated dashboard views of the customer to view relevant history and ensure optimal renewal rates.

  • Easily update pricing and terms
  • Adjust effective dates for new agreements
  • Prorate payments as changes occur and even adjust the billing process
  • Notify sales and consulting team members with pricing changes to ensure optimal communication

Contract Realignments

In the software world, change is constant.  Customers often need to adjust multiple times thought the contract for reasons like adding users, modules or increasing user counts due to seasons or growth.  AXIO allows your team to change the terms of contracts mid-way (change the value and or contract periods) without missing a beat.

Billing, Billing Frequency, and Modify Billing Frequency

This module provides automated billing features with various types of billing frequencies and billing options like monthly quarterly, half-yearly, yearly and non-linear (custom billing dates). It also provides the ability to change billing frequency mid-way of the contract period.

Revenue Management

AXIO enables an automated revenue management process for both fixed price and variable price contracts that allows your firm to adapt as revenue recognition standards evolve.  No more unreliable spreadsheets or manual calculations.ASC 606 and IFRS 15 Steps

Workflow Integration

Because AXIO Professional Services for Dynamics AX is built on the Microsoft platform, the opportunity to integrate with customer relationship management solutions like Microsoft Dynamics CRM is relatively simple.  Kick off workflow processes that provide alerts to sales and consulting team members or nurture customers as contract changes approach.  Consistent, timely and communication around contracts keeps customers informed and drives a positive customer experience.

Used in conjunction with Microsoft Dynamics Core Financial capabilities, the Revenue Management module streamlines the contract management process and gives your financial staff the tools they need to ensure that contract terms and conditions are enforced.

You really must see it to appreciate it.

Please reach out to me directly or to anyone on the SBS Group team if your firm is struggling with revenue management.  It isn’t easy to change your business model, but your ERP solution shouldn’t make things more difficult.

Best regards,

Robbie Morrison
VP Enterprise Solutions and Services, SBS Group

About Robbie
Robbie Morrison has spent nearly 20 years helping customers build and deploy elegant technology and business solutions.  From start-ups to enterprise-class organizations worldwide, his knowledge of the Microsoft Dynamics ecosystem helps SBS Group customers maximize benefits from the ERP investments.  Robbie

Today, Robbie serves SBS Group customers in his role as Vice President, Enterprise Group where he provides thought leadership and manages the enterprise delivery team.  Robbie received his MBA from the University of Georgia, Terry College of Business.
https://www.linkedin.com/in/robbiemorrison


 


Want to learn more about AXIO for Professional Services and Dynamics 365? Watch our latest webcast recording!

Watch: An Overview of Field Service Management from Microsoft

Field Service Management is a hot topic nowadays. Field service firms are starting to search for new and innovative ways to optimize their business. One of the best solutions for these firms is to invest in deploying a field service management software solution. The proper solution can improve customer satisfaction, field service agent morale and, most importantly, increase revenue.

Field Service Management from Microsoft is Microsoft’s solution to help field service firms optimize their business operations and maximize their revenues. By acquiring FieldOne, Microsoft signaled its desire to assist field services firms with a one-of-a-kind, innovative solution.

Field Service Management from Microsoft addresses all the needs of a field service firm. From customer communications to extensive scheduling and planning, this revolutionary solution gives each member of the firm control of their operations – leading to happier customers and more business.

Want to see all that Field Service Management from Microsoft can do? Don’t take my word for it. Watch the short video below to see a day in the life of a field services firm using the solution!

 


Learn how you can optimize your field services firm. Download “The Ultimate Guide to Optimizing Field Service Management”!

field service ultimate guide

How to Decrease the Number of Report Writers in Your Company

How many of us have more than a handful of reporting solutions across our business systems? I know it’s shocking, but most companies do use that many reporting tools across their ERP system and other databases. When looking to invest in a reporting solution, how you integrate and present your data is very important. It is the foundation when it comes to making smart business decisions. This article focuses on several options for consolidating various reporting tools to navigate your company-specific issues in managing your data.

A financial report writer allows users to build customized reports that use transactional information from the users’ data source, integrating live from your ERP system, a data warehouse (DW), or an online analytical processing (OLAP) cube. Of course, an increasing number of modern financial reporting tools are just as good at reporting from CRM systems and other operational data source, thus reducing the need to buy, install and learn multiple report writers.

Reporting tools provide many benefits. For instance, report writers give updated and consolidated information as well as giving an effective means of internal communication about performance. Report writers also solve current issues faced by the company and help directors in decision making and policy framing. Finally, they provide data that is reliable, permanent, and otherwise unknown to shareholders, the Board of Directors, among others. These are all great benefits, but as mentioned above, if most organizations have more than five report writers across their business systems, that leaves room for challenges. Organizations usually have many reporting tools for separate needs, such as financial statements, sub-ledger transaction reports, a customer relationship management (CRM) tool, a payroll system, an enterprise resource planning (ERP) solution and more.

There are multiple problems when investing in numerous reporting tools. For instance, to name a few, it gets pricey to maintain and purchase each reporting tool. It’s complex to maintain different user security models and related user management, and hard to learn all features in every reporting tool.  Finally, it is almost impossible to consolidate the information from the different report writers into one place, so users resolve to manually export to- and formatting reports in Microsoft Excel. This makes the reports prone to error and costly, as it takes a large amount of time in delaying information because users have to manually compile everything. Report writers that offer Excel add-ins, provide Excel users a jump start on learning the reporting module as most business users already have a lot of spreadsheet skills, and there are no manual Excel reporting problems involved. Web and Cloud computing are becoming more prevalent as they are increasingly becoming the present and future of Business Intelligence (BI). Many of them work in conjunction with Excel.

A common solution to modern software is to invest in one flexible report writer that can perform statistical and operational reports and financial statements, offer a DW where your data and information from different sources are compiled in a single database and the single reporter writer has access to all the information through the DW, and can distribute e-mails to end users or provide access through a web browser for end users, so they can use reports to answer any questions they may have without asking other people to run reports for them. You can consolidate your report writers and achieve additional BI capabilities by aiming for a single BI solution that covers financial and operational reporting, data warehousing, budgeting and forecasting, and dashboards/analysis. This is also known as a BI suite. A tip to consider is to make sure the BI suite eliminates or reduces the need to maintain many report writers as well as many BI tools.

To continue learning more about reducing the number of reporting tools, read the rest of the article here.


Learn more about SBS Group’s Business Intelligence practice! Click here.

SBS Group to Host Two Sessions at the Dynamics SL User Group Fall Conference 2016

SBS Group announced today it will be hosting two sessions at the Dynamics SL User Group Fall Conference 2016. SBS Group, a leading information technology firm, is a Gold Sponsor at the annual event. Representatives will be present throughout the duration of the conference at Booth #16.

dynamics sl user groupThe first session from SBS Group is entitled “The Future of Dynamics Field Service Management” and will be on September 28, 2016, from 10:30 a.m. – 12 p.m. This session will touch on the evolution of field service management over the past decade through the advancements of various cloud technologies. Also, the impact of these advancements on the Dynamics SL community and the availability of field service management to Dynamics SL users will be discussed.

The second session being held is entitled “FieldOne – Field Service Management from Microsoft”. This session will be on September 29, 2016, from 2:45 – 3:15 p.m. Microsoft’s field service management solution will be the topic of this session including its capabilities and advantages for Dynamics SL users. Both sessions will be presented by James Bowman, President and CEO of SBS Group.

The Dynamics SL User Group Fall Conference 2016 will be held at Paradise Point Resort & Spa in San Diego, CA on September 28 – 30, 2016. The three-day event will feature training sessions, demonstrations and deep dive sessions with all topics focusing on Microsoft Dynamics SL. The Dynamics SL User Group is an association of professionals interested in the development and optimized use of Microsoft Dynamics SL. To learn more about the Fall Conference, visit http://www.msdslug.com/p/cm/ld/fid=94.

About SBS Group
SBS Group is a national Microsoft master VAR (Value Added Reseller) with Gold level competency in enterprise resource planning (ERP) and customer relationship management (CRM). Over the past 30 years, they have been recognized as Microsoft Partner of the Year, Inner Circle Member and Microsoft President’s Club member multiple times. The company is headquartered in Edison, New Jersey and operates offices across North America. For more information, please visit SBS Group’s website at http://www.sbsgroupusa.com. Follow us on LinkedIn at http://www.linkedin.com/company/sbs-group, on Twitter at http://www.twitter.com/sbsgroup and find us on Facebook at http://www.facebook.com/SBSGroupUSA.


To read the full release, click here.

New Video Release: Managing Resources in Project-Based Businesses (2 mins 44 sec)

This brief video demonstration is for current and prospective Microsoft Dynamics AX customers seeking an enterprise solution for their professional services firm to assist in resource management.

The workforce of professional services firms is a vital factor to success. High utilization of the workforce is a sign of proper resource allocation and a growing business. To ensure smooth project delivery and satisfied customers, project resource managers need to be able to optimize the workforce’s skill sets and availability. After all, the same employee can’t work on every project and not every employee is a proper fit to what the customer needs. Therefore, it is important for managers to be able to easily see the skill sets and availability of their workforce, so they can adequately assign them to projects.

On AXIO for Professional Services powered by Microsoft Dynamics AX, resource/workforce management is streamlined for those managers balancing several projects. In just a few clicks, project managers can access dashboards which give them the skill sets and availability of their workforce and properly assign them to match the customer’s and the project’s needs. Project managers can even set up AXIO to automatically assign projects to employees!

Watch as a Dynamics AX expert demonstrates the resource/workforce management capability of AXIO for Professional Services.


Did you find this video helpful? Watch our other AXIO videos!

Videos of Microsoft Dynamics AX with AXIO Professional Services

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