Within the high-tech products and services industry, software companies are increasingly expected by enterprise buyers to cater to their own unique requirements.
Aside from this, they also want vendors to support multiple pricing models as this allows flexibility in meeting their budgets affordably. Halfway into a contract, a client may decide to increase seats, change storage capacity, add a mobile access module, or modify any of a hundred other details that meet their company's specific industry needs and budgets.These customers want functionalities of these enterprise software to be customized to their needs, and to upgrade or downgrade features and capabilities as their requirements evolve.
To be able to meet this granularity in market demand is important to attracting and retaining customers, as well as in maximizing revenues. After all, the more your company can re-bundle existing products and services, the more sales it produces without incurring more costs. It's the most cost-efficient method of expanding to different markets without taking on more risks.
However, the challenge here is incorporating the changes into your company’s billing and cost and revenue recognition processes.
For a lot of software houses, accounting for these eternally-changing contracts with discounts, upgraded services, downgraded services and different pricing models can turn into an accountant's nightmare. Or at the very least, it creates headaches due to non-integrated sales, billing, and revenue and cost recognition software, manually-created spreadsheets, and time-consuming data corrections.
Solution: Integrated Enterprise System
To adapt to tech buyers' ever-changing requirements, a flexible and more integrated system for revenue recognition is a must. The first big step is to adopting a cloud-based software platform that integrates the front- and back-office applications. This easily enables the flow of billing data across applications and financial processes without needing additional staff to reconcile, recalculate or re-enter data in the system.
Aside from a cloud framework, there are three other criteria that should be present in integrated enterprise systems.
End-to-end record keeping
To have an accurate revenue recognition system, you need end-to-end logs of everything from the sales order to general ledger. With this, any changes to individual steps in the process can be traced and errors can be quickly identified.
Central data repository
Having an easily traceable record of all parts of any transaction means having one repository for all of your data. This is a key step to easily recognize costs and revenues for software projects. To have control over the sales and revenue recognition processes, an organization needs that often talked-about holy grail: "one version of the truth.” It is important for software firms to have one set of data in a standard format, accessible by all of its systems.
Visibility into real-time data
A completely integrated solution provides visibility into every aspect of the transaction, from the customer account to billing data and expenses to finance. In addition, the solution must provide not only historical data, but also real-time information. Real-time data makes it possible to understand the impact of changes on customer accounts, long-term revenues and profitability.
Keeping up with changing customer needs while maintaining accurate and up-to-date billing and financial records is a continuous challenge. Cloud-based platforms that provide integrated sales, financials, CRM, and Ecommerce systems offer the best approach for achieving the much-needed flexibility in pricing with the financial visibility and operational efficiency that software companies need.
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