Quote to Cash Overview - Part 4

This is the last part of the Quote to Cash Overview and we'll cover Professional Services and Enterprise License Agreements today.

Let's first cover Professional Services. What I refer to when I talk about Professional Services is Consulting Services and Education Services. Consulting Services includes all the consulting offerings we might sell for our Software Products (e.g. SAP is selling Consulting Services to install their SAP CRM 7.0 solution at a customer site). Education Services includes all the training that we might sell for our products (e.g. SAP is offering training classes to learn more about certain parts of their CRM solution and these classes are scheduled at various times with a "fixed" price)

Professional Services can generally come in two flavors.

1. They don't require a Statement of Work (SOW) and might have a fixed price
2. They require a Statement of Work (SOW) and the price needs to be determined

In case # 1 this is an offering that could be sold on a website without requiring more customer info. An example is an SAP Consultant that wants to get more training on SAP eCC SD - Pricing. They can go to the SAP training website and order that training course for $ x . The handling of this service is similar to that of a HW or SW product. The difference here is that the Revenue Recognition might be different because the training course/service was sold today (November 13, 2013) but our customer attends the course next year (February 2014). The question now is when can the selling company recognize the revenue (November 2013 or February 2014).

In case # 2 the process becomes more complex. Note that in this case there is no fixed price that we can put on a website. Let's assume a customer is asking us (company x) to implement SAP CRM 7.0 to support our business transformation from a system point of view as an example. Our company needs to first spend some time and effort to determine for which price we can offer this service. That means before we can prepare any quote for the customer we need to approve some money (pursuit budget) to determine if we want to make an offer and what the offer details should look like. e.g. Do we make a "fixed price" offer or do we make a "Time and Material" offer? We basically need to determine the following requirements

• Resource Management - (How many people will we need?)
• Time Management - (How long will this Project go? What are the planned milestones?)
• Expense Management - (What expenses will we occurs when we run this project? Who is paying for them?)
• Project Management - (We will need to setup a Project Schedule to plan the Project)
• Billing Requirements - (When are we going to bill the customer? What amounts are we going to charge?)
• Project Collaterals - (We need some materials to communicate our plans to the customer)
• Financial & Reporting Requirements - (What kind of reporting do we need to provide?)
• Revenue Recognition - (How and when will we recognize revenue for this project)
• Regional Calendars - (In case we do the project in several regions we need to consider the various holidays and their impact)
• Multi Currencies - (If we do the project in several regions we might have to deal with multiple currencies)
• Partner Involvement - (Do we have other partners that we need to involve. E.g. for our project maybe IBM and HP both offer servers for the software. Which partner do we want to/have to involve?
• Opportunity impact - (If we pursue this offer, what impact does that have on other opportunities. Is this the best use of our time and resources?)

There are probably a number of other requirements but I think this gives you a good idea on what needs to be considered. Only after these questions have been addressed can we make an offer/quote to our customer. The result of these investigations will be put into a Statement of Work.

Now let's shortly address Enterprise License Agreements (ELA). They might have different names in different companies but it basically refers to a case where a customer buys a part of the product portfolio from another company. Example: Customer A buys the following products from Microsoft MS-Outlook and MS-Office. They could buy this for a certain number of users (e.g. 5,000 user get the license) or for a certain amount of Dollars (licenses can be obtained for up to $2,000,000) and/or for a certain period of time (e.g. the agreement is valid for 1, 2 or 5 years). Note that there can be multiple flavors of these agreements. What I describe above is a simplification.
The challenge here is that many processes and system steps are unique (e.g. at the time when the ELA is signed the customer will not make selections for one specific laptop but more generally state that 10 laptops are included in the ELA).  Hence many steps might be manual since no system solution fully supports this. Some other specialties are

• potentially long quotes/orders since many product numbers might need to be listed there (Note: In most cases it will be simplified for the customer BUT we probably have to have all the details anyway even though they are not visible to the customer)
• special features on websites to download all the Software Products when needed
• follow up at the end of the ELA to determine if the agreed upon products/services were really used by the customer (true up).

Again, these are only some few examples to ensure the general challenges become clearer. There is much more detail once we would dig into this.
Note that these are mostly big or very big deals and so they will in most cases only be available for certain (very good/big) customers.

I hope this 4 part overview over the Quote to Cash area was helpful. It should have a least shown you that this area crosses many teams and subject areas and hence to ensure success in this area (for any process improvement, Business Transformation etc.) it is key to closely align with the affected teams.