How order management can help you succeed with subscription business models

November 10, 2021 | 4 minute read
Erin Sun
Director of SCM Product Marketing, Oracle
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When my husband and I were preparing for a trip a few weeks ago, he decided to pack his video game controller but not the video game console. Not being a gamer myself, and setting aside the fact that we were going somewhere with some of the best beaches in the world, I asked why he would bring only the controller. His answer was that he subscribed to a service offered by the video game console manufacturer, allowing him to stream the games on any device and play them anywhere using the controller.    

If you’re not familiar with the service I’m describing, think about this: modern video games require immense computing power and graphical display capabilities. The service described basically offloads all of that from the consumer and reduces it to an interactive video signal, which makes the product much more accessible. Isn’t that amazing? With Wi-Fi, 5G internet, apps development and subscription services, consumers can enjoy video streaming services anywhere, as long as there’s a decent internet connection. Hardware manufacturers can offer subscription services on top of hardware sales, generating new revenue streams while building longer term relationships with customers.  

Subscription business models are some of the fastest growing revenue opportunities. As this coming holiday shopping season will likely be affected by continued supply chain disruptions, companies can benefit from subscription-based products and services—for example, consumer electronics, wine clubs, book clubs, coffee machines and beans, automobiles, gym equipment, printings, renewable energy and more. No matter which industry you work for, you should be looking for opportunities to create value for your customers and for your company. Are you ready for this new business model?

We are seeing and hearing two main challenges from customers: how to adapt their products to be sold as subscriptions, and how to adopt the processes and infrastructure needed to accommodate subscription transactions. Customers need help to manage:  

  • Faster time-to-market: How can organizations quickly add subscription services to the product portfolio? How can they execute the subscription-based pricing and selling model? How can companies manage subscriptions and bundles along with existing product offerings? 
  • Complex order orchestration: How can companies manage service activation and revenue recognition after customers receive bundled products of hardware, software and service? How can these subscription renewals or amendments be processed efficiently? How can organizations enable repeatable and automated processes? How can cumbersome manual processes and disconnected, standalone applications be eliminated?
  • Real-time insight: How can companies get a 360-degree view into customer data to minimize churn and maximize renewal? How can they capture usage and consumption data? Because legacy systems are often siloed, companies don’t have full visibility into customer data. This often results in being unable to understand the reasons that their customers are breaking up with them.

Now let’s talk about how to make it all work.

First, consider an integrated subscription management solution that connects your front and back offices. An end-to-end subscription management solution simplifies the order-to-cash process, capable of fulfilling orders that combine physical goods, warranty coverages and subscriptions. Many subscription management vendors don’t offer the capability to process a mix of hard goods and services because they don’t have back-office applications such as supply chain management.

Second, understand your customers better with a 360 view of their subscription health and adoption. Use predefined AI models to surface churn probability and track KPIs such as monthly recurring revenue, total contract value and customer lifetime value. You can then take actions to increase renewal and customer retention.

Third, consider a solution that enables repeatable and automated processes. With the right execution, companies can grow new businesses by pivoting and diversifying product offerings such as product and subscription bundles. You can maximize profit by making smarter supply chain and fulfillment decisions. Your financial planning and reporting become easier. Revenue and cash flow become more predictable, and the cost of goods sold is spread out over time.

Oracle enables every customer to take full control of their subscription business. With Oracle Cloud solutions, businesses can:

  • Easily offer new products and services such as recurring charges, usage-based subscriptions, and mixed orders of hard goods and subscription services.
  • Import mixed orders from multiple order capture applications such as configure-price-quote (CPQ). Oracle Order Management can then be used to orchestrate the fulfillment of different orders lines across applications, including revenue management, supply chain and accounts receivable.
  • Leverage Oracle Subscription Management for recurring billing, usage charges and subscription lifecycle management. If a customer makes a change on the subscription after the sale, it can be updated and recognized easily in the system. 
  • In the upcoming release, companies will be able use Oracle Order Management to coordinate order fulfillment across subscription management, supply chain and finance operations, taking the full advantage of an end-to-end solution that supports demand forecasting, inventory planning, sourcing and financial planning. 

Oracle’s subscription management is digitally connected with your order-to-cash process. It allows your customers to configure, manage and renew subscriptions, fulfill mixed orders, and automate the recurring billing, payments and revenue recognition processes, so organizations can focus on customer satisfaction and retention.

Watch a demo or read more about how to adopt subscription business models and processes.

Erin Sun

Director of SCM Product Marketing, Oracle

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