Spend Matters welcomes a new guest post from Joe Alphonse, Product Marketing Manager at Revitas.
With 2013 rapidly coming to an end, most organizations are focused on two critical goals: increasing revenue for the coming year and maximizing 2013 profits. However, this year-end push can also expose some of the major problems with system integration and communication, such as lack of visibility, data inconsistencies, or even inaccurate revenue numbers. These hidden pains often lie just beneath the surface and rear their ugly heads at the worst possible times, and are unfortunately some of the most difficult to resolve.
Organizations typically seek the quickest answer when problems occur, and many turn to stand-alone systems to patch up immediate issues. Need a system to help manage your customers and contacts? Why not implement a customer relationship management (CRM) system? Having issues with accounts receivable or accounts payable? Here comes an enterprise resource planning (ERP) system. Struggling with quote management or product configurations? Add on a configure-price-quote (CPQ) system. Is poor contracting impacting your bottom line? Install a contract lifecycle management (CLM). The process goes on and on. It’s simple cause and effect. When there’s a problem, the organization finds an answer.
But what if these answers are actually part of the problem?
By solving problems with individual systems, organizations can create silos of information that lack the communication required for an efficient, compliant contracting process that drives revenue. Organizations are most likely to see these types of problems arise at the end of the year, when system unity is most crucial. A truly integrated solution seamlessly connects multiple systems to enable communication, meaning organizations don’t have to access multiple solutions just to answer one question.
So let’s take a step back and look at the role each system plays in the process to better illustrate the value of integration.
CRM. The lifeblood of your sales team, CRM systems are at the start of every agreement, every promotion, every opportunity, and every account management. It’s the first piece of an effective sales pipeline and ultimately drives business.
CPQ. Before organizations can drive business, many require CPQ systems to easily and accurately configure customer quotes, provide appropriate options based on product compatibility, enable real-time pricing, and promote up-sell and cross-sell opportunities. CPQ systems ensure that price and product configurations provided to customers are accurately delivered with smart recommendations for savings and maximizing purchase value.
ERP. To ensure obligations are paid on time, the behemoth of all systems, the ERP solution, handles financial accounting, accounts payable and receivable, payments, and invoices.
CLM. But the system that ties them all together is the CLM solution, which complements each of the others throughout the process.
But integration is the key. By integrating CLM, ERP, CPQ, and CRM, organizations benefit in five major ways:
Seamless communication. As revenue moves through the system, it’s important for various internal stakeholders to have access to information as deals progress. By integrating systems, individuals can track, report, and analyze contract performance and view progress as it’s made. With strong communication and increased visibility, organizations can proactively manage processes and ensure optimum system performance.
Enhanced efficiency. By eliminating manual processes and eradicating labor-intensive calculations and payments and replacing them with automated processes, organizations reduce unnecessary delays and error risks. But by integrating systems, businesses can minimize duplicate efforts by managing and tracking tasks and milestones, streamlining contract approvals, and optimizing communication and awareness, all of which improve overall efficiencies throughout the lifecycle.
More strategic, creative contracting. Information about past contract performance can play an integral role in shaping more creative and profitable future incentive agreements. With an integrated solution, businesses can leverage analytics and insights about past activities to assess contract performance and pricing incentive effectiveness, and then replicate past success or avoid prior pitfalls when developing future agreements.
Secured profit margins. Without integrated revenue and contract management, companies run the risk of submitting incorrect payments, duplicating payments, and missing deadlines, all of which can erode profit margins. Worse, some companies still rely on manual payment verification, a time-intensive, error-prone, and unrealistic approach, especially when reviewing thousands (or even millions) of incentive payments. With integration, companies can automatically verify payment information, minimizing revenue lost to incorrect payments and safeguarding profit margins.
Proactive compliance and risk mitigation. When managing dozens or hundreds of agreements, maintaining audit readiness and providing proof of compliance can drain company resources. Yet these steps are crucial given the steep fines (not to mention damaged reputations) for non-compliance with contract terms and conditions, regulatory guidelines, or financial reporting requirements.
Integrating contracting and revenue management systems increases data visibility and process auditability, while reducing the potential for errors like inaccurate re-keying or missed deadlines and milestones. Organizations can also easily generate comprehensive reports containing all relevant data and information to prove compliance, better preparing them for sudden audits.
An integrated cycle is the key to developing an efficient process that enables organizations to increase operational effectiveness, improve data consistency, eliminate IT workarounds, and enhance visibility into all aspects of end-to-end business processes.