In B2B companies that dynamically develop, price, and sell complex, “on-demand” products and services; Finance, Sales, and Operations are inextricably linked and interdependent. Finance’s role is no longer accounting for money. Its role is enabling organizational performance. Sales’ role is no longer about making sales. It is about making the right sales, the right way. And, Operations is not about cutting costs, but enhancing client experience. The leaders who work together to exploit this interdependence have a strategic advantage in improving sales productivity, increasing competitiveness, and securing financial performance.
Nowhere else is this opportunity more evident and necessary than at innovative companies evolving from straight-forward products to complex interdependent solutions, services, subscriptions, and usage-based products. A once simple product configuration and profitability analysis is now a maze of exceptions and complex array of permutations with multi-faceted scenario planning, resulting in a material governance, risk management, and compliance challenge.
Top sellers know that “time kills deals.” Dragging a deal through scenario planning and approvals adds days and weeks to the sales cycle and puts revenue at risk. On the flip side, anyone with B2B selling experience knows that a bad deal is worse than no deal at all. Every company has closed deals that they came to regret because they led to unrealistic price expectations in the market, eroded perceived value of the company’s products, materially impacted financials, and did irreputable harm to the brand.
Back to interdependency. These complex deals can manifest corporate bureaucracy at its worst. People tend to know or care only about the part of the deal that impacts them individually or their group. As a result, CFOs often operate without real-time data to make smart decisions on pricing, risk, resource allocation, and financial forecasts. Sales wrestles with productivity, managing prospect expectations, quota demands, and demotivating salespeople who lose sales and commission checks. Legal wrestles with the immense pressure to create and negotiate contracts rapidly while managing corporate risks. And by the way, what about the customer’s experience! The customer already has enough headaches navigating the complex purchase without added approval complications from the vendor.
Yes ” deals should close fast, they must be profitable, and come with an acceptable risk profile, but only when we look closely at the interdependence and address the entire process can we achieve all three.
Let’s look at a couple examples. Software as a Service (SaaS) companies frequently provide services that support multiple platforms. Some services are priced according on the number of hours or even seconds of computational processing completed on a customer’s data. Understanding customer profitability requires Sales Ops and Finance to forecast numerous scenarios under different levels of computation time. This analysis may not be too difficult for a single product, but across a deal with multiple products and services, each with their own pricing structures, it could take days or weeks to assess the possible material outcomes in terms of pricing and delivery risk.
Technology is not the only industry that has complex pricing and delivery models. Another great example of multi-product and services pricing complexity can be found in the heavy equipment manufacturing business when warranties and service are included in the sale of the heavy equipment. Consider a manufacturer of mining equipment who wants to include both a warranty, plus an optional service contract for routine maintenance on a fleet of excavators. Having the ability to model the expected warranty costs, both with and without routine service, would provide the manufacturer with the analysis to lower the cost of the excavators while making additional margin on service contract.
So, how can a company confidently develop and price a complex, multi-year, multi-faceted deal, while managing material financial, delivery, and reputational risk WITHOUT slowing the deal’s velocity or simply losing it outright? Who is managing the end-to-end process for the good of everyone?
Here’s how we are helping clients get it done.
Technology allows companies to record, track, share, and learn from data more than ever before. When the technology is coupled with emerging business models, it can improve communication and streamline fluidity between functions and business units. With better integration throughout the company, a strategic CFO can play a more cohesive leadership role that strengthens financial management while enabling Sales to augment sales productivity and Operations to enhance competitiveness.
We call it Deal Transformation. Our approach enables complex B2B firms to run a single and complete quote to cash cycle at scale for any type of offering (standard SKU products, services, usage-based products, subscriptions). It brings together stakeholders from Sales, Finance, Legal, and Operations to manage the deal cycle while reducing approval time and mitigating pricing risk.