Understanding Subscription Management as a Service

Objective

After completing this lesson, you will be able to understand SAP Subscription Billing as the backend system for subscription management

SAP Subscription Billing

Let’s revisit the business situation and James’ next steps after completing a service order for installation in the previous unit.

Business Situation

In the previous unit, James, the order agent at Print2You, created a solution order for ACME Inc.. A subscription was created from the solution order on SAP Subscription Billing. Remember that SAP Subscription Billing is a backend system that is integrated with SAP S/4HANA Solution Order Management according to the subscription order creation process. SAP Subscription Billing is a public cloud solution that allows a company with products and services to create an automated subscription billing process. The subscription creation process is run without any action from James. Another important part of the quote-to-cash process in SAP S/4HANA is the management of subscription billing.

SAP Subscription lifecycle management is integrated via Event Mesh in the system environment of SAP S/4HANA, SAP Event Mesh, and SAP Cloud Integration.

James is familiar with SAP Subscription Billing, but he has a lot of questions regarding subscription usage fees and discount calculations. James is interested in following the subscription lifecycle. Before he goes any further, he’d like to know how subscription billing plays a role in the entire quote-to-cash process.

The following video shows us where we are in the SAP S/4HANA Solution Order process:

Our business example includes recurring fees and usage ratings that play a role in subscription billing.

Overview of Printing-As-A-Service with Bonus Included Pages

Company 

Print2You provides printing as a service products based on monthly subscription models. The monthly fee is based on the chosen hardware and included usage.  

The duration of the subscription is 12 months. 

Customer

ACME Inc. ordered a premium printer with a professional-level price model, which includes maintenance and a set number of printed pages at no extra charge. Additional printed pages will trigger added fees. Let’s have a look at the Premium Printer Price Model overview as follows:

Subscription Product: PRT_PRD_PRM

Price Model: Professional/Premium

Monthly Base Fee: 460 USD per month for a duration of 12 months. The monthly fee includes rental and a set number of printed pages.

Now that ACME Inc. has agreed to the above subscription product, let’s take a moment to learn about subscription lifecycle management. 

Subscription Lifecycle Management

Subscription Billing is the backend system for subscription management.

To create a subscription, the following steps are taken:

    1. SAP S/4HANA submits the Sold-to-Party as the customer for subscription billing.
    2. The subscription is created out of the subscription item in the solution order item 30, which was a subscription product.
  2. After creation of the subscription, the subscription is managed in subscription billing over its lifecycle. According to our business example, the printing as a service subscription can be created in a pending status.

    The service begins after the installation has been completed, with pending subscriptions not fully provisioned yet. You can use the status management of a subscription to wait for the monetization of the subscription until it is completely provisioned.

  3. After the service confirmation is completed, an event changes the status of the subscription from pending to active.
  4. At this point in the subscription lifecycle, ACME Inc. is using three printing scenarios. These are analyzed in detail in lesson 2.
  5. Usage rating changes the subscription according to the consumption of the subscription including volume. Within SAP Subscription Billing, this is called allowance.
  6. The recurring fee of 460 USD is created, with a monthly billing cycle that starts at the beginning of the month. The fee is prorated if the subscription starts or ends during the month.
  7. If the printer is changed during the lifecycle of a printing as a service contract, the prices are adapted, or the subscription is renewed or canceled.

    Other business activities can change the subscription in SAP Subscription Billing. Next, you will learn how rating allowances within the subscription lifecycle define the amount of usage credit, such as the number of bonus printed pages

Allowances in Subscriptions

What is a Subscription Allowance?

A subscription allowance defines an amount of usage credit consumed within a subscription. An allowance can be an initial credit included with a subscription or purchased separately.

According to our business example, ACME Inc. is using a premium printing service with a per year allowance of 1,000 black and white and 200 color printed pages.

This allowance is consumed over an entire year. The allowance ends after an expiration date or when fully consumed. Each monthly billing cycle lists any consumed allowance, excess rated usage charges, and the set monthly recurring fee.

Once an allowance is depleted, the subscriber can purchase more or continue to use the services with charges to the bill.

Now that we have a better understanding of the subscription lifecycle and allowances, we’ll next examine how ACME Inc.'s printing scenarios usage of the printer services influence the allowance provided with the subscription.

Please complete the below simulation exercise, which shows you how to change the status of a subscription from pending to active, as an example for the subscription status change.

ExerciseStart Exercise

Key Capabilities: SAP Subscription Billing Solution for Product as a Service

  1. Translate Commercial Products into Subscription
    • Lifecycle management of periodic and usage based billing.
    • Subscription and Contract Management. Enables comprehensive management of all aspects of your subscription contracts and allows for flexible adjustments and amendments.
    • Discounts and Promotion: Capable of managing and applying multiple discount models and promotional offers to attract and retain customers.
  2. Process Optimization
    • Configuration of Pricing Models: Allows for the easy configuration of complex pricing models, enabling businesses to offer a wide array of pricing plans to their customers.
    • Usage Metering: Accurately records the usage of services or goods and bills customers correspondingly.
  3. Cloud Platform Approach
    • SAP Subscription Billing runs on BTP.
    • Pre-delivered content for Integration with S/4HANA Solution Order, SAP Entitlements Management and SAP S/4HANA Sales Billing, and SAP Convergent Mediation CE.
    • Integration via APIs for Subscription Contracts, Usage, and so on.

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