Explaining the Architecture of SAP S/4HANA Service SOM

With SAP Billing and Revenue Innovation Management, service providers can bring innovative pricing offers to market faster than the competition with an intuitive user interface that requires zero coding.

The solution supports prepaid, postpaid, and hybrid models to monitor customer accounts in real-time and improve customer sentiment by giving subscribers control over their spending.

Pricing for complex B2C scenarios, such as family plans, are supported out of the box, as are B2B scenarios like credit pooling and sophisticated tiered models. Calculation of partner revenue share can be configured right along with customer pricing.

Marketing and sales are empowered to craft pricing models that reward loyalty, offer partners flexible terms, and ensure accurate settlement.

Finally, operations can consolidate pricing for multiple services and multiple lines of business on a single, high-performance platform that dynamically scales to extreme transaction volumes with 99.999% high availability.

The diagram outlines various business functions and processes related to Subscription and Order Management (SOM) within a broader framework known as billing and revenue innovation management.

The subscription order management component of SAP Billing and Revenue Innovation Management helps you explore new B2C or B2B markets or extend market opportunities by addressing new customer segments in new verticals and geographies.

Additional benefits are as follows:

• Design new subscription offerings that are instantly available for quoting and ordering across all channels.
• Handle the complexity of dynamically bundled service packages to ensure that what's ordered can be delivered and billed with subscription order capture and automated management of contract changes, renewals, and extensions.
• Manage B2B master agreements and hierarchies with large enterprise customers, including specific terms for pricing, shared allowances or credit pooling, who can order what, volume discounts, and invoicing.
• Give your service agents a 360° view of customer interactions across the entire order-to-cash process, allowing them to provide prompt and expert service with a personal touch.

Looking closer into the functional areas of Subscription and Order Management, the sales process is located in the SOM system, which means that order and contract management are managed in the same system. There are different kinds of contracts that will be covered throughout this training. There are subscription contracts, partner agreements, and master agreements.

The SOM also provides master data, for example, business partners, contract accounts, and products. Change processes to existing contracts are managed in the SOM system and, last but not least, the fulfillment is triggered from the SOM system.

All of these aspects will be covered in later units in detail.

Subscription order management is part of the SAP S/4 HANA Service. In combination with a solution quotation, the link between sales and distribution is triggered.

As a business example in this training, a Cloud Selection Service is used.

The O2C company offers cloud infrastructure to their customers. The product Cloud Selection Service is a subscription and is paid monthly.

The monthly fee depends on the selected service level agreement. Four options are possible:

1. Pay As You Go
2. Silver
3. Gold
4. Platinum

Depending on the selected service level, the customer can consume a number of CPU hours, RAM hours, and Gigabytes of bandwidth for free.

Additionally, the product is bundled with an activation fee and a license fee for delivering the license key. The customer can choose between License50 and License100. The product has a minimum duration for the subscription of 24 months.

This business example with Cloud Service Provider is followed in the exercises of the training.

Pricing and charging model design in SAP Billing and Revenue Innovation Management is done with decision trees (simplified example graphic on slide). Decision trees allow for truly flexible expression of configurable pricing and charging logic. They are easy to learn and easy to use.

This is not a fill in the blanks model, where the pricing logic is predefined and all you can do is set price levels or tiers. Some competing solutions may tout their simple UI, but it often greatly constrains the type of pricing models that you can implement. When you need to make significant changes with such solutions that were not covered in the initial vendor-hardcoded design, then you either have to get your hands dirty by custom-coding with lengthy development cycles or worse, you have to go back to the vendor for a change request.

In the SAP Billing and Revenue Innovation Management billing solution, pricing and charging logic is built up by assembling decision trees containing simple components.

These components are like simple building blocks that you can put together in many different ways. There are no constraints to the depth of the tree or the way in which you choose to sequence the different decision building blocks. In this way, you can create exactly what you need, without requiring custom coding or change requests from SAP.

Multisided Revenue Models: This solution allows for both customer pricing and partner settlement to be managed and calculated in the same engine, using the exact same approach to pricing configuration. Competitive products either do not handle partner-centric pricing at all or handle it with a disjointed, separate solution. This solution requires different configuration expertise and comes with the risk that customer pricing and partner settlement cannot be properly maintained in sync.

Charging Flexibility: The charging model design offers true charging convergence and can manage prepaid, postpaid, and hybrid charging models. The determination of the account, wallet, or allowance to be charged is made using flexible decision tree logic and can change charging event-by-event, based on transaction characteristics. Competitive solutions tend to have a much more static and inflexible method of assigning charges to customer or partner balances.

Service Control with Allowances: This solution includes powerful new capabilities for stacking and sharing allowances, entitlements, and quote. These are vital to allow service providers to give subscribers, families, and businesses full control over their spending, while permitting the rapid introduction of promotional packages (data, minutes, and service credits).