SAP Subscription Order Management (SAP SOM) – 5 Main Features

As the businesses go on with the transition to Subscription Economy the demand on market for complex and flexible product and pricing modelling is always high. SAP BRIM solution has specifically designed and build SAP SOM - Subscription Order Management for this purpose. SAP SOM support the order process of a combination of physical goods, service and subscriptions. This enables and empowers at the same time your transition from a product-based model to a service-based model.

With SAP SOM you can design and model within a record time new subscription offering as a mix of products including all types of prices, one-tome charges, recurring charges, usage charges, revenue sharing, commissions etc. SAP SOM offers a huge flexibility on master data management and contract life-cycle management like adding, updating or cancelling element of a subscription contract and at same time tracking the consumption of the service usage, such as balance check.?

Let’s have a closer look on 5 main features and functionalities that SAP SOM on S4/HANA offers:

Product Modeling

The product modeling has become more easy, quick, and dynamic. A subscription product provides specific attributes and characteristics, like AVC – Advance Variant Configuration, for leveraging payment models, one-time fees, recurring fees and usage-based fees. Different types of products can be grouped and combined into product bundles to provide a flexible offering to customers, such as subscription and physical products and services.

Price Modelling

SAP SOM offers, support and uses various types of fees and charges, such as recurring fees, usage and one-off charges, and allowances. In combination with SAP Convergent Charging (SAP CC), it provides huge flexibility when we talk about tiered pricing, blended price or threshold price maintenance. This can be done using the mapping tables or range tables, which are created in SAP CC and maintained also from SAP SOM and can be associated to specific customers or specific product bundles.

Master Agreements

Master agreement functionality is a contract agreement that is used to define the terms of a long-term relationship between a customer and a service provider. Usually, you can find master agreements in B2B scenarios where terms for future contracts are agreed. Terms agreed on master agreement can affect usage prices for service, discount, invoice layout, recipient, payer or additional invoicing list etc.

A use case of master agreement could be:?A business customer within an organizations structure, closes a master agreement for specific products. The customer has negotiated and agreed prices for usage and monthly fees and a volume discount for total revenue of 10% of the year. In this case the customer signs with service provider a master agreement for the negotiated prices.

Contract Life-cycle Management

Contract life-cycle management enables you to manage a subscription contract for a service that the service provider company offers to its customers.?It supports process such as contract extension and contract cancellation, technical resource change, or product change by enabling up-selling or down-selling process.?

Revenue Sharing

This is one of the most important features in today’s subscription economy. As the partnering in providing services is becoming more and more useful in complex business models, revenue sharing is crucial in this process. Partner agreements are created to maintain revenue sharing terms between service and content providers, in a service-based model.

When an end user or customer is using a service, the involved partner is taking a part of the revenue based on the contract that the service provider agreed with the end customer.

Being aware that SAP SOM offers more features and functionality, these were 5 main features that I am convinced think are important in today’s subscription economy. On top of these 5 main features, I would put one more attribute of SAP SOM, which is the capability to apply these features across multiple industries and take advantages of them. You can apply these features in any scenario of “Anything as a Service” and Outcome-based business models.