Listen as SAP’s Carla LeJeune discusses the benefits of Optimizing End-to-End Entitlement Management for subscription-based product and service bundles in the Digital Solutions Economy.

Also, below is a transcript of the podcast episode:

Jim Hunt: Hello, this is Jim Hunt for Bramasol’s Insights to Action podcast series. Today. I’m really happy to have Carla LeJeune with us. She’s Senior Director of Outbound Product Management at SAP. Carla is a seasoned financial sales professional with over 20 years of experience and she’s expert in strategic sales initiatives, subscription based business models, and what we’re going to talk about today, Entitlements Management, Carla, it’s great to have you here. Welcome.

Carla LeJeune: Well, thank you. Thank you for having me, looking forward to it.

Jim Hunt: Certainly. Maybe if we could just start off with kind of a high level overview of what are entitlements and how do they fit into the Digital Solutions Economy?

Carla LeJeune: Sure. So entitlements are the “rights” that you’ll award to a third party when you establish an agreement with them for something. So, if you think about it, rights could be the right to access your software. If you’re selling software rights to access software on a particular hardware platform, and if you’re a company that’s now looking at expanding your product base to include embedded software in your hardware products. Or entitlements could be the rights to warranty. It could be the rights to training that’s associated with the software and hardware product. It could be the rights to support. So just think of an entitlement as the right to use by an end customer, or a partner or a company’s rights to use something that you are providing them based on an agreement you have with them, whether it’s a contract or a quote or a sales order.

Jim Hunt: That’s great. Let’s talk a little bit about the value of entitlements, both for companies and for their customers and, explain why so many companies are moving towards offering entitlements and why customers like them.

Carla LeJeune: Sure. So, where companies are moving, and where entitlement management comes about, is companies are starting to move more into subscription-based solutions. So they are wanting to have predictable revenue streams, and to be able to provide new offerings and business models to their customers. So, what are they trying to do with these offerings at the end of the day? They want to be able to increase revenues to their company. And they also want to do this in a cost-effective way. So, how do they increase revenues? It could be increasing the entire customer lifetime value for use of your products. Because in the digital economy, you are no longer just taking a product and delivering it to the customer, and then they go about their way and you don’t necessarily talk to them on a regular basis, until they are looking to buy a new product. In the digital economy and the everything-as-a-service economy, you’re going to be talking to your customer a lot more often. Because this is a subscription-based business model and you need to make sure those customers are getting value all the time out of your solution in order to reduce customer churn, make sure they don’t go someplace else.

Carla LeJeune: So, you know, one of the areas, or one of the things you want to look at is how do I increase the overall customer value?

Jim Hunt: It sounds like you’re essentially putting the customers more in control, but you’re also bringing together all of the aspects that might have been disparate previously, such as the customer had a warranty, they might have contracted for software to go with their product, but it wasn’t all tied nicely together. And entitlements help do that.

Carla LeJeune: Yes. It’s a hundred percent you hit the nail on the head. So one of the key areas where you provide customer value is that 360-degree view of what a customer is entitled to. If it’s software, hardware, support, warranty, training days, the customer now has complete visibility to what they are entitled to. And if you think about very large customers where you may have an overall contract with them for, let’s say thousands of user licenses, you’ve got many departments across this one customer that could be utilizing licenses, and sometimes they don’t even know that they have a corporate contract for something. So the departments could be going out and purchasing one-off subscriptions to a product with entitlement management. The customer can see exactly what they’re entitled to, to ensure that they’re making the best use of what they’ve already paid for.

Jim Hunt: Right. And it sounds like from the company’s standpoint too, giving that broader view creates better upsell opportunities. If those departments didn’t know that the company had contracted for a certain software or whatever rights usage. And so they want more seats to that as well.

Carla LeJeune: Yes, actually that’s another great point. There’s two sides of that, right? So it could be making sure, let’s say a customer had purchased a thousand seats for something. And you’re two months into the contract that was for a year, and they’ve already used 990 seats. You can alert the customer as well as your sales people to get ahead of this, to say, you by the way, Mr. or Ms. Customer you’re about to run out of seats here, let’s get ahead of that and go ahead and purchase more on the other side. Or, what if they purchased and aren’t utilizing those seats, it could be it”s not a value to ‘them or maybe they’re just not aware of all the value, and the different ways they could use your particular product. So once again, you could get ahead of that before you lose that customer, getting back to the preventing churn

Jim Hunt: Excellent point. And it kind of leads us into my next question, which was expanding on the value points for companies. We’ve just touched on tracking usage and upselling opportunities, but what are some of the other benefits for companies?

Carla LeJeune: Well, one is to prevent revenue leakage, making sure that people aren’t using more than they’re entitled to. Your customers, aren’t trying to do this sometimes in a malicious fashion, they just don’t know. But anytime your customers are using more of your product than they’re entitled to, you’re essentially giving away your intellectual property for free.

Carla LeJeune: So being able to track that and then track not only what they originally purchased, but have a complete audit trail as they draw down against those purchases. Exactly. Where, when, who, why, – all of that is available to you in an entitlement management system,

Jim Hunt: Right? So, you mentioned the 360 view for the customer. That’s the external. There’s also the internal 360 view for the company on the free entitlements. You might make a decision that you want to give the customer something, but you don’t want to do it without knowing about it.

Carla LeJeune: Absolutely. And if you want to take it a level further, you can even test out things, such as new features, etc., you may want to provide to customers new feature and track the usage of those to see if that is a place where we want to invest as a company, or is that a place where maybe we don’t want to invest anymore because our customers aren’t seeing value from that particular feature or function. Right?

Jim Hunt: And, obviously the entitlement management we’re talking about doesn’t operate in a vacuum. There’s the backend billing processes, and also things like compliance with revenue recognition requirements and so on. So how does entitlement management and maybe talk about some SAP systems here, like BRIM, how does entitlement management relate to those compliance and billing and other aspects?

Carla LeJeune: Great question. Actually you can think of entitlement management as essentially a bridge between sales and provisioning. So something that is different in a digital economy, as I mentioned, is previously you had a product, you delivered it, they got it, they received value from it. And, once you deliver, you can do things like recognize revenue. In the digital economy, it doesn’t work like that. So if you walk through that business process, you sell a bundled solution. Let’s say you’re gonna sell embedded software in a piece of hardware. Well, let’s say SAP BRIM does your invoicing, right? You have an invoice for s SKU and that SKU happens to have hardware, software warranty, training, and support, those five different items. There are five different entitlements that you’re never going to track on an invoice . It’s going to be an individual line item. Entitlement management then can look at all these different line items and say, oh, this piece of software, what do I have to do to enable my end customer to utilize this software?

Carla LeJeune: Well, it’s got to be provisioned, so it can reach out to a provisioning tool. They are going to need a license key, so it will reach out to a license key solution as well. And then by the way, I may have to wait for both of those things to be complete in order to kick off to your financial system to say it’s okay to recognize revenue now. Because there are different operational requirements or financial requirements around recognizing revenue when you’re talking about software versus a hardware product that is fulfilled upon delivery. Did that answer your question?

Jim Hunt: Yeah, it definitely did. So essentially, there’s a connection with those other applications, but there’s also kind of a decoupling. So you can manage the entitlement without having to go back and tweak the invoice or do anything in the billing system. Then compliance can be driven from the entitlement management as appropriate as an integrated piece, but decoupled so that you can manage that customer relationship and the entitlement rights usage without impacting the other systems.

Carla LeJeune: Yes. And that “decoupling”, that’s a key word that you just said there. Because once again, something that’s different with, let’s say software, is that things change all the time. So you have a new version. You want to make sure that you get that to all the customers that already are entitled to the previous version. Well, you don’t need to create a new sales order for that because they don’t have to pay more. They automatically get this version. What you can do then is enable this in entitlement management, to look for everybody who has version one. Now they’re going get version two, so you kick off provisioning and kick off the license key. In the past, we saw some customers that were, doing things like creating fake sales orders in order to drive that process, which you know, is diluting and deluding your backend financial systems.

Jim Hunt: Yeah. And, and if per chance, your system automatically sends those fake sales orders, or somehow the customer becomes aware of them, then your customer support gets a lot of calls from the customer saying “Did I just buy something new what’s going on here?” Whereas entitlement management that is decoupled allows you to manage all that without confusing either your internal accounting or your customers.

Carla LeJeune: Absolutely. Which of course at the end of the day increases customer satisfaction. And that’s what it’s all about.

Jim Hunt: Exactly. So, we talked about some of the other customer benefits, such as giving them that 360-degree view and some of the agility and so on. Is there anything that we missed in the conversation that customers really love about good entitlement management?

Carla LeJeune: Well, a couple things. Something else before we forget, there’s the other side of the house, we haven’t talked about the operational costs and keeping operational costs down. But most definitely from a customer perspective, having that complete view of everything that they own is key, from a support and product perspective. So, that’s one of the, the biggest values there. You mentioned agility is part of an entitlement management system as well. A good entitlement management system has the ability to handle operational items that you don’t get when you just delivered a product. So, splits, transfers, merges, and those types of things are handled in an entitlement management system that ultimately are of great value to the customer.

Carla LeJeune: For example, “I don’t want to buy new licenses. I just want to transfer some of these licenses over to a different division, because we’re not using in division one, or we purchased another organization and they had entitlements for some of your software products as well. We want to merge all those licenses together. All of those things can happen in an entitlement management system, whereas in the past, what you would see is a proliferation of spreadsheets or homegrown custom applications where they’re trying to fulfill the needs of what would be provided in entitlement management system. And a lot of these manual custom processes at the end of the day, aren’t efficient, and you can’t audit them, so it affects compliance and then ultimately affects customer satisfaction.

Jim Hunt: Right. We, we probably have about five minutes left, so let’s switch and talk about the keys to success in implementing entitlement management systems.

Carla LeJeune: So I mean, one of the keys to success at the end of the day is enabling an end-to-end system. That’s one of the big benefits of SAP’s entitlement management system is the fact that it is SAP agnostic. It’s cloud based, it doesn’t require any backend SAP and it’ll integrate with any sales order system, provisioning system, license key, system, et cetera. So one of the keys to success is making sure you have an integrated end to end process from however you have that initial customer interaction, whether it’s a contract management system or a sales order system through to entitlement management, where you can do your entitlement modeling, and you enable the lifetime management of the entitlements. So that’s where your merges, your transfers, your splits, and those kind of things happen. Then you can communicate with whatever downstream processes you need to communicate to via entitlement management, such as integration to that license key, delivery solution, your provisioning solution, and your consumption or your usage solution, so how you track your consumption. An then also being able to have that two-way communication so that you could drive other processes based on the results of your provisioning and license key processes, for example, to drive revenue recognition.

Jim Hunt: That’s great overview! I’m sorry to interrupt you, but I would be remiss if I didn’t ask you about the relationship to SAP S/4HANA, since that’s the future obviously for SAP customers. But it intrigues me because you could almost consider entitlement management part of an on-ramp roadmap. Because it’s agnostic looking backward, it can pull in information from whatever systems they already have in place, legacy systems or things they got from M&A activity and so on. So it can unify that way, but because it’s seamlessly connected with S/4HANA and with SAP Analytics Cloud, then it gives that forward path. So it it’s the best of both worlds seems like?

Carla LeJeune: Absolutely. And you hit the nail on the head. Now, I said we were SAP agnostic but of course we integrate with SAP solutions out of the box. But, to your point, it really gives you a lot of value when you’re talking about M&A activity and the ability to get your arms around what you just purchased, before potentially you do or do not move to an SAP platform and then also assist in that migration road to S/4HANA per se, as a stepping stone there.

Jim Hunt: Perfect. We’re running out of time, but could you maybe run down the list of stakeholders in a company that benefit from good entitlement management, and what those benefits are?

Carla LeJeune: Sure, absolutely. So, starting with sales and sales operations. We talked about the ability to have automatic alerts in order to drive upsell opportunities or to support customers that potentially aren’t utilizing your solutions in all the ways that they could. Then you’ve got product management and go to market. where it adds value. We mentioned how you could track the usage of features or test out new features, and how your customers like to utilize those features in order to drive future R & D for example And there is compliance and audit, plus all around preventing revenue leakage, and making sure that people aren’t over utilizing their entitlements to your solutions. And also providing a complete audit trail of the consumption and the draw downs against those entitlements.

Carla LeJeune: We talked a little bit about the operations processes and getting rid of the proliferation of spreadsheets because of the ability to handle all the things you need to in an entitlement management solution, like handling new versions and delivering of them, as well as splits, transfers, merges, all that kind of good stuff. Also automating those downstream processes like revenue recognition. A couple of things that we didn’t talk about is the customer experience giving them complete visibility to everything that they’re entitled to. One item that we hadn’t talked about and we probably should have was business agility and the ability for customers to drive new business models and respond to competition by providing new bundlings and new offerings quickly.

Carla LeJeune: So those are some of the values that entitlement management brings. I’m sure I I’ve forgot many, many more. It’s an interesting solution in that when customers get their arms around it, they may purchase it for a particular use case, but once they start working with it, they realize, oh my goodness, we could use it here as well. Especially on that experimentation on providing new features, we have customers like ServiceNow, a good reference customer, who purchased it for one reason and then realized that they could, they could look at and give insight to their R&D organization around which features they should invest in for the future, using entitlement management.

Jim Hunt: That’s excellent. From a summary standpoint, maybe you could talk about what should companies be doing now, if they’ve been intrigued by this discussion and they want to know more or get started on better entitlement management? Obviously, a plug for Bramasol – they should be contacting them because they certainly are experts in it. But just kind of from a big picture, how should companies assess their position and move forward into better entitlement benefits?

Carla LeJeune: One thing they could definitely do is go to SAP’s website and search on some keywords like monetization or digital transformation. There they can learn more about what customers are going through as they’re moving towards a digital world. What are some of the questions you have to ask? What are the things that you’re not thinking about if you want to move into more of a subscription recurring revenue stream models. And second, just pick up the phone, give us a call. We’d be happy to talk and we’ve got short videos that we can share with you about the value that entitlements bring. Your account executive would be happy to set up a lunch-and-learn or a conversation around the solution and stories on other customers that are utilizing the solution and the value they brought. So I would say it’s pick up the phone, give us a call,

Jim Hunt: Perfect wrap up, Carla. Thank you so much for your time today. I always learn from these sessions and you’ve taught me a lot today. I’m sure our listeners got a lot out of it too.

Carla LeJeune: Well, thank you. Thank you for having me. I really appreciate it. And it was a lot of fun.

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