Innovating Revenue Streams in the Construction Industry: A Case Study

The perpetual hunger for knowledge and savvy strategies is what pushes entrepreneurs forward. And we, at CLARITY, are eager to help satisfy this hunger with a series of case studies spanning various industries, showcasing how, for example, digital transformation can increase revenue streams. 

Through this series, we aim to illuminate the intricate dynamics steering business growth and success. In this instance, we explore how CLARITY, a leader in software monetization strategies, partnered with a global construction company. This construction and manufacturing leader sought CLARITY’s expertise to refine their approach to monetizing the company’s engineering software solution. With CLARITY’s proficiency in subscription-based business models and software monetization architecture, the collaboration ushered the client through a transformative journey.

Need for Transformation

Several years ago, a global construction company introduced its innovative engineering software, aimed at revolutionizing the process of designing structural connections. This software quickly gained traction in the market. The engineering solution, developed to alleviate the burdensome calculations engineers face when conceptualizing structural connections, leveraged advanced algorithms to analyze stress distribution across various elements, empowering engineers to enhance the efficiency of joining essential structural materials. 

The introduction of this software marked a transformative moment for engineers. Its significance lies not only in time-saving but also in precision and optimization, ultimately resulting in considerable savings in materials and labor costs. Additionally, the software includes features that indirectly boost the sales of hardware, such as a built-in product cost estimation tool and a product recommendation list. These features streamline the engineering process and aid in making informed decisions, thereby contributing to increased sales of associated hardware products.

Despite the success of the software, the construction company faced the challenge of effectively monetizing this offering. The challenge lies in transitioning from traditional product-based sales to subscription models, which demand more sophisticated billing and customer management systems. This shift requires overcoming obstacles such as managing recurring billing cycles, dynamic pricing structures, and customer churn, all while maintaining personalized service offerings. Additionally, organizations must adapt their Enterprise ERP systems to effectively support the demands of subscription-based business models, addressing issues such as disjointed systems and manual workarounds to extract actionable insights from operations.

Recognizing the need to transition into a subscription-based model, the company conducted a pilot program using ZUORA Billing specifically for software sales in their North American division. After the pilot and global software program rollout decision, it became evident that an end-to-end solution integrated with their existing SAP stack, encompassing both front-end and back-end functionalities, was imperative to fulfill customer requirements. Additionally, a critical need that emerged from the pilot program was the ability for customers to log in to the storefront and simulate the effects on billing resulting from any modifications made to their licenses.

In response to this need, the construction company sought expert guidance and support. They partnered with CLARITY, a leader in software monetization strategies, to architect a comprehensive solution tailored to their unique requirements. Leveraging CLARITY’s deep understanding of subscription-based business models, the collaboration aimed to refine the client’s approach to software monetization and boost revenue streams. 

Strategy for Software Sales Enhancement

As a recognized leader in SAP Quote-to-Cash solutions, CLARITY empowers businesses worldwide by streamlining sales processes, mastering complexities of pricing and configuration, and unlocking new revenue streams through the implementation of subscription models. 

Recognizing the potential of the client’s software product to generate recurring revenue, CLARITY embarked on a collaborative journey to formulate a comprehensive strategy for software sales enhancement. Leveraging their deep understanding of subscription-based business models, CLARITY proposed the implementation of SAP Subscription Billing, a robust tool designed to facilitate the monetization of subscriptions and usage-based services.

The integration of SAP Subscription Billing marked a pivotal step in the client’s journey towards monetizing their software product effectively. Through a successful Proof of Concept (PoC), CLARITY demonstrated the tool’s capabilities in optimizing subscription monetization, paving the way for further discussions on enhancing the IT landscape to seamlessly incorporate SAP subscription billing while leveraging existing investments in the ERP platform.

A key aspect of the project involved enabling customers to manage their subscriptions autonomously. User-friendly subscription management interfaces, such as those exemplified by Netflix and Amazon Prime, have demonstrated widespread success. Building on the principles of these successful models, CLARITY collaborated with the client to develop a portal integrated into their commerce platform, empowering software users to easily manage their subscriptions with upsell/downsell, pause/resume, and cancellation features, enhancing the overall user experience and promoting user retention.

In essence, CLARITY’s strategic approach to software sales enhancement not only facilitated the monetization of the client’s software product but also empowered them to offer a seamless subscription management experience to their software users. 

Mitigating Risks and Improving Efficiency

In pursuit of the vision to provide state-of-the-art customer experiences, CLARITY embarked on an initiative to implement self-service capabilities. Granting users autonomous control over subscriptions, billing, and account management was a pivotal step in enhancing the customer service relationship. This initiative represents a core aspect of ensuring seamless self-service software trial, purchase, license management, and life-cycle management. 

Indeed, the importance of self-service options cannot be overstated in the context of subscription-based businesses. Empowering users to manage their accounts and subscriptions independently not only fosters a sense of autonomy but also facilitates seamless interactions with the platform. It enables users to effortlessly navigate through various tasks, such as signing up for new software – whether on a trial or commercial basis – modifying subscription plans through options like upselling, downselling, or cross-selling, and accessing vital billing information, invoice lists, outstanding invoices, and dispute resolution mechanisms.

Conversely, the absence of self-service options poses significant risks to the business. Longer response times for customer requests can lead to frustration and diminished satisfaction levels among users. Moreover, the lack of self-service functionalities may deter users from subscribing to new products or offers, thereby impeding revenue growth and hindering the expansion of the customer base. By addressing these risks and implementing robust self-service solutions, businesses can enhance customer engagement, streamline operations, and drive sustainable growth in the competitive subscription market landscape.

Implementation and Solutions

CLARITY played a pivotal role in orchestrating the implementation of SAP Subscription Billing, providing comprehensive architectural support, and tailoring consulting services to meet the client’s unique requirements. In addition to guiding the client through the transition to a subscription-based business model, CLARITY actively contributed to the development of services aimed at extending the capabilities of the client’s existing SAP S/4HANA infrastructure.

The implementation strategy was crafted, leveraging a suite of cutting-edge tools and software solutions to ensure a seamless transition.

• With SAP Subscription Billing at its core, businesses can seamlessly implement subscription and usage-based monetization models, leveraging the power of diverse systems surrounding it.
  
• SAP Cloud Integration simplifies the integration of cloud-based and on-premise applications, ensuring a smooth flow of data and processes.
  
• SAP Event Mesh enhances agility and scalability by enabling applications to communicate through asynchronous events, fostering responsive applications and facilitating event-driven business processes across the ecosystem.
  
• SAP S/4HANA acts as the robust backend powerhouse, providing an intelligent real-time ERP system to support subscription billing operations.
  
• Delego Payments ensures secure and efficient payment processing, while SAP Commerce Cloud empowers businesses with omnichannel e-commerce capabilities, culminating in superior customer experiences.

Together, these systems create a dynamic ecosystem where SAP Subscription Billing stands as the central component driving monetization strategies forward.

Results and Impact

The implementation of CLARITY’s solutions, which began in April 2020 and went live in Austria and Great Britain in July 2021, yielded tangible results, driving significant improvements in software adoption, usage, and revenue generation. Then, the solution was rolled out in an additional 13 countries by the end of 2021.

By empowering customers with self-service capabilities, including the ability to manage subscriptions autonomously and access billing information, CLARITY enhanced user experience and customer satisfaction. This strategic approach not only streamlined customer interactions but also fostered a sense of empowerment among users, leading to increased engagement and loyalty.

These self-service features include but are not limited to:

• Activating the software subscription by accepting Services Subscription Agreement with an electronic signature
• Assigning or removing software users to/from the subscription
• Scheduling subscription cancellations
• Transferring admin rights to a colleague
• Downloading the accepted agreement

Furthermore, the introduction of self-service options enabled the client to expand its market reach and attract new customers. With the ability to easily sign up for new software and modify subscription plans based on their evolving needs, customers felt empowered to explore additional offerings from the client. This, in turn, translated into higher conversion rates and increased revenue streams for the business. When users, predominantly engineers, utilize subscription-based software, they not only pay for the software itself but also purchase various hardware products from the manufacturer. As a result, revenues are augmented across multiple areas of the business.

By leveraging CLARITY’s expertise in subscription-based business models and software monetization architecture, the client successfully transformed its software sales strategy, and bolstered its position in the industry, solidifying its standing among competitors.

Moreover, the enhanced customer experience facilitated by CLARITY’s expertise and support has had a ripple effect on the overall success of the business. Not only has it strengthened customer relationships and loyalty, but it has also contributed to improved brand reputation and market competitiveness. With a scalable platform in place, equipped to adapt to changing market demands and customer preferences, the construction company is well-positioned for continued growth and profitability in the ever-evolving digital landscape.