Most organizations today are challenged by the disconnect between their revenue and pricing strategy and the systems of execution. For many years, the pricing module in SAP ECC Sales and Distribution (SAP ECC SD) has been used for pricing configuration, determination, and calculation of prices. However, the evolving conditions in the marketplace, the need for companies to evolve their business models, SAP Lead to Cash Process and associated pricing strategies, the ability to ingest several data inputs to compute and deliver prices in near real-time across their geographies, business lines, channels, and applications have created a level of architectural complexity. For example, pricing and revenue teams continue to struggle with manual operations around price list management and managing several pricing processes around their channel complexity and rebates. What’s more, SAP ECC SD Pricing is constrained in terms of performance when it comes to evolving needs such as dynamic pricing and lacks the framework to provide actionable insights around revenue leakage across the pricing waterfall. So, a mere lift and shift of Sales and Distribution Pricing into the S/4HANA cloud will not deliver the impact organizations are looking for. Instead, it will hold them back from innovating and growing faster.
Through RISE with SAP, the S/4HANA Core & CX solutions offer business process intelligence powered by robust cloud infrastructure. As part of the RISE with SAP initiative, SAP partners with Endorsed Apps such as Pricefx to help organizations realize improved business outcomes for their technology investment. Pricing is being recognized as a critical competency for global enterprises and Pricefx is leading the way for a SaaS-based approach. Pricefx’s Pricing and Revenue Management and Optimization solutions can yield quicker Return to Investment (ROI) for your technology investment as it directly impacts your top-line and bottom-line improvement.
In this article, we will examine the economic value points generated by Pricefx position as the only SAP Endorsed App for Pricing and combined with that, how Pricefx powers the core SAP Lead to Cash Process.
Value Point 1 – Pricefx Mitigates the Costs of Migrating to SAP S/4HANA
By December 2027, SAP expects its customers to make the shift from SAP ERP Central Component (ECC), to S/4HANA, leaving behind the older Business Suite. But here is the catch: SAP’s support for ECC will cease by 2030. If you are still hesitating due to migration expenses and the intricate project timeline, it’s time to change gears. Swift action is crucial. The budgetary impact of the transition can be counteracted by adopting an automated pricing solution like Pricefx.
With Pricefx businesses can attain these benefits:
Strategy Enhancement: By utilizing an SAP-endorsed pricing solution such as Pricefx, businesses can optimize pricing strategies pre-cloud migration. This solution offers pricing agility, functionality, and capability, empowering informed pricing decisions.
Expense Reduction: The pricing solution serves as a buffer against migration costs. Its pricing flexibility helps cover expenses, easing financial strain.
Revenue Boost: Integrating pricing software with SAP enables revenue optimization across the lead-to-cash process, bolstering overall business success which we will discuss in depth later in this article.
If you would like to get more in-depth information about mitigating the costs of your SAP S/4HANA transition, check out the details in my recent article by clicking on the image below:
Value Point 2 – The Pricefx-Generated SAP RISE Opportunity
Pricefx is the only cloud native platform in the marketplace with end-to-end pricing and revenue management capabilities that will allow customers to:
Not just digitize the pricing processes but also unify, streamline, and automate the pricing management and optimization workflows across your business architecture
Enable pricing and revenue management teams to harmonize and align their pricing strategy and sales execution across their front-office and back-office
Respond to market price moves dynamically while providing optimal pricing guidance across your global business units and sales channels
Power pricing and sales teams with actionable insights using contextual decision support for quicker price setting and negotiations within sales cycles
Elevate your business and pricing models beyond cost-plus ranging from attribute-driven pricing to value-driver-based models to maximize your top-line and bottom-line growth
Provide a data-to-business value framework for turning your historical and operational data into analyses, insights, and predictions for driving optimal business outcomes
What the SAP RISE Opportunity Means for Your Business
Pricefx are part of a pricing ecosystem where both the amount of data and computing power to process it are greater than ever before. Subsequently, the key technology trends that are accelerating growth for organizations today are:
Connected data models
Robust cloud infrastructure
Through RISE with SAP, the S/4HANA Core & Customer Experience (CX) solutions offer business process intelligence powered by robust cloud infrastructure.
As part of the RISE with SAP initiative, SAP partners with Endorsed Apps such as Pricefx to help organizations realize improved business outcomes for their technology investment.
Pricing is being recognized as a critical competency for global enterprises and Pricefx is leading the way for a SaaS-based approach. Pricefx’s Pricing and Revenue Management and Optimization solutions can yield quicker ROI for your technology investment as it directly impacts your top-line and bottom-line improvement.
The Pricefx – SAP partnership drives significant value in the marketplace. As an Endorsed App, Pricefx goes through a rigorous, premium certification process that validates the solution from both a business value and technical integration capability standpoint. Our joint customers realize strategic and operational advantages using our innovative solutions that;
Drive process excellence with solutions that enable business process intelligence for improved business outcomes (e.g., revenue & margin)
Drive more automation with digital workflows that simplify, streamline, and unify processes for improved productivity (e.g., Price setting and sales cycle times)
How Does Pricefx Power SAP’s Core Lead to Cash Process?
While SAP enables end-to-end Lead to Cash business processes for your organization, Pricefx can infuse this core Lead to Cash business process with revenue and profit optimization using one of, or any combination of the following three pricing functionalities:
Leverage Pricefx’s industry-specific pricing capabilities and processes to align your pricing strategies with the unique demands and intricacies of your business sector. With tailored solutions, you can address industry-specific challenges head-on, ensuring that your pricing remains competitive and profitable.
Gain a competitive edge with Pricefx’s actionable insights and contextual decision support tools. Harness the power of data-driven recommendations and contextual insights to make well-informed pricing decisions in real-time, enhancing your ability to respond swiftly to market changes and customer preferences.
Unlock the full potential of advanced AI optimization modeling within Pricefx to drive profitable growth. Utilize cutting-edge algorithms and predictive analytics to fine-tune your pricing strategies, optimizing revenue and profit margins while maintaining a strong focus on sustainable, long-term growth.
Understanding that every business is unique, and each has different pricing needs and requirements, organizations can choose to use a crawl, walk, or run approach in deploying Pricefx pricing capabilities as follows:
Use the Pricefx pricing analytics capabilities to understand revenue and margin leakage and improvement opportunities.
Better manage price setting of price points and adjustments across your pricing waterfall (from list to net and net to gross)
Dynamic pricing engine with price optimization to support pricing execution across Sales Cloud (CRM, CPQ) and Commerce Cloud (B2B, B2C).
Enables the ‘One Office’ vision to streamline your front office and back-office operations.
How Pricefx Enables SAP’s ‘One Office’ Solution Vision
As businesses increasingly adopt the visionary ‘One Office’ approach, seamlessly merging their front and back-office operations, the synergy between CX Solution Suite and S/4HANA becomes vital. This integration not only presents a challenge but also a remarkable opportunity for companies to streamline and unify their revenue and pricing strategies. Across various business lines, regions, brands, and product ranges, this convergence allows for the optimization of revenue and profit within the lead-to-cash processes, which span multiple channels and support the evolution of B2B and B2C commerce models.
Pricefx offers a powerful solution that facilitates this transformation. It enables organizations to achieve unified pricing management and optimization, harmonizing their pricing practices to establish optimal prices. This dynamic pricing approach extends seamlessly across various processes and channels, leading to improved revenue and margin realization.
Pricefx’s innovative approach, represented by the Pricefx Infinity Loop (see directly above), guides your pricing transformation journey. From initial strategy formulation to ongoing optimization, it provides a comprehensive framework for businesses to thrive in the era of the “One Office” vision as follows:
Price List Management with Analytics & Optimization
Price Agreements and Promotions Management
Optimal Pricing for Direct Opportunities & Quotes
Dynamic Pricing for eCommerce & Omni-Channel
Rebates and Channel Program Management
Pricing for Sales Orders and Invoices
Rebate Accruals, Payouts and Claims Processing
The Economic Value of Pricefx – The Only SAP Endorsed Pricing Solution
In the world of pricing optimization, the economic value generated by Pricefx stands as a testament to its effectiveness and impact. Let’s explore the impressive figures and tangible benefits that Pricefx brings to the table.
Unlocking Economic Value
Pricefx’s influence is unmistakable in the realm of pricing optimization, boasting an astounding $8.85 billion in Gross Margin (GM) Dollar Improvement*. This substantial growth in GM dollars is a direct result of Pricefx’s ability to enhance pricing strategies and streamline optimization efforts, contributing to the bottom line. Notably, this figure represents the “average impact values” across Pricefx’s extensive customer base, highlighting the consistent and substantial improvements achieved.
Beyond the impressive GM improvement, Pricefx manages a staggering $500 billion in Revenue Under Management (RUM)1. This vast sum underscores the platform’s capacity to handle and optimize revenue across diverse industries and global markets. Moreover, Pricefx boasts an exceptional 97% Customer Retention rate, a testament to the enduring value and relationships forged with its customers.
For businesses, Pricefx translates into substantial value. On average, customers experience a remarkable +177 basis points of margin improvement*, reaffirming Pricefx’s role as a catalyst for financial growth. This “basis points” unit signifies a change in Gross Margin percentage, illustrating Pricefx’s technical prowess in enhancing profitability.
Additionally, Pricefx’s solutions deliver tangible results, with businesses witnessing a 2-6% increase in deal win rates*. This boost in win rates is based on concrete measurements, demonstrating Pricefx’s direct impact on sales success. Furthermore, the platform slashes cycle times and price-setting efforts by more than 90%#, allowing businesses to respond swiftly to market dynamics.
Lastly, Pricefx’s close integration with SAP, with over 70% of customers seamlessly linked#, underscores its compatibility and effectiveness within the SAP landscape. This partnership reflects a shared commitment to “Customer First” values, fostering a mutually beneficial ecosystem. In essence, Pricefx’s economic value extends far beyond numbers, reshaping the landscape of pricing optimization for the better.
* – From 2023 Pricefx M1 Metrics Database report
1 – The total revenue Pricefx and its partners manage on the Pricefx platform.
2 – Pricefx establish long lasting relationships where value is measured (from 2023 Pricefx M1 Metrics Database report).
# – Data compiled from Pricefx pricing software users across 10+ industries and more than 100 companies, using the Pricefx Plasma benchmarking solution. Learn more about Pricefx Plasma here.
On the other hand, looking at things more positively, check out our Pricefx Margin Lift Calculator by clicking on the link below to see how much a pricing software solution could add to your organization’s bottom line: