In this second blog post covering aspects of best of breed (BoB) system architecture, we look at contract management.
In a typical BoB company solution, one of the key challenges is where to model contracts. The normal choices of CRM; timesheets; service desk etc don’t really work well for contracts. Even the ledger will struggle.
Many companies therefore fall back to the system of last resort (spreadsheets) or build their own contract modelling system (more parallel static data to maintain). But, while this can be made to work, the challenge is going to be maintaining that data and linking it to service delivery and invoicing.
How orders are modelled (another challenge) now comes into play. The old way was (once again) spreadsheets made to look like a word document, faxed back to the finance department who would enter the data manually in their spreadsheet and then run a macro (or just filter on date) to produce an invoicing file for re-keying manually onto invoices. And that can work as well, if orders are large and rare, but as cloud software becomes increasingly dynamic and orders come through all the time, this method is likely to produce increasing error levels and/or delays in invoicing.
OK, it’s a problem, but a workable one, at a cost.
Except that’s not the end of the process. Your service desk needs to model certain aspects of the order (such as what is covered), your timesheet system needs to model any service delivery, budgets etc. If your service desk team book time to contracts, those need to be modelled in there as well. Even the expenses system may need to have a contract dimension if you have more than one contract on-going with a client. This is before you deal with cancellations, additional orders, delayed service start, modification to coverage (in particular if equipment support is part of the offering).
So, this is why finance departments in tech firms can grow to 10% of overall headcount or more. They have a lot of chasing and picking up to do. It is not only expensive (in staff time) to process and bill an order, it is also an error-prone process. On the back of all this, we have not even touched on deferred revenue management.
So, while you might have the world’s most optimised agile development team using the latest software, your business is still likely to be inefficient in the back-office, potentially missing billing events and losing you money. Worse, as the data is in different systems, understanding this problem is going to be hard. Even getting data sets out that have equivalent state will always be a major challenge (just wait for the MIS blog).
Integrating contract lifecycle management into your BoB architecture as a controlling data flow is key to economic growth of the business - it’s just a shame it doesn’t figure highly in most solutions.