www.pwc.com/technology
Technology industry
at the cross-roads:
Transforming quote-to-cash operations
Technology Institute
Technology industry at the cross-roads: Transforming quote-to-cash operations / 2
The global technology industry is going
through an evolutionary period, driven
by major market trends including the
proliferation of tablets and other mobile
devices, adoption of social media platforms
within the enterprise and the increasing
pervasiveness of the cloud. The combination
of these has resulted in an explosion of
data around the customer/consumer/user
that represents in itself an unprecedented
opportunity for the technology industry.
Hardware, software and technology services
companies now have an opportunity to
make up for ground lost over several
recessionary years of postponed spending by
theircustomers.
However, the technology industry faces a
host of internal and external challenges in
pursuit of these opportunities. Reaching new
emerging markets with very diverse customers
across countries and orchestrating global
operations creates tremendous pressure within
the organisation. The regulatory environment
is changing in the US, and varies signicantly
in other major economies. Meanwhile, budgets
need to stretch farther than ever. Outdated
and inefcient legacy solutions, disconnected
processes and systems due to mergers and
acquisitions and outdated business models
drive up operating costs and complexity and
need to be addressed.
All the while, customer experience is being
shaped by companies like Apple, Amazon and
eBay, which can identify consumers wherever
they enter the browse/buy/use cycle, identify
their purchase history and buying patterns
and tailor propositions accordingly. These
are companies that provide customers with
products and services that delight and
inspire, while addressing specic desires.
Companies that follow a similar trajectory in
understanding and leveraging these shifts in
customer expectations and in the industry
have vastly successful results and differentiate
themselves from competition in a profound
way. (See Figure 1)
Currently though, few companies deliver
an Amazon-like buying experience for their
customers. In fact, the evolution of the
technology industry into more integrated
hardware and software propositions,
alongside complementary services and
content-based offerings, means that,
increasingly, companies seem to be operating
on a continuum of business models, rather
than just focusing on one or two sources of
revenue. (See Figure 2) When combined with
global expansion, an essential requirement for
sustaining growth, this results in signicant
fragmentation of the customer experience and
enormous complexity within the sales cycle
and the buying process.
Executive summary
Figure 1: Apple vs. HP quarterly revenue (US $bn)
4.6
10.4
1Q 2011
9.2
8.9
1Q 2012
Apple iPad
HP Personal Systems Group
Technology industry at the cross-roads: Transforming quote-to-cash operations / 3
To address this successfully, companies must
have a clear vision of the future—an operating
model comprising robust processes and
enabling technologies that is simultaneously
capable of delivering a seamless customer
experience, global scalability along with rapid
change and adaptation when needed. It is a
compelling proposition—one that efciently
supports current businesses and adequately
enables new revenue streams as they take
shape through innovation and/or acquisition.
It is a proposition that inspires and drives
transformation inside the enterprise—a
profound change that may be achieved in
iterations, but is comprehensive in nature.
Is it possible to realise this vision completely?
The authors believe that while this may be the
ultimate moving target for companies, there
is signicant value to be realised along the
transformation journey—identication of the
current and future DNA of revenues for the
company in line with market opportunities and
strategic priorities, along with the ability to
design, develop and deploy a robust business
architecture and enabling platforms and
technologies.
Executive summary (continued)
Qualcomm
Intellectual
property
Product Product
with
services
Product with
experience
Services/
Experience
with product
Services Experience
Logitech Dell
Adobe
Amazon CSC
Facebook
Diverse customers, multiple business models, global presence
Figure 2: Technology company business models
Why optimise Q2C?
Optimising quote-to-cash (Q2C) operations
is one high-impact way technology companies
can respond to these challenges. Based on
PwC’s research and analysis of a wide range of
transformation and operations improvement
projects conducted by technology companies,
we have identied Q2C as particularly ripe
for improvement because it affects all of
theseareas:
1. Evolving customer expectations, including
consumer-like shopping patterns among
enterprise users and buyers;
2. New business models and product
propositions that market segments across
the globe and
3. Concentration of competitive advantage
within customer-facing processes and
product innovation.
Q2C processes touch almost every function
within the organisation—sales, nance, IT,
R&D, marketing, legal, supply chain, order
management and customer service—and
are integral to successful channel partner
relationships. As a result, improving Q2C
operations has a potentially profound effect
across both the front and back ofce.
Technology industry at the cross-roads: Transforming quote-to-cash operations / 4
Select corporate metrics
Total revenue
Sales per customer
Cross-sell and upsell revenues
Sales cycle time:
•Quote-to-ordercycletime
10–15% increase
10–15% incremental revenues
20–35% increase
30–60% reduction
25–50% faster
Order processing cycle time:
•Cycletimetogenerateinvoices
•Orderchangeprocessingcycletime
•Percentageofinvoicescreatedwithouterrors
20–40% reduction
10% reduction
20–30% reduction
15–20% improvement
Source: PwC
Figure 3: Impacts of Q2C optimisation
Companies that have transformed Q2C operations realised signicant agility and efciencies,
while reporting signicant improvements on critical metrics across the transaction lifecycle.
(See Figure 3) While not every organisation can achieve all of these results, Q2C leaders are
actively using customer data and purchase history to customise offerings and speed the buying
cycle. Standardised back-end processes help them respond with more exibility and agility to
changing market conditions, while customer-facing technologies allow them to deliver tailored
interactions. By automating as much of the Q2C cycle as possible, from contracts and pricing
approval to order management, they reserve hands-on attention and resources for complex and/
or high-value orders.
What seems to separate leaders from laggards and mainstream organisations in their quote-
to-cash operations is that they put the customer at the centre of their view of the world. As
such, they streamline Q2C operations, automate processes, consolidate functions to avoid
misalignment of requirements and otherwise provide an outstanding customer experience.
(See Figure 4)
This paper explores ways that transforming Q2C enables organisations to enjoy a wide range
of top and bottom-line benets by giving partners and customers seamless user interactions,
reducing time to market and increasing organisational efciency while cutting costs.
Technology industry at the cross-roads: Transforming quote-to-cash operations / 5
Laggards Mainstream Leaders
Customer
experience
•Fragmentedexperiencewithmultiple
entry points and high complexity
•Heavy reliance on customer’s/user’s
ownunderstandingofthecompany’s
product and product structure
•Heavy reliance on customer’s/user’s
self-reporting of purchasing history
•Singlestartingpointwithdened
pathwaysbasedoncustomertype
•AbundanceofSKUsresultsin
complex choices and unclear pricing
tradeoffsbetweenindividualproducts
andbundledoptions
•Inabilitytoleveragenewpurchase
patterns (social/recommendation-
based,try-and-buy,etc.)acrossnew
customer constituencies
•Context-specicroutingthroughQ2C
cycle,drivenbycustomerproling
basedonfeedsfrompurchase
history and entitlements
•Multiplebuyingcycleoptions:rapid,
standardised guided path for most
customers,aswellasricher,more
exiblealternativepathsthatallow
for customised offerings
Q2C business
architecture
•No governance model
•Lackofstandardised,
common processes
•Outdatedandconictingbusiness
policiesforpricing,creditapprovals
and contracting
•Multiple manual data entry efforts
andcheck-backsthroughQ2Ccycle
•Strongleadershipwithcentralised
governance team making
recommendations across Q2C for all
product lines
•Lack of understanding of region-
specicneeds
•Exception-basedprioritisationof
strategic customer needs
•Federated governance model across
majorcustomersegments,product
groups and geographies
•Template-basedapproachwith
allowanceforvariations
•Frequent updates to templates
for rapid market response
Q2C
technology
platform
Multiplicity of peripheral systems
forpricing,congurationand
contractsaroundcoreQ2Ccycle,
accompaniedby‘enforcedadoption’
ofmaintransactionbackbonebyall
acquired companies
•Acquisition-basedgrowthwith
ensuingsignicantlagbetween
technologyenablersand
businessneeds
•Recognitionthatdifferentbusiness
modelsmayrequiredifferentenabling
solutionssupportedbyaexible,
extensibleenterprisearchitecture
•Focus on customer-facing solutions
andenablingtechnologiesfora
tailored customer experience
•Back-endprocessesareenabled
byglobalstandardplatform
Order
management
•Manualordervalidationandbooking
•Non-standard assignment of orders
for resolution
•Manualchecksforpricing,contracts
and trade compliance
•Autobookingforstandardorders
•Manual intervention for more
complex orders
•Partially automated checks
•Autobookingformajorityof
orderswithclearownershipofthe
rest,leveragingauniedorder
management console
•Order prioritisation applied
•Automated trade compliance checks
Data
•Manual processes
•Contracts and pricing approval
not integrated
•Pricing automation at time of quoting
•Limitedintegrationwithsales
contracts
•Contractsintegrationwith
automated controls
•Streamlined approval management
withautomatedapplicationandcontrol
ofpricingmodiersandqualiers
•IntegrationwithInstalledBase/
Entitlement Master
Organisation
•Separate functions in silos
control individual steps along
the transaction continuum
•Overlappingrolesandresponsibilities
withduplicationinskillsets,along
withresourcegaps;legacyownership
ofresourcesbyfunction
•Frequently duplicated
controls and activities
•Limitednumberoffunctionsalong
the transaction continuum
•Initial alignment of integration
betweenfunctions
•Cross-functional forums at
manager/senior manager levels
forcollaborationandrapiddecision-
making;thisisaccompaniedby
executive-level cross-functional
forumsaswell
•Some duplicated controls
•Integratedfunctionownsthefull
transactionoworinstitutionalised
understandingandownershipof
end-to-endprocessbyparticipating
functions
•Integratedprocessviewdrives
collaborationacrossfunctions;
strategic and operational decision-
makingwithinQ2Cthroughcross-
functional groups
•Harmonised requirements
and controls
•No duplication
Source: PwC
Figure 4: The Q2C performance spectrum—leaders, laggards and the mainstream
Technology industry at the cross-roads: Transforming quote-to-cash operations / 6
Q2C operations are more complex than other
business areas because they are almost always
cross-functional and multi-layered, especially
for hardware and software companies. The
diversity of business models supported by
most technology ecosystems can increase this
complexity by an order of magnitude.
Consider the following:
• Different customer segments (large enter-
prises, government, small and midsize
business, consumers) require different
approaches to pricing, conguration and
quoting, as well as purchase order submis-
sion, order visibility and invoicing.
• Sales channels have multiplied; direct chan-
nels now include e-commerce and mobile
options as well as call centres and the tra-
ditional sales force, while indirect channels
include distributors, OEMs, system integra-
tors, resellers and VARS, with increasingly
complex partner programmes.
• Order types have proliferated in all sectors
of the tech industry.
These developments require careful design
and transition management that will depend
on how a company has evolved from its core
business model of ve to ten years ago. For
instance, a hardware company with lagging
Q2C processes may still cling to traditional
pick-to-order, order-to-stock, assemble-to-
order, congure-to-order and engineer-to-
order processes. Companies with a traditional
model continue with these processes, but also
have to embrace other processes due to new
revenue streams. The expansion of the universe
of revenue sources and routes to market, along
with more complex product offerings, means
that the same ‘hardware OEM’ company has
to combine devices, software and services into
one completepackage.
To do so, it must enable several additional
transaction types within Q2C operations,
including:
• Demos/try-and-buy
• Freemium (rst use free)
• Volume Purchase Agreements (VPAs)
• Maintenance services
• Software as a Service (SaaS) and
subscriptions
• Hosted solutions
• Enterprise License Agreements (ELAs)
• Enterprise Service Agreements (ESAs)
The technology industry’s approach to
Q2C processes has typically been highly
manual, requiring multiple touches and
pricing modications on virtually every
quote and order. With the advent of multi-
offering quotes that span several locations
and require alignment across business units
and geographies, Q2C processes are more
fragmented than ever for these laggards.
Laggards’ multiplicity of systems and manual
processes challenge their Q2C procedures at
every turn. Pricing complex solutions offerings
requires input from multiple departments,
delaying the ability to respond to customer
needs quickly and increasing the odds that
customers will turn to a competitor who can
deliver a faster quote. A complex conguration
process requires partner training and makes
sales and service more difcult, decreasing
channel partners’ incentive to sell a product.
Lack of visibility into transactions can lead
to conicting information about orders,
inconveniencing partners as well as customers.
High-touch manual pricing processes are
time-consuming and nancially complex,
creating further sales delays and introducing
tax, audit and compliance risks. The Q2C
process becomes so complex, costly and slow
that channel partners and customers alike can
easily be tempted to turn elsewhere.
Even mainstream technology companies
face substantial challenges. Their minimal
standardisation and automation governing
deal management or pricing results in a lack
of a single source of truth across systems,
functions and products. So, senior executives
and nancial management in technology
companies with mainstream Q2C processes
typically do not have complete and accurate
data about pipeline status, revenue projections
or other key nancial metrics.
Indeed, the lack of a single enterprise-wide
Q2C information source is having deleterious
effects throughout most organisations, not just
laggards. The following table highlights some
of the most vexing impacts of inferior Q2C
processes on key functional areas. (See Figure5)
Solving the Q2C conundrum
Technology industry at the cross-roads: Transforming quote-to-cash operations / 7
Finance Sales Marketing
Quoting
operations/
Order
management
Operations
Customer
service
Issues
withtax,
reporting and
compliance
due to a lack
of consistent
information
Relentless
pressure
to maintain
or improve
margins on all
transactions
Missed
opportunities
due to the lack
of competitive
information
Lacksefcient
system-driven
compliance
and validation
checks,
creating
increased
exposure to
compliance
risk
Suboptimised
fullment,
production
and logistics
conditions due
to poor order
visibility
Poor service
response
and revenue
leakage due
to fragmented
processes and
limitedvisibility
of data around
service
contracts,
warrantiesand
entitlements
Revenue
andprot
forecasting
challenges due
to inadequate
or conflicting
data
Lost
opportunities
because
many (if not
most)deals
require manual
intervention
Inaccurate
information
leads to less
competitive
offers
Lack of
seamless
integration
withquote,
leading to data
misalignment
and erroneous
order creation/
booking
Quoting
channel
partners
hesitate to
dobusiness,
or even to
maintain the
partnership
Poor customer
service due to
limitedvisibility
ofdataabout
customer
installed
baseandits
entitlements
Cannot
generate
timely,
accurate
invoices
without
intervening
manually in
the invoicing
process
after invoice
creation
Incorrect
or missing
information
leads to poor
customer
service and
reducing
effectiveness
of cross-sell
and upsell
programmes
Inaccurate
information
leads to overly
generous
offers and
reducedprots
One-size-ts-
all model for
allbusiness
processes,
including order
reviewand
management,
leads to
customer
and channel
partner
dissatisfaction,
prolonged
orderreview
and order
bookingcycle
times
Supply chain
visibilityis
minimal at
best,making
thefullment
cycle and
order status
difcultor
impossibleto
track
Manual price
approvalsslow
deal velocity
Source: PwC
In short, as nonstandard processes proliferate throughout the Q2C cycle, so do high costs, poor
communication, errors and inefciencies—chipping away at revenues, protability, customer
satisfaction and the ability of business decision-makers to spot opportunities and make accurate,
timely decisions.
Figure 5: Inferior Q2C processes lead to widespread dysfunction
Technology industry at the cross-roads: Transforming quote-to-cash operations / 8
Addressing these challenges requires
more than a point solution or a system
implementation project; it requires business
transformation on multiple levels. PwC has
found the following to be key prerequisites to
successful Q2C transformation:
• Transformationbasedonstrategic
imperatives:The transformation
process needs to take into account the
organisation’s strategic imperatives for the
next ve to ten years. In our experience,
business transformation projects of all
types must dene the value to be delivered
in terms of the company’s objectives.
Without aligning all design decisions to the
company’s strategic objectives, projects are
unlikely to deliver the expected outcome.
This is particularly critical in improving the
Q2C process for technology customers. The
cross-functional nature of Q2C operations
demands an equally cross-functional
transformation, one that meets the distinct
needs of technology customers and is
tailored to their particular businessmodels.
• StrongC-suitesupport:Sometimes
customer feedback alone is not persuasive
enough to overcome internal resistance
to changing Q2C processes. It is critical
that executive leaders establish and
communicate goals and priorities for
transforming Q2C operations. This can be
reinforced by supporting early ‘quick wins’
that illustrate the business value of change,
as long they align with overall design
directions as well. Implementing KPIs to
track progress delivers proof of success
aswell.
• Customerexperience:Changes to the
business architecture and operating model
of Q2C operations must make customer
experience issues a priority. Improved
customer satisfaction is a clear, powerful,
visible impact, both short- and long-term.
• Iterativeapproach:While the scope and
vision of a Q2C transformation should
be end-to-end, an iterative approach to
design, implementation and user training is
generally recognised to be the best possible
approach. This allows ample time to modify
design aspects before nalisation, build any
necessary regional variations into a globally
consistent process and ensure that systems
and operations remain stable during the
migration to the new process.
• Foundationalcapabilities:As with any
major business transformation, changes
to Q2C operations must begin with
foundational capabilities. Organisations can
add ‘nice-to-haves’ after the ‘must-haves’ are
established and fully functional.
• Organisationandpeople:The
transformation journey has a very
signicant impact on people and the
organisation in focus. It is critical to
leverage a pervasive communication plan,
conduct a detailed organisation impact
analysis and to anticipate signicant
changes at multiple levels. The use
of champions across all levels of the
organisation, and specically within the
most impacted functions, fosters adoption
and reduces organisational resistance
to change.
The rst step to transforming is benchmarking
the various processes that touch the Q2C
process to determine the enterprise’s position
against its primary competitors. This is
followed by implementation of the relevant
and appropriate parts of the PwC Q2C
reference architecture.
PwC benchmarks the Q2C processes against
industry best practices for various business
models, using the following scale:
• Developing: Capabilities are lacking.
Processes not well established or dened.
An obstacle to competitive success if
capability is important.
• Practicing: Capabilities and processes are
dened and repeatable. Can be applied
against some standard of performance.
• Optimising: Strong capabilities in this
process. Continuous improvement in
place. No signicant weaknesses.
• Leading: Taking advantage of new
capabilities available for improvement.
A source of competitive advantage if
capability isimportant.
Figure 6 depicts a typical Q2C process
benchmarking analysis of a technology
company relative to its peers.
The way forward:
Transforming Q2C operations
Technology industry at the cross-roads: Transforming quote-to-cash operations / 9
The results of this benchmarking help to
identify and prioritise the aspects of Q2C
operations with room for improvement
across an organisation’s functional areas,
including sales, nance, operations and
customerservice.
Once the benchmarking analysis indicates
which aspects of Q2C operations are most in
need of revision, each aspect can be broken
down for deeper analysis. PwC has a reference
architecture that includes all of the direct and
indirect activities involved in the Q2C process,
customised for the technology industry. (See
Figures 7 and 8) The direct drivers constitute
the primary ow of the transaction, while
the indirect processes provide the supporting
data and systems necessary to complete
thetransaction.
Applying the reference architecture against
the results of the benchmarking provides a
road map of what the optimised Q2C process
should be, based on PwC’s proprietary best
practices data for each activity.
Figure 6: Benchmarking Q2C process weaknesses and strengths
Solution
management
Contracts
Pricing
Configuration
Order management
Developing
Main industry
competitors
Best in class
Quoting
and proposals
Customer/partner
management
Function Developing Practicing Optimising Leading
Developing: Capabilities are
lacking. Processes not well
established or defined. An
obstacle to competitive
success if capability
is important.
Practicing
Practicing: Capabilities and
processes are defined and
repeatable. Can be applied
against some standard
of performance.
Optimising
Optimising: Strong capabilities
in this process. Continuous
improvement in place. No
significant weaknesses.
Leading
Leading: Taking advantage of
new capabilities available for
improvement. A source of
competitive advantage if
capability is important.
Source: PwC
Technology industry at the cross-roads: Transforming quote-to-cash operations / 10
Figure 7: Core Q2C processes
Quote to cash processes
Opportunity management Solution design & pricing Manage change orders Order fulfilment Invoicing & rev mgmt
Register deal
Create deal object
Manage quote object
Quote creation
Manage price & discount
Apply list price
Present quote
Print quote
Iterate and finalise quote
Generate quote
Apply discounts
Generate final price for quote
Contract review/development
Profitability and margin
management
Order management
Capture order
Product delivery
Prepare product
Invoicing & rev mgmt
Billing & payments
Credit & collections
Revenue management
Indirect tax
Deliver product
Install
Activate/deploy
Validate order
Book order
Manage order
Manage change orders
Solutioning
Initiation of the configuration
Creation of a configuration
Joint solution design
Addition of the configuration to
the quote
Quote status advancement
Quote conversion to order
Quote archiving
Available to promise
Deal review and disposition
Deal conversion to opportunity
Manage opportunity
Opportunity creation
Opportunity closing
Opportunity conversion to quote
Opportunity sales stage
advancement
Metrics and analytics
Predictive analytics
Compliance
SOX setup
Export compliance setup
Policies
Revenue policies
Tax treatment policies
Booking policy
Booking policy
Partner management
Partner programme definition
Partner recruitment strategy
Multi-tier go-to-market
Retail strategy
Operational insights
Throughput analysis
Reporting platform
Business models/
scenarios
New to industry
Product release
management process
New product introduction
Product lifecycle mgmt
Catalog setup & maintenence
Content setup & maintenence
SKU management (s/w)
Configuration rules
management
Product roadmap
management
Configuration library
management
Usage set up &
maintenance
Prod licensing setup
Install base
creation & update
Products & services
entitlement & licensing
Offerings entitlement
Terms & conditions
Payment positions
Fulfilment positions
Capacity & duration
entitlement
Order details including
channels & locations
New to company
New to quote-to-cash
operations
Pricing data
management
Discounting rules definition
Customer experience
management
Organisation structure
Account teams
Contract attribute repository
Dashboards
Documentation consistency
Quality of service
Pricing & discounting
strategy
Promotions governance
Sales & operations
planning
Sales forecasting
Contract management
process
Contract creationContract creation
Master data
management
Contract creationCustomer data management
Partner data management
Manufacturing data
management
Contract creationItem creation
BOM creation
Printing (certificates, artwork)
Item master management
Strategic deal desk
Operations forecasting
S&OP processes
List price strategy
Discount strategy
Sales force
management process
Territory management
Sales compensation strategy
Pricing administration
Pricing treatment rules
GTM offering price definition
and setting
Pricing data publication and
distribution
Sales compensation
execution
Global order requirements
policy
Contract renewal
amendment termination
Contract repository creation
and maintenance
Offering rules
management
Contract creationConsumption rules
Treatment rules
Merchandising rules
Programme rules
Go-to-market offering
definition
ECO (engineering change
orders)
Licensing model and
attributes
The PwC Q2C reference architecture includes almost 40 core process tasks encompassing
opportunity management, quote development and review, deal review and order management.
Figure 8: Enabling process & data
Quote to cash processes
Opportunity management Solution design & pricing Manage change orders Order fulfilment Invoicing & rev mgmt
Register deal
Create deal object
Manage quote object
Quote creation
Manage price & discount
Apply list price
Present quote
Print quote
Iterate and finalise quote
Generate quote
Apply discounts
Generate final price for quote
Contract review/development
Profitability and margin
management
Order management
Capture order
Product delivery
Prepare product
Invoicing & rev mgmt
Billing & payments
Credit & collections
Revenue management
Indirect tax
Deliver product
Install
Activate/deploy
Validate order
Book order
Manage order
Manage change orders
Solutioning
Initiation of the configuration
Creation of a configuration
Joint solution design
Addition of the configuration to
the quote
Quote status advancement
Quote conversion to order
Quote archiving
Available to promise
Deal review and disposition
Deal conversion to opportunity
Manage opportunity
Opportunity creation
Opportunity closing
Opportunity conversion to quote
Opportunity sales stage
advancement
Metrics and analytics
Predictive analytics
Compliance
SOX setup
Export compliance setup
Policies
Revenue policies
Tax treatment policies
Booking policy
Booking policy
Partner management
Partner programme definition
Partner recruitment strategy
Multi-tier go-to-market
Retail strategy
Operational insights
Throughput analysis
Reporting platform
Business models/
scenarios
New to industry
Product release
management process
New product introduction
Product lifecycle mgmt
Catalog setup & maintenence
Content setup & maintenence
SKU management (s/w)
Configuration rules
management
Product roadmap
management
Configuration library
management
Usage set up &
maintenance
Prod licensing setup
Install base
creation & update
Products & services
entitlement & licensing
Offerings entitlement
Terms & conditions
Payment positions
Fulfilment positions
Capacity & duration
entitlement
Order details including
channels & locations
New to company
New to quote-to-cash
operations
Pricing data
management
Discounting rules definition
Customer experience
management
Organisation structure
Account teams
Contract attribute repository
Dashboards
Documentation consistency
Quality of service
Pricing & discounting
strategy
Promotions governance
Sales & operations
planning
Sales forecasting
Contract management
process
Contract creationContract creation
Master data
management
Contract creationCustomer data management
Partner data management
Manufacturing data
management
Contract creationItem creation
BOM creation
Printing (certificates, artwork)
Item master management
Strategic deal desk
Operations forecasting
S&OP processes
List price strategy
Discount strategy
Sales force
management process
Territory management
Sales compensation strategy
Pricing administration
Pricing treatment rules
GTM offering price definition
and setting
Pricing data publication and
distribution
Sales compensation
execution
Global order requirements
policy
Contract renewal
amendment termination
Contract repository creation
and maintenance
Offering rules
management
Contract creationConsumption rules
Treatment rules
Merchandising rules
Programme rules
Go-to-market offering
definition
ECO (engineering change
orders)
Licensing model and
attributes
Source: PwC
The PwC Q2C reference architecture includes almost 70 indirect process tasks including data
analytics, business policies and models, compliance and regulatory activities.
As you can see, each component of the Q2C
process may contain multiple sub-processes,
not all of them necessarily performed by the
same department or even an internal function.
For example, in the case of a physical product,
order fullment includes product delivery,
which may incorporate product preparation,
transportation, installation and activation/
deployment, and crosses supply chain,
customer service and (potentially) one or
more channel partners.
As we have already emphasised, transforming
Q2C operations is fundamentally a business
initiative, not a systems deployment. While
many aspects of the transformation involve IT
systems, far more involve business processes
in which IT is incidental. Consequently,
the redesign of the Q2C cycle needs to be
outcome-focused, emphasising business value
throughout the process. As market conditions
and corporate strategy change, the design
should shift accordingly.
Source: PwC
Technology industry at the cross-roads: Transforming quote-to-cash operations / 11
As mentioned earlier, the wide-ranging impact of transformative change in the Q2C context
must be assessed at multiple levels for the organisation with appropriate strategy formulation
and planning, followed by consistent communication and execution.
The ve key areas to focus on during a Q2C transformation are:
• Organisationstructure: during the transformation, functions often need to be realigned to
streamline operations and realise the expected gains. Typical actions include consolidation
of functions in a single organisation responsible for the end-to-end process and de-layering
of responsibilities to expedite transactions and empower lower levels of the organisation.
• Rolesandresponsibilities: the shift in organisational structure also implies a change in
roles and responsibilities for its members. Span of control and areas of responsibility change
considerably during the transformation requiring the team to pay particular attention to the
denition of new job descriptions.
• Skill-setsandcapabilities: as organisations transform, so do the skill-sets and capabili-
ties of the professionals within them. Tactical, repetitive activities are automated, leaving
only complex, value-add activities to be performed manually. Orchestration and collabora-
tion replace siloed activities, requiring a different level of training. Soft skills are required
to handle rst customer response. Conict handling and resolution need to be part of the
culture of the customer-facing functions/groups.
• Changesinlegacywaysofworking(WOW):leveraging enabling platforms and associated
tools that are set up using rules-based models, that are in turn governed by operating poli-
cies, substantially reduces the need for individual heroic efforts and ‘tribal knowledge’.
• Changeininteractionswithbothinternalandexternalcustomers: as automation
replaces direct contact, customer interactions require a different approach. New communi-
cation standards and guidelines need to be developed for specialists to adopt. Collaboration
across functions becomes critical to maintain the expected level of service and respect SLAs
agreed upon with partners and customer.
These areas need to be considered not only within the frame of the change management
activities strictly dened, but in the broader transformation context. Areas that are often
overlooked until later stages of the project include deployment and training. The number of
releases and the deployment trade-offs (e.g., big-bang vs. pilot, limited capabilities vs. full
system for limited products, all geographies vs. single country)need to be determined with
an eye towards the ability of the internal as well as the external stakeholder groups to absorb
change.
In this sense, PwC has found the creation of a change network and change champions at all
levels of the organisation to be particularly effective. These professionals act as evangelists of
the solution and, given their intimate familiarity with the issues that led to the transformation
in the rst place, provide the team leading the transformation with critical insight into likely
obstacles to adoption and inputs to the design of the new organisation.
Organisational impact and key changes
Technology industry at the cross-roads: Transforming quote-to-cash operations / 12
The next step: Implementing the new Q2C process after the benchmarking, identication of
the relevant parts of the reference architecture and incorporating them into a project scope. A
user experience (UX) team then creates a prototype of the new Q2C experience. An IT systems
team then reviews the UX to determine what is doable or needs to be added to the existing
architecture and toolset and performs usability tests. The rest of the Q2C development process is
illustrated in Figure 9.
Implementation strategy
Figure 9: How to build the new Q2C processes
Finalised scope
Input
Output
Finalised business
requirements,
UX design
UX team
creates UX
prototype for
selected
requirements
1. Systems team
performs FIT GAP
2. Perform
usability test
Identify high priority,
high risk requirements
(Business Architecture,
Systems, UX)
Systems and
Business Architecture
teams determine
POC scope and goals
Systems team
develops and
demonstrates
POC
Compare, refine
and validate
requirements,
UX prototype
& UI specs
for sign-off
Business
Architecture
Team leads detailed
design for core
processes, enabling
processes, operating
policies and role of data
Requirements that
need further
definition will
continue through
another iteration
Source: PwC
Technology industry at the cross-roads: Transforming quote-to-cash operations / 13
Note that user experience is also an integral
part of the design. In fact, it should be a
keyconsideration.
Emphasising the UX in the beginning of the
development process contradicts traditional
user experience development approach, which
usually happens much later in systems design.
However, taking the traditional approach risks
perpetuating current UX issues in the new
design—a signicant risk given how often UX
issues contribute to the need to improve Q2C
in the rst place.
Addressing UX and business requirements at
the same time and allowing them to inform
each other minimises this risk. Once the
system redesign has progressed enough to
simulate common tasks, usability testing
provides feedback on performance, accuracy,
ease of use and other metrics, which help
further rene the new Q2C process. Iterative
design that continuously aligns business
process design to system implementation helps
to contain costs, expedite time-to-deployment,
reduce documentation and generate a truly
effective Q2C solution.
Another key aspect of transforming Q2C
operations involves the adoption, as part of the
design of the new system, of pre-determined
transaction ows which can be isolated
into free-standing segments at any point in
the overall Q2C process. For example, the
congure-price-quote, order management,
fullment, billing and invoicing, or any
combination of processes, need to be isolatable
to enable either full automation or manual
intervention. Three different approaches to
Q2C transactions are no touch, low touch and
high touch:
1. ‘No-touch’ transactions are highly
standardised and automated to require
no internal involvement.
2. ‘Low-touch’ transactions demand a
minimum level of internal assistance.
3. ‘High-touch’ transactions call for special
attention because of their worth and
complexity.
Not every company does everything at once.
Each company has to develop a schedule to
develop the specic capabilities it needs.
Figure 10 provides more detail about the
ramications of the three approaches on
specic segments of the Q2C cycle.
Technology industry at the cross-roads: Transforming quote-to-cash operations / 14
Configure-price-quote Order management Fulfilment Billing/invoicing
No-touch
(fast-track/
automated path)
Aprocesswithintegration
across systems and data
iscapableofautomating
notonlysalesofbaseline
products and simple
congurations,but
alsoofproductswith
complexcongurations
through the automation
ofcongurationandthe
integrationwithsales
contracts and automated
pricingapprovals;such
transactions do not require
anyinvolvementbythe
company’s sales force and
allowthechannelpartners
and/orthecustomerstobe
self-sufcient.
Leveraging electronic PO
submissionmodessuch
as EDI/Rosettanet/e-
hubshelpsautomatethe
POreviewprocess.This
isfurtherenhancedby
systematic application of
contractual agreements
during the systemic
validationprocess;in
addition,leveragingthe
upstream quoting data
tocreateandautobook
salesordersbasedon
predenedthresholds
limitsmanualintervention.
Electronicfullmentof
orderswithnomanual
intervention;thisis
possibleforself-service
and/orsoftwareproducts
inclusive of SaaS offerings
whereprovisioningis
automated;forsoftware
products,ESDand
electronic delivery of
licensekeys.Inaddition,a
tight electronic messaging
integrationwithcontract
manufacturers and
logisticspartnersallowsfor
seamlessfullmentwithout
manual intervention for
standard product and
solutioncongurations.
Utilisingupstreamdataand
a3-waymatchingprocess
betweenthequote,
contract and purchase
order to automate the
generation of invoices/
billingstatements;this
canbeenhancedwith
a consistency along the
transaction continuum
allowingthecustomers/
partners to identify and
receivetheinvoices/billing
statements in the desired
formatconsistentwith
thequoteandthePO;
electronic invoicing is also
includedinthissegment.
Low-touch
Heavy manual intervention
is required in cases
wherethenatureofthe
transaction and the
customer’s requirements
donotallowforautomation
and are expected to add
valuetothetransactions;
usuallyassociatedwith
assemblingcomplexbilling
statements from multiple
systemsandsources,
break-upofinvoices
due to the requirement
tobillthecustomeron
different accounts and
requiring special formats
not included in the
invoicelibrary.
Standard transactions
presenting small deviations
require minimal manual
involvement fall into this
category;suchcases
are generally due to
incomplete information
onthereceivedorder,
conflicting information
betweenordersand
quotes.Thisistypically
enabledbystreamlining
themanualPOreview
processbystandardising
rulesaroundallowable
changes to preserve
integritybetweenquotes,
sales contracts and
purchaseorders.
Limited manual intervention
isrequiredwhenspecial
planning requirements
areincluded;suchcases
may include holds due
toallocationofproducts,
special government
requirements in terms of
fullmentoriginandspecial
orders involving non-
standardcongurations.
Limited manual intervention
required to account for
special requirements
aroundcontingencies,
revenue recognition rules
and special legal/regional
requirements.
High-touch
(semi-automated/
manual path)
Transactions that require
specialattentionbecause
their value and complexity
placethembeyond
standard pricing rules and/
or non-standard sales
contract arrangements
(includingT&Cs)require
specialcarebecauseof
the strategic nature of
thecustomer.
Special transactions
require manual intervention
bytheordermanagement
specialists to account for
variations that add value
to the transactions and
require human judgment
usually representing
a small percentage of
orders;dependingon
the nature of products
andservicesoffered,
such orders may include
servicerenewals,demos,
returns,cancellations.
Ordersincludinghardware,
softwareandservicesmay
require the company’s
intervention at multiple
phasesofthefullment
cycle;inparticular,when
customised services
and highly customised
product offerings require
specialised expertise
fordelivery.
Heavy manual intervention is
requiredincaseswherethe
nature of the transaction and
the customer’s requirements
donotallowforautomation
and are expected to add
valuetothetransactions;
usuallyassociatedwith
assemblingcomplexbilling
statements from multiple
systemsandsources,
break-upofinvoicesdue
totherequirementtobill
the customer on different
accounts and requiring
special formats not included
intheinvoicelibrary.
Source: PwC
Figure 10: Q2C transaction delivery strategies
Technology industry at the cross-roads: Transforming quote-to-cash operations / 15
However an organisation applies it, segmenting transaction ow enables the organisation to
focus on high value-added activities while automating standard transactions, thus limiting
human error and reducing turn-around time. The ability to provide no-touch, low-touch and
high-touch transactions is a hallmark of a Q2C processleader.
At the same time, standardising the process improves the organisation’s ability to integrate
pricing and deal management, and supports its ability to build a leading-class deals desk to
maximise the protability of non-standard deals. In this way, an improved Q2C cycle has a
direct impact on both productivity andprotability.
PwC has successfully worked with several
global technology companies to transform
their Q2C operations. Although these
initiatives addressed diverse challenges across
multiple business models, product types and
routes to market, they share common themes.
Forexample:
• A Fortune 500 global OEM was struggling
to streamline a Q2C process across eight
product families, each with multiple
conguration and pricing options. With
PwC’s help, the company identied
strategic priorities and key value drivers
to create new operating policies and
processes, organisational mechanisms and
enabling data. This allowed the company
to automate substantial segments of the
congure-price-quote process, order
management and invoicing. The changes
shrank the sales cycle and quote turnaround
time by about 25%, enhanced time to
market for new product introductions,
reduced the incidence of order errors and
reduced cost-per-order by 12%. In addition
to these operational efciencies, the
improvement also signicantly improved
customer and channel partner satisfaction
with the overall Q2C experience.
• A Fortune 500 Internet and digital
media company turned to PwC for help
controlling the enormous complexities of
its global Q2C operations by redesigning
regionally tailored processes, policies
and systems. The redesign automated
the creation and approval of quotes and
orders, reduced hand-offs and process
steps by 30%, streamlined the approval
and review process and helped prevent
duplications and errors in the Q2C process.
As a result, the company slashed its quote-
to-order cycle time by 70%, increased
productivity by 15% and boosted sales
to top global customers by offering them
differentiatedservices.
• A leading electronic gaming manufacturer
with global operations lost 25% of its
market share in 18 months as customers
complained about how hard it was to do
business with them. With PwC’s assistance,
the company slashed paperwork for each
quote from as much as 100 pages to just 3,
reduced its order lead time from 14 weeks
to 3 weeks and increased the percentage of
orders for standard (rather than custom)
products from 13% to 80%.
Real world examples of
Q2C transformation
Technology industry at the cross-roads: Transforming quote-to-cash operations / 16
Because Q2C operations touch almost every
aspect of business while having a signicant
inuence on the overall customer experience,
transformation in this area is a complex,
cross-disciplinary initiative. This type of
transformation cannot be approached as
a problem to be solved only by applying
technology solutions. Instead, organisations
must address this as a business-owned
exercise with an IT roadmap that aligns
with clearly dened goals and continuously
updated design imperatives. There should be
a constant, consistent focus on dening and
driving towards a target state that aligns with
strategic business goals.
A holistic approach based on a framework
that includes benchmarking and a reference
architecture can transform Q2C operations in
a way that spans business models and routes
to market. By creating an operating model that
focuses on a responsive, seamless customer
experience, which automates all but the most
complex, nonstandard and high-value deals,
organisations can reserve their resources for
critical transactions. In addition, this approach
also gives partners and enterprise customers
the smoother, simpler purchasing experience
that is closer to their expectations as shaped
by their shopping experiences with Apple,
Amazon, eBay and others.
Conclusion
PwC can help
If you have any questions about the quote-to-cash transformation process or would like to
explore how PwC can help to transform your business, please reach out to us.
RomitDey DarrenLee
Technology Principal Technology Principal
PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP
[email protected]c.com dar[email protected]c.com
+1 408 817 5906 +1 408 817 4248
JoeLo TomPuthiyamadam
Technology Principal Technology Principal
PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP
[email protected] tom.put[email protected]c.com
+1 408 817 5040 +1 646 471 1490
Let’s talk
Please reach out to any of our technology leaders to discuss this or other challenges.
We’re hereto help.
RamanChitkara TomArcher
Global Technology Industry Leader US Technology Industry Leader
PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP
raman.chitkar[email protected]c.com thomas.arc[email protected]c.com
+1 408 817 3746 +1 408 817 3836
XavierCauchois GregUnsworth
European Technology Industry Leader Asia Technology Industry Leader
PricewaterhouseCoopers Entreprises PricwaterhouseCoopers Services LLP
xavier.cauchois@fr.pwc.com [email protected]
+33 1 56 57 10 33 +65 6236 3738
About the authors
The following PwC professionals contributed their experience, knowledge and expertise to
produce this paper.
RomitDey,Principal SantoshIyer, Director
San Jose, California San Jose, California
PatrickKennedy, Director MarcoMastrapasqua,Director
San Jose, California San Jose, California
About PwC’s Technology Institute
The Technology Institute is PwC’s global research network that studies the business of
technology and the technology of business with the purpose of creating thought leadership
that offers both fact-based analysis and experience-based perspectives. Technology Institute
insights and viewpoints originate from active collaboration between our professionals across the
globe and their rst-hand experiences working in and with the technology industry. For more
information please contact Raman Chitkara, Global Technology Industry Leader.
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