Who Uses Revenue Management Software?
The following roles will often use revenue management software:
Accountants: Accountants use revenue management tools to recognize and allocate revenue to multiple business entities, track all revenue streams, remain compliant, and verify that payments are received as expected.
Managers: Managers from departments such as sales, marketing, and operations use revenue management software to monitor the performance of products and services sold by the company and to optimize their offerings for the greatest customer value and profitability. This software can provide important insights into which products and services are performing well.
Challenges with Revenue Management Software
Revenue management solutions can come with their own set of challenges.
Complex sales transactions: The complexity and volume of sales transactions can add their own set of challenges. The most basic of contracts can become challenging if there are hundreds of contracts to manage, while e-commerce transactions can easily be in the thousands every day. A revenue management system must be capable of keeping up with large volumes of contracts and transactions.
Inconsistent data: Tracking and managing revenue requires a variety of inputs. Examples of these inputs include billing overages, pricing, customer support fees, discounts, incentives, and usage charges. To provide the system with accurate data, there needs to be a lot of inter-departmental coordination and communication to accurately support the revenue management process.
How to Buy Revenue Management Software
Requirements Gathering (RFI/RFP) for Revenue Management Software
When selecting revenue management software, it is essential to first look at how the business operates and then familiarize oneself with the different types of software available. There are a variety of options when it comes to revenue management software products, including those designed for the business needs of small and medium-sized companies. Some things to consider include the ability to automate complicated revenue calculations, handle different types of product contracts, and monitor revenue per customer, contract, or project.
Compare Revenue Management Software Products
Create a long list
Depending on the industry, the buyer might want to first create a long list of software products designed to help businesses in the particular industry. For example, there are platforms specifically built for businesses in retail, manufacturers, restaurants, hotels, etc.
Create a short list
After reviewing and researching the software on the long list, the buyer can widdle down this list based on the budget. Revenue management software is available to suit all budgets, and some general applications may be downloaded free or bought off the shelf at a lower price.
Buyers must keep in mind, however, that the more specialized a software is, the more expensive it gets. This is the case because the user base for specialized software is usually relatively small. If the company wants something specific to their industry or customized for the business, they should be prepared to pay a premium.
Conduct demos
As a rule of thumb, companies should make sure to demo all of the products that end up on their short list. During demos, buyers should ask specific questions related to the functionalities they care most about. For example, one might ask to be walked through any features for revenue recognition and allocation, forecasting project cost and revenue, and analyzing the performance of special offers, packages, and incentives.
Selection of Revenue Management Software
Choose a selection team
The accountants or managers from departments such as sales, marketing, and operations who will be using this software must be involved in the selection process. Every business is different, and the accountants, or other frequent users, are most likely in the best position to offer an educated opinion about the best choice for the business's particular needs. The accountant may even be able to help the company install and set up the software of choice.
After choosing a software, buyers must remember that they don’t have to be stuck with this selection forever; most platforms allow for add-ons or modifications. However, this decision shouldn’t be made lightly because no matter what software is chosen, it will be a big time and money commitment. To see ROI, buyers can’t change their minds a few months later and switch software again.
Negotiation
Negotiating a software contract is vital to minimize risk, whether in terms of performance protection, security protection, or simply making sure that both parties are in complete agreement with what to expect from the other. If the business has the cash flow, they could ask for a discount in return for an annual upfront payment, and many software providers are happy to make that deal. Other times, a software provider may offer unlimited usage if the buyer pays upfront instead of paying a monthly or quarterly package price.
Buyers should also determine if they need help implementing the software or integrating it with another system. Usually, a software provider's first offer will include some implementation services in a given timeframe. Buyers can ask for these services to be removed if they can manage it themselves or if a third party can do it for cheaper.
They also need to decide for how long they will need this software. If the company will use the software for years, the buyer can negotiate longer terms which sometimes results in more favorable pricing.
Final decision
The final decision should be based on all the information gathered previously. Businesses should try to prioritize needs and select the solution that meets most, if not all, of their requirements. Companies must remember that there isn't a perfect software, but there is one that is best for their business. If possible, buyers should try to conduct a pilot program with a smaller sample size of users to gauge how well the software is received. If the platform gets high marks, they can buy with more confidence. If the tool is found to be inefficient or not performing as expected, it might be time to test another software.
