Revenue Management: The Blind Spot of the S/4HANA Move

In this episode of Acuiti Talks, Steven Wright, VP Sales – EMEA at Acuiti Labs, speaks with Ketan Khope, AVP Presales – Americas, about why revenue management is so often missing from S/4HANA transformation planning, and why it deserves a seat at the table from the start.

The conversation compares running revenue management transformation in parallel with the S/4HANA move against tackling it after a lift and shift. It shows how the sequential approach can lead to project fatigue, a phase two that never happens, and little real improvement for finance and collections teams. It also covers why business process owners need to be prepared for change, and the value of bringing in a specialist SAP BRIM and subscription billing partner alongside a generalist SI to handle edge cases, reduce manual effort, and prevent revenue leakage.

An essential listen for CFOs, CIOs, and transformation leaders planning their move to SAP S/4HANA.

Transcript

Hi Ketan, nice to see you. Thanks for joining me for a series of AcuitiTalks. Now, Ketan, you and I have both been around in the SAP ecosystem for a long time. You, in your role as Chief Architect and design authority, and I, on the commercial and client partnering side, we’re in this really unprecedented time at the moments of transformation. SEC to to S4. Such a lot of projects going on. Tell me when you walk into an initiation meeting. Is revenue management ever in the room?

Honestly, it’s in the room, but it’s never owning the entire transformation. And worse, sometimes it’s led by IT to do the transformation.

Well, that sets us up quite nicely. Let’s unpack that. And let’s try and prove why revenue management should have a prominent seat at the table. It feels like every conversation I’m having at the moment with CFOs and CIOs is more about the timing and urgency of the technical move from ECC to S4, and these dates are being bandied around 2027-2030. Which of those have you subscribed to? What I’m not hearing so much is the value I want to derive from this project. This is the business impact that I want to achieve. And I’m certainly not hearing that in the revenue management sphere. What’s your experience?

That’s the point. It’s currently driven by a date. It’s never being driven by business outcomes. And that’s something that is telling us that even while that transformation is happening, it’s driven mostly by IT to say, how do we quickly move or shift to S/4HANA?
And even with that mindset, by the end of last year, only roughly 40% have actually moved to S/4HANA.

So we still have 60% of the global installed base of SAP. Who needs to make this move within the deadlines that have been imposed? Gosh, that that’s a significant number.

That’s a significant number. And it’s good even with that push and the optimistic estimates.
It’s being said that only 60% of the installed base will make it by the end of ’27.

And of that conversation and of these projects that are going to be happening, revenue management doesn’t really seem to be a big element in those projects and in these plans.

And that’s exactly the point. But revenue management is part of all of those transformations and should be at the forefront and at the decision-making table.

Revenue management is such an important topic right now, with organizations globally looking at how they build their services, whether it’s subscription billing, outcome-based, or event-based; this conversation is ongoing. Let’s assume that revenue management should be part of the S4 transformation discussion and agenda. How should organizations go about, slotting that in?

I’ve seen it done both ways. Let’s talk about an organization that has done this in parallel. So, I’ve seen a large organization that decided to shift to S/4 and Revenue management transformation. Truly transformation. So, which means you’re not only improving your processes; you are making sure you have a platform that is future-ready. Doing all of that together. So, two separate teams. Same governance and the same go-live date. Which means you are going live on S4 with the new revenue management processes in a one go.

And that sort of big-bang approach obviously creates more work and probably results in a larger project. Is that the only way to go?

The other way is sequential, and people don’t like to admit. But most people, and this is the more common approach, do this sequentially. What it means is you’re going to lift and shift what you have from ECC to S4, and then think about revenue management, which is not a very efficient way to do it or get the outcome that you need. And it’s, of course, going to take longer.

So, with that kind of phase two approach, I can imagine that what can happen is that from phase one you get a little bit of project fatigue, and phase two then might never happen. Or phase two grows arms and legs and becomes a much bigger, more time-consuming, and more costly thing and runs over budget. So it sounds like, from what you’re saying, that running things in parallel is the only way to go.

It depends on each organization. Each organization is different. If revenue management is the challenging part of your organization, and it is for most organizations who are into services, businesses doing lots of usage-based or a subscription-based economy, then you are definitely needing to look at your revenue management as the first piece that you want to tackle.

But if your revenue management is slightly easier and not mistaken to be easier because the right stakeholders are not part of the program, but you know that it is easier. Whether it’s the billing, whether it’s the credit management or collections is comparatively easier part of your overall processes, then it is okay to do it sequentially. But more often than not, it’s getting very complicated as the business is moving towards subscription economy.

I think revenue management is the piece that you need to tackle heads on and along with your move.

I think my takeaway from that would be that there’s almost like this hybrid approach. As long as you are thinking about the revenue management piece right at the inception of your S4 project, and you have a plan for how you’re going to tackle that, you could do the lift and shift piece, the technical piece, as long as you’ve investigated what needs to happen to move your revenue into an optimal state and where that sits in your project. You can then plan and resource appropriately for that.

Absolutely. So the point is, don’t think of revenue management as a step that you tackle after you move to S4; think of it as a planning or roadmap exercise that you will do before understanding which parts I’m moving to S4 as-is, and what parts I’m going to tackle as part of revenue management, but have that picture right in front of you before you start anything on the S4 journey.

Exactly. It should be integral, not an afterthought. Exactly. I want to change topics slightly now and talk about operational change management. So the impact on people and on customers in a lot of these projects, if we go back and talk to the user population, 3 or 4 months after to go live. Sometimes what we hear from areas of finance, particularly in collections, is that there’s not really been any improvement to their lives into their processes and in certain circumstances.

Sometimes we hear that there have been issues caused, that things have broken as part of the project that have resulted in disputes on invoices, which causes DSO, day sales, outstanding issues, cash flow issues, and even customer satisfaction issues. What are your thoughts on that?

The point that you earlier mentioned about fatigue is real. People embarked on that transformation thinking their lives were going to improve, but because it was just a lift and shift to S4, nothing really changed because it was almost intentional that way.

People didn’t look at the processes and think about how they were going to improve them. And that’s the revenue management piece that we talked about earlier, which was never part of that journey. As phase one, when you’re doing it sequentially, you kept it for later, and that resulted in the exact outcomes that you planned for. You plan for moving things to S4, but people’s lives were not improved. That fatigue sets in at some point. Because when you reach that phase two, when you really want to improve the processes, by that time people are feeling. “I went through a one- to two-year journey, and nothing has changed. I still have to run my BAU, and I’m on this project for, I don’t know, four years, and is this really going to improve anything?” That’s the cost of running this sequentially that people sometimes miss.

So, what you’re saying is to get the best out of the project and, the revenue management piece, it’s best to include the people and the customer aspects in this operational change journey as early as you can.

Exactly, and IT is always ready for the S/4 move because it’s technical; they have done this. They have always been part of SAP upgrades. So they are set for this. OCM, organization change management, is prepared. They have made training for this. But what is not prepared is the change in business processes. The owners who are running these bits have not prepared for those changes and are not planned for it. So that’s where we miss it.

So, we shouldn’t overlook these important aspects. Makes sense.

So, we’ve talked about the need for revenue management to be an integral part of S4 transformation, and when we talk about revenue management from an SAP perspective, we’re talking about BRIM, we’re talking about subscription billing. And these are fairly niche parts of the SAP portfolio, most of these large S4 transformation projects are managed by a global SIs, let’s call them more generalist organizations and with BRIM, subscription billing being are very niche parts of the SAP solution. Is there an argument and a need to have a specialist boutique partner involved rather than trusting everything to one of these generalist SIs?

Fair point, Anybody who is generalist SI with the experience can stand up a S4 platform for sure, but that doesn’t give them the right experience or toolset to stand up a revenue platform which is catering to usage-based contracts, revenue management, whether it’s billing of such usage-based contracts or revenue recognition in case it’s a complex subscription business. And that’s where the lack of experience sometimes ends up in an end state where you have a strong S/4 platform, but a weak revenue management platform.

I can potentially say a lot of our listeners are thinking, well, doesn’t that increase complexity? What? Why do I want to introduce multiple partners into my project? What are you really going to get by engaging a specialist partner like Acuiti into your project over and above just trusting everything to the generalist SI.

Exactly. So the specialist is going to bring you the right experience where they have done this tens of times in other places, and they know how the usage-based economy, the subscription economy works, and what are the edge cases, where the process kind of sits with people and helps you automate that end-to-end so that you end up with the platform which is really future-ready and helps you either launch new types of business models, or run the existing business models so efficiently that the transformation really pays out on its own.

It makes sense. So, the specialist is drawing on their experience, and they can really see where the pitfalls are, to avoid any of these revenue leakage issues and they can help you build something in your revenue profile that’s fit for purpose and future proof based on the experience that they have.

Thanks, Ketan. I want to conclude this section by asking you if there was one question that you could level at a CFO, what would that be?

Who in your transformation team really is waking up every day to own the revenue? That’s the question I’ll ask. If you don’t have that person on your team in the S/4 transformation, then you are not having the right stakeholders on the transformation.

I think that’s a great place to start for this segment because in our next episode, episode two, I want to explore something slightly differently around revenue management to talk about revenue management, not just about eliminating friction, but using it as a growth enabler.