Power of N: Fixing Pain and Fostering Process

Welcome to “Power of N”, a collection of blogs by John Ellithorpe, CTO of Model N. John’s series will give you an inside perspective on enterprise software and how Model N builds applications that solve our customers’ critical business needs. Power of N takes you behind the scenes for a look at what’s required in the applications that our customers use to realize exponential growth in revenue.

Last month in Insanely Great Enterprise Applications, I described the characteristics of truly successful applications targeted for businesses. In this post, I will focus on the first, and most apparent, characteristic: Addressing a specific business problem.

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It is obvious that enterprise applications are designed to solve business problems. What makes a great application is the extent and completeness to which the business problem is solved. Pain points usually exist within a business context, usually an end-to-end process. A business application can derive some value by simply addressing the specific pain, while ignoring the larger process. However, that value is inherently limited by the narrow focus of the solution.

Tackling the entire end-to-end business process expands the potential value of the solution in more than one way. As with targeted solutions, structured automation can provide significant operational efficiencies. Potentially more meaningful value can be derived by looking at improving the processes themselves.

Let’s look at a Revenue Management challenge in the Life Sciences industry:Chargebacks. In a nutshell, a chargeback is a credit from a manufacturer to a distributor that purchases product at a higher Wholesale Acquisition Cost and sells it at a lower contracted price. The biggest operational challenge is simply maintaining a common understanding between the partners of the data that drives pricing. The Model N Revenue Management Solutions directly solves the operational challenges by managing the GPO membership rosters and the Bid Awards that provide clear price notifications to the distributors. Our solution provides a collaborative platform to a complex, multi-party process that targets the operational challenge of minimizing the chargeback error rates.

However, Chargebacks is only a piece of the larger Revenue Management end-to-end process. In this case, end-to-end process is actually a misnomer as there are no ends. This process is a closed-loop plan-execute-analyze cycle. During planning, contracting strategies are developed to best position the manufacturer in the market. During execution, those strategies are realized as contracts sold into the market resulting in chargebacks that need to be paid. Finally, the realized revenue is analyzed as input into the next planning phase. The full solution needs to not just automate the overall process, but also provide structure and insight to that process, thereby, addressing a broader scope of questions. How are your channels reacting? What contracting strategies were effective? Did investments in specific incentives provide the desired outcome? How should you adapt?

Great enterprise applications excel by tightly combining these two levels, the operational and the strategic. Being an evidence-driven analytical organization requires fine-grain alignment across the entire process. While it’s possible to stitch together a variety of best-of-breed operational applications, inherent mismatches in how different solutions are designed along with the integration challenges can increase rather than decrease the operational challenges taking away valuable time from the strategic. Enterprises are increasingly coming to this conclusion and looking for solution suites.

What about change? Thus far, I have described solutions delivering both tactical and strategic value, but without any notion of change. The world does not stand still. Next month, I’ll look at what it means to support a dynamic business.

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