Digitalization has taken hold across Shared Services and Global Business Services. New challenges from shifting consumer preferences drive modern digital business models (like subscriptions or usage-based) to emerge from startups and established corporations alike. These established enterprises often think in larger, more sophisticated terms. However, they tend to hit a wall quickly incorporating sufficient monetization and billing infrastructure across their shared services in a sensible, efficient way. In these cases, software provides the most effective remedy to their efficiency woes; maintaining and improving billing & invoicing performance while simultaneously reducing risk, errors, and resource requirements isn’t just a pipe dream anymore. It is reality. There are platforms today that enable multinational corporations to innovate their shared service centers without increasing headcount or outsourcing.
In a recent interview, Nitrobox Co-Founder & CEO Henner Heistermann explained why improving efficiencies in Shared Services and GBS can be a veritable question of survival for multinational enterprises. We provided the rough transcript of the discussion below.
“Organizations still don’t know what improved efficiencies they can achieve with the addition of a software solution in their shared services and GBS.”
What inspired you to develop a billing & monetization platform?
Henner: My business partner and I started out building a consulting company for e-commerce. We realized that many companies have problems with their financial processes. At that time we suspected that such processes would become increasingly complex and detailed, and at some point would have to be individually tailored to the customer because every consumer can buy a product as they like.
And this is where today’s enterprises reach their limits when they offer digital services?
Henner: Precisely. Many companies’ internal IT systems can’t cope because they don’t have the flexibility required in order to map such individual processes. After all, ERP and billing systems in many corporations are often fifteen years old, or older. When we started Nitrobox, topics like “subscriptions” and “on-demand billing” didn’t even exist. But it’s not so easy to close old systems, because all conventional financial processes are still bound up with them. So what we’re doing is to add more capabilities to these traditional systems so that they do not have to be replaced. This is how the idea of the Nitrobox platform came about. We’re the modern layer on top. Organizations still don’t know what improved efficiencies they can achieve with the addition of a software solution in their shared services and GBS.
So the Nitrobox platform is able to connect to large ERP systems like SAP?
Henner: That’s right. The questions would then be: What data does the respective ERP system need? What do finance and operations teams need? In accounting, a distinction is made between the general ledger and the subsidiary ledger. The general ledger is always maintained in the central financial systems, but certain business models can be treated separately, such as e-commerce or particular digital services – like subscriptions, order-to-cash, or pay-per-use – and this is then handled by software. At the end of the process, the results flow back into the general ledger.
Can’t the exchange of data for thousands of micropayments still be problematic?
Henner: Interfaces are usually available, but traditional systems are unable to process thousands (sometimes even millions) of transactions in just a few minutes. Today, they don’t have to. Tools like Nitrobox take the principal burden, which can be quickly scaled as a cloud solution as an additional layer in the tech stack. The company’s principal financial system then only needs to import the financial reports with regard to its digital offers once a month.
“Billing costs can be between eight and 25 euros per payment for corporations. When software is used the costs are reduced to just a few cents.”
What other advantages are there for corporates looking to adopt a software solution to modernize their shared services and GBS?
Henner: The processing costs are normally far too high with conventional systems compared to what is possible today. Billing costs can be between eight and 25 euros per payment for corporations. When software is used, the processing costs for many transactions are reduced to just a few cents. The next advantage is speed. If a company wants to create such a solution on its own in order to monetize its new digital services, they’re looking at an implementation that can take years, and in that period the process or even the digital business model itself has then already changed again. So what is needed is an agile and flexible solution that makes it possible to capitalize on changing consumer preferences as quickly as possible. The Nitrobox platform is sufficiently scalable and can be adapted to all compliance requirements. We can offer our service right away in Europe or worldwide if a company wants to roll out its digital business models internationally.
What developments do you observe in digital business models, and how are they relevant to shared services and GBS?
Henner: Currently we see how output chains are changing in many industries. E-commerce is all about internationalization, while in production, material purchase orders are automated – where basically one machine orders something from another machine and pays for it independently. This is where many small transactions are generated, which is important to remember. And then there are on-demand services and subscription models, where users pay a usage fee as in the case of car sharing. Such models would be just as possible for construction machinery or tools. Additionally, usage-based software services have seen a boom in popularity, as well, not just in the mobility sector. For shared services and GBS, understanding what consumers want in terms of payments and business models is essential. Multinational enterprises must offer models in line with market expectations, and understanding how to do so efficiently will be critical in the coming years.
“It must become a core competence of companies to be able to quickly build, test, and monetize new business models. This will become a question of survival.”
So the flexible monetization of such digital business models will play an increasingly important role for enterprise companies?
Henner: It must become a core competence of companies to be able to quickly build, test, and monetize new business models – and not only within a limited scope of action but, if necessary, even worldwide. Every large company has to operate a monetization and billing infrastructure that guarantees precisely this flexibility. Thinking as a large global company, I have to be able to do this in order to compete with purely digital companies. I believe that this will become a question of survival for the various corporations.
Thank you for giving us your expert insights, if someone wanted to get in touch, how could they?
Henner: They could get in touch via our website or find us in person at the next SSOW conference in Lisbon! We’ll be there.
Want to get in touch now? Just fill out the form and we’ll get back to you. Otherwise, see you at SSOW 2022!