Subscription Order Management (SOM) E2E Overview in SAP BRIM

This document provides a summary of the key features, architecture, and processes within SAP S/4HANA for billing and revenue innovation management (BRIM), specifically focusing on Subscription Order Management (SOM) as part of S/4HANA for Customer Management 2.0 (based on S/4HANA 1809 FSP01). This solution enables businesses to manage and offer solutions that combine traditional products with subscription-based services, leveraging consumption-based pricing.

Key Themes & Core Concepts Mentioned in the Document

  • Subscription-Based Business Models: SOM is designed to facilitate the transition to subscription-based business models, encompassing recurring fees, usage-based charges, and one-time fees. It handles the entire lifecycle, from order capture to billing and finance.
  • Integration: The solution integrates with key SAP components like SAP Convergent Charging (for usage-based pricing), FI-CA (Contract Accounts Receivable and Payable), SAP Convergent Invoicing and SD (Sales and Distribution). This integration is critical for managing the financial and logistical aspects of subscription services.
  • Simplification and Unification: S/4HANA SOM simplifies the landscape by replacing older systems (like CRM Product with Material Master) and unifying master data objects. It replaces Business Agreement with Contract Account and uses SD pricing engine instead of IPC.
  • Flexibility and Customization: The system offers flexibility via the Business Transaction Management Framework (BTMF) to implement custom change processes and document-specific distribution using Order Document Distribution (ODI).
  • Centralized Product Master: S/4HANA uses a single product master (material master), enhanced with subscription-specific fields and apps. The old CRM product is replaced.

Key Features and Functionality

  • Product Modeling: Allows modeling and management of diverse products, including “recurring subscriptions”, “usage-based subscriptions”, “one-off charges”, “physical goods”, and “bundles”
    • Supports defining prices based on contract runtime and even bundle specific pricing
    • Leverages SAP Convergent Charging for complex, consumption-based pricing.
    • Uses SD price conditions for hardware, one-offs, and recurring fees.
    • The product configuration modeler creates product masters and specifies prices.
    • Bundles combine different product types, with optional and alternative components.
  • Order Capture: Enables management of subscription orders, tracking their processing status and also supports the creation of subscription contracts as a follow up object of subscription orders
    • Manages partner agreements for revenue sharing in a similar fashion to customer contracts
    • Handles the capture of subscription orders encompassing subscription products, physical goods, and bundles.
  • Order Distribution: Distributes subscription contracts to FI-CA and SAP Convergent Charging (if applicable).
    • Uses Document Distribution with ODI (Order Document Distribution) which also provides features for monitoring and scheduling.
    • Supports the creation of FI-CA provider contracts and SAP Convergent Charging contracts during order distribution.
  • Contract Change Processes: Manages various contract changes like cancellation, extension, product change, contract account change, technical resource changes and version upgrade for the cross catalog mapping.
    • Uses a framework (BTMF) and BRF+ to define and control change processes.
    • Contract management covers all the relevant change processes for existing contracts.
  • Usage Collection & Processing: Integrates with SAP Convergent Charging for rating and charging of usage.
    • Processes usage charges, one-time fees, and recurring fees through billing.
  • Billing, Invoicing, and Finance: Integrates with SAP Convergent Invoicing, FI-CA, and Revenue Accounting.
    • Supports billing for recurring fees, one-off charges, and usage-based charges.
    • Enables invoice creation and contract account management.
  • Discounts: Discount and Charge keys are defined in Convergent Invoicing. Can be assigned to subscription products, derived automatically or added manually in subscription orders.
  • Partner Settlement: Manages partner agreements for revenue sharing with content providers, supporting the creation of partner agreement orders and FI-CA provider contracts for partners.
  • Revenue Accounting: The BRIM solution accounts for revenue compliant with IFRS15, using the FI-CA provider contract as a core object. Integrates with SAP Revenue Accounting and Reporting for contract identification, performance obligation management, price allocation, and revenue recognition.
  • Order and Contract API’s: Provides asynchronous SOAP Services and the “AIF” Framework for handling errors.
    • Allows for external applications to create or change subscription orders and contracts programmatically.
    • The subscription order Application Programming Interface (API) provides another option in subscription order and contracts maintenance, in addition to the existing Web-based UIs

Key Components & Data Objects of SOM Component

  • Business Partner: Central object in S/4HANA; different roles (e.g., MKK for FI-CA) are assigned based on business requirements.
  • Contract Account:  In S/4HANA only the contract account is used both in FICA and in subscription order management. Business Agreements are no longer required
  • Subscription Order: Manages customer subscriptions, exploding bundles into sub-items
  • Subscription Contract: Follow-up object of subscription orders, distributed to FI-CA and SAP CC.
  • Provider Contracts: Contracts created in FI-CA and SAP Convergent Charging for managing recurring and usage-based fees.
  • Billable Items (BITs): Created in SAP Convergent Invoicing for billing one-off charges, recurring fees and usage.
  • CI Billing Plans: Used to manage recurring fees in SAP Convergent Invoicing.
  • ODI (Order Document Distribution): Framework for document-specific and customizable distribution.

Process Flows of SOM in SAP

The document outlines several key process flows:

  • Subscription Order to Billing: Shows the journey from creating a subscription order through to billing, including the creation of sales orders, billable items, and FI-CA/CC provider contracts.
  • Recurring Fees: Illustrates how recurring fees trigger CI Billing Plans within SAP Convergent Invoicing for managing periodic charges.
  • Usage Fees: Explains the flow for usage-based fees, involving SAP Convergent Charging for rating and charging.
  • One-Off Charges: Details how one-time fees are delivered to SAP Convergent Invoicing as billable items.
  • Physical Goods: Describes how physical goods within a subscription order create SD sales orders for logistical processes.
  • Change Processes: Depicts how contract change requests result in updates to FI-CA and CC provider contracts.
  • Discounting Flow: Shows how Discount keys from Product Modelling are carried into the Subscription Order/Contract, and processed in Convergent Invoicing.
  • Partner Settlement: Demonstrates how partner agreements and customer contracts interact to generate partner and customer billable items.

Architecture

  • The solution is built on-premise as part of S/4HANA for customer management 2.0 FSP1 (based on S/4HANA 1809 FSP01)
  • It utilizes S/4HANA core components with a specific layer for customer management
  • The architecture involves components like SD, FI-AR/AP, SAP Convergent Charging, SAP Convergent Invoicing, and Revenue Accounting

Conclusion:

SAP S/4HANA Subscription Order Management is a comprehensive solution designed to support modern, subscription-based business models. It integrates various SAP components to provide end-to-end functionality, from product modeling and order capture to billing and revenue recognition. Key to this solution is its flexibility and simplification within the S/4HANA architecture. The system relies heavily on the concept of subscription contracts as follow-up documents to manage fees, charges and products. This briefing should provide a good understanding of this solution’s key aspects.

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