On a topic so holistic, yet so detailed, so high-level, yet so ‘nitty-gritty,’ so outcomes based, yet so heavy on inputs and operations; it is no wonder that a true Subject Matter Expert (SME) on the whole subject, soup-to-nuts, is tough to come by. But yet, we are flooded with information from individual contributors on the topic, at the broader spectrum. So, when does the information we are receiving go from objective to subjective. And furthermore, for a topic so important, so heavily discussed, with such great financials attached, how are we letting the conversation move from fact to ‘fiction,’ or really ‘individual belief?’

I continually attempt in this blog to move away from the subjective, the varying ways to do what needs to be done, and focus on a ‘standard.’ So, for the readers’ sake, I will digress; and rather focus on a few, common misconceptions that are a result of this ‘subjective’ view of Life Science Revenue Management business processes.

But first, a quick refresher (or at least attempt to all get on the same page) on Quote-to-Cash, and its regular aliases:

Here, we are differentiating the ‘process names,’ by breadth across varying operational phases (Quote/Contract, Revenue Recognition and Cash), as well as type of analytic available (Pre-deal, Post-deal). What we are really talking about here is scope; what is the scope of your revenue management business process?

The Majority of Risk, Problem Areas Exist within
Revenue Recognition, Finance Organizations

In the past six months or so, I have witnessed about three or four various takes on industry surveys (live or not) asking the audience (Life Science finance and contract operations professionals), what is your biggest pain point…as it relates to product valuation, accounting and reporting standards, business process, etc.? The answer, always the same and by large margin: Revenue Recognition (aka, Gross-to-Net).

I’m not sure if this is due to an overwhelming misunderstanding of the related end-to-end business processes, or the life of Pharmaceutical product, or what; but when I start to get into the deeper conversation with these folks, on where there pains truly stem from; they are not Revenue Recognition-related at all. OK, so sure they are ‘related,’ as they lie within the same E2E process. But these pain points are truly upstream business processes from not only the GTN process itself, but typically the entire Finance organization itself. It is my experience that most common problem areas occur first within the Contracting or Sales and Marketing organizations and related business processes, and the effects trickle down into Finance. It’s often not until we see something hit the balance sheet, that we flag an issue; and at that point, it’s in the hands of the revenue recognition or finance team, therefore, there lies the issue.

If the focus and emphasis, especially when it came to business process management, was forced more upstream and more cross-functionally, we would not only be able to more accurately pinpoint where our problem areas were, but also approach them as such.

Optimization = Automation

Now, I understand why the software vendors of the world would preach that to automate your business process, is to optimize it; their livelihood thrives on organizations buying into automation. But to look at why this was more commonly assumed, I looked at countless industry articles and publications, definitions of the words themselves, thought leadership blogs, etc. By definition, in regards to automation, it is quite simple: removing the human factor from a process; providing consistency, increased speed and reduced errors.

It wasn’t so simple, just looking at optimization by definition: an act, process, or methodology of making something (as a design, system, or decision) as fully perfect, functional, or effective as possible. So, I just thought back to the endless automation projects I’ve been a part of, and distinguished between the two. Automation can certainly be a part of optimization, but without considering things like business process management, documentation and control, E2E strategy, organization, one cannot simply be the other. Automation can take you to a point, but it is optimization that truly makes the process better by providing something impactful. Optimization adds a certain level of sophistication to the process that not only increases effectiveness and productivity, but also provides accurate information for decision making. Here, it is easy to translate into a Q2C and GTN practical application: optimizing actuals management business processes will increase productivity of those processes, as well as provide accurate inputs for forecasting (P&L management).

Should be Assessed Process-by-Process, versus Holistically, E2E

This one gets me, really. We have become masters of the phrase, or take on the phrase, ‘breaking down the GTN silos.’ But yet, we still launch initiatives and projects within our organizations governed and managed by only one function or group, without spreading out the stakeholders cross-functionally. We still shy away from extending our regular or irregular information requests to upstream or downstream groups due to ‘fear of the unknown?’ We still write test cases, day-in and day-out thinking we know that the E2E business process really means, but in the end, we always miss someone or something and come up short at Go-Live.

But that’s OK, that’s one thing. We are the leaders of our Life Science organizations and we can make mistakes and have misconceptions. It’s when the publishers, thought-leaders and vendors have this misconception, which is not OK. Why, I ask, would you attempt to assess or optimize an already ‘silo-ed process,’ silo-by-silo? I mean, the question itself sounds funny to me; read it back to yourself and see if you agree.

I’ll say it as simply as I possibly can: if you look at only the pieces, you will struggle with the big picture, and inevitably miss something, if not everything.

10 Common Pitfalls in Quote-to-Cash Business Processes For Life Sciences Organizations