Lenovo: Achieving agile billing
Flexible revenue management for a new business in nearly 200 countries
As the world’s top PC maker, Lenovo wants to give everyone access to technology that enables intelligent digital transformation. It’s now transforming its own business, using SAP Billing and Revenue Innovation Management solutions to underpin a new everything-as-a-service (EaaS) approach that’s enhancing customer loyalty and promoting growth.
| Industry | Region | Company Size |
| High tech | Beijing, China, and Morrisville, North Carolina | 77,000 employees |
reduction in time to onboard customers, to 14 days.
reduction in time to issue monthly invoices, to 8 hours.
invoicing accuracy, exceeding an expected 85%.
Executive Director, ROW Sales, Business Application Services Delivery, Lenovo Group Ltd.
| Industry | Region | Company Size |
| High tech | Beijing, China, and Morrisville, North Carolina | 77,000 employees |
reduction in time to onboard customers, to 14 days.
reduction in time to issue monthly invoices, to 8 hours.
invoicing accuracy, exceeding an expected 85%.
Executive Director, ROW Sales, Business Application Services Delivery, Lenovo Group Ltd.
Integrating and automating billing processes across the globe
Many consumers are familiar with hardware devices from Lenovo Group Ltd., from its iconic ThinkPhone and ThinkPad to the ThinkStation PX, the world’s most powerful AI workstation. But perhaps fewer are aware of Lenovo’s Solutions and Services Group (SSG), which was set up in 2021. SSG brings together IT solutions and services across Lenovo’s different lines of business to provide a truly global offering covering everything from pocket devices to cloud computing in a single contract.
To support this new everything-as-a-service (EaaS) model, Lenovo set out to automate a landscape comprising more than 30 internal and external IT systems. A key element of this project involved replacing billing and revenue management software that was no longer fit for purpose. Manual data entry and rate validation with the existing solution led to billing errors and inefficiencies. In addition, revenue recognition processes involved manual alignment with contract terms (such as deferred revenue allocation), hindering smooth contract management and compliance and causing annual revenue losses.
Meanwhile, siloed systems across areas from opportunity, quote, contract, and order management to billing, revenue recognition, and finance (including ERP) necessitated cross-system data transfers that created delays and inconsistencies. It was also a struggle to handle dynamic or more-complex scenarios, including subscription models, tiered pricing, and usage-based billing such as hybrid cloud services.
Not surprisingly, this had a knock-on effect on customer experience, with an initial quote taking 1.5 months and onboarding twice that time. Once a customer was on board, it could take 48 hours to issue their monthly invoice.
Lenovo needed to standardize and automate processes from framework service agreement to subscription order and from subscription contract to customer invoicing and revenue accounting. It wanted to unify data sources and deploy flexible pricing (including bundling and dynamic discounts) for subscription, pay-as-you-go, and usage-based models. Achieving this would not only improve the customer experience but also enable growth by supporting new business models and enhancing market responsiveness.
Executive Director, ROW Sales, Business Application Services Delivery, Lenovo Group Ltd.
Covering all bases with diverse billing and revenue management solutions
Lenovo already uses SAP software, including SAP Ariba and SAP Concur solutions. The company is also migrating its on-premises instance of SAP ERP Central Component to SAP S/4HANA Cloud Private Edition. For the SSG business, it needed a billing and revenue management solution that would integrate smoothly with this IT landscape as well as supporting an EaaS model.
Having appraised several vendors’ offerings, Lenovo spent four months working with SAP’s product and sales teams on a proof of concept for SAP Billing and Revenue Innovation Management solutions. The results of different sandbox scenarios convinced the company that the full range of these solutions would help meet its complex business needs and scalability requirements.
For example, the subscription order management component of SAP Billing and Revenue Innovation Management would help Lenovo automate the subscription contract lifecycle. The CRM and convergent charging components, as well as capabilities from the SAP Convergent Mediation solution by DigitalRoute, would support a variety of consumption-based price-modeling tools. Facilitating zero-code modeling, they would enable flexible quotations and billing for the infrastructure-as-a-service (IaaS) business. And the SAP Convergent Invoicing package would help Lenovo automate billing for subscription, usage-based, and hybrid models.
In addition, contract accounts receivable and payable functionality of SAP S/4HANA Cloud Private Edition would help Lenovo automate transaction invoicing and financial accounting of related companies, including by supporting internal transfer pricing.
Lenovo opted for a phased approach, starting with Australia, where it first developed the equipment-leasing business model, including device as a service (DaaS). In a second Australian pilot, it enabled the consumption-based pricing model, including IaaS. Ten months later, it was ready to roll out the solutions across the globe.
Yu Xin, Lenovo’s executive director of ROW sales for business application services delivery, explains the importance of involving different stakeholders in a project of such huge scale: “We needed to involve teams from across the value chain, from sales and supply chain through service delivery to accounting and financial reporting. Together, we had to define and design the processes needed, with SAP Billing and Revenue Innovation Management underpinning the entire system.”
Executive Director, ROW Sales, Business Application Services Delivery, Lenovo Group Ltd.
Collaborating on a customer-focused billing experience
Four years after Lenovo developed its proof of concept, SSG has smoothly implemented SAP Billing and Revenue Innovation Management in 27 onshore countries and a further 155 offshore countries. Yu says: “Without the solutions, we definitely could not support our current business volume of around $US200 million a year. I just can’t imagine reaching that volume with manual processes.”
Yu cites three key benefits of the new landscape. First, SSG can now rapidly configure new pricing models or adjust existing ones without coding, letting it innovate quickly, shrink time to market, and nimbly meet customers’ needs.
Second, smooth data flows across the value chain, from sales lead to finance, eliminate reconciliation issues. According to Yu, “Previously, at the start of each month, revenue recognition and accounts receivable processes took a lot of time while we manually processed about 200,000 billing items. Now, we’re fully integrated because everything runs on SAP software, and revenue and billing management is linked with SAP S/4HANA Cloud. So all the back-end processes flow naturally.”
Third, a clear and comprehensive audit trail eases compliance with external audits and tax regulations in diverse countries.
Standard billing processes are fully automated. Customers now receive a quote in a week, can be onboarded in two weeks, and receive their invoice in eight hours. A small operations team of around 20 people no longer have to spend time investigating and rectifying invoicing issues, instead redirecting their focus to value-added work. Now SSG can more easily track KPIs such as error rates, revenue leakage, and timely invoicing. And it can monitor query resolution time and satisfaction scores using surveys and tickets.
Meanwhile, collaboration across different functions has also improved, with finance, service, sales, logistics, digital transformation, and IT codesigning comprehensive business models as one project team with the shared aim of prioritizing customer-centric billing innovation.
The solutions also help the company run more sustainably, aiding a drive to cut annual maintenance costs by 10%. Revenue from the new business aligns with a goal to increase subscription revenue by 20% by 2026. And the company expects to achieve full return on investment in five years, thanks to reduced maintenance costs, faster invoicing, and lower IT costs.
Growing the business with a robust billing foundation
The last phase of this impressive undertaking involves rolling out SAP Billing and Revenue Innovation Management to 10 more countries. These include Brazil, which is an especially challenging market due to its multiple regulatory bodies and complex tax system. Lenovo is confident that the solutions will help it navigate this market efficiently.
Meanwhile, the company continues to implement SAP S/4HANA Cloud Private Edition worldwide. With centralized ERP data feeding into smooth and efficient billing and revenue management processes, SSG can focus on its mission to make smarter technology solutions and services accessible to all organizations, big and small.
Want to know more about Lenovo?
Lenovo: Adding As-A-Service Capabilities to World-Class Hardware, Giving Customers Exactly What They Need (SAP Online Customer Story)
Lenovo: Building a Comprehensive Procurement Platform Bolstered by Tailored Support (SAP Business Transformation Study)
Lenovo: Solving Huge Challenges Smartly with Intelligent Solutions and Services—The New IT! (SAP Video)