About
Siemens Healthineers, a global leader in medical technology, continues to expand its portfolio of digital and AI-enabled healthcare solutions. As subscription-based business models became an increasingly important part of this portfolio, Siemens Healthineers partnered with Zuora to strengthen its subscription management capabilities and support the evolution toward a scalable global operating model.
Industry:
HealthcareManufacturing and IOT
01
The Challenge
As digital offerings expanded across products, countries and customers, Siemens Healthineers required a standardized approach to manage increasingly diverse subscription models, including recurring and usage-based offerings. The objective was to establish a reusable subscription framework that could support business growth while integrating seamlessly into the existing digital backbone and IT landscape.
02
The Solution
Working with Zuora, Siemens Healthineers established a standardized subscription management capability supporting the subscription lifecycle for digital offerings. Zuora provides the flexibility to manage recurring and usage-based subscriptions while enabling standardized processes that can be reused across products and countries as part of Siemens Healthineers’ global subscription strategy.
03
The Benefits
- 41 countries included in the first wave of the global rollout using the standardized subscription framework
- Established one scalable global subscription operating model supporting current and future business growth
- Standardized three commercial models: recurring, usage-based and hybrid subscriptions
- Accelerated rollout of new digital subscription offerings through reusable, standardized processes
- Reduced operational complexity by replacing product-specific approaches with a global framework integrated into the existing enterprise landscape
“Zuora Revenue has reduced the number of manual process steps by more than 60% and shortens the processing time by about 75%. And it also supports the long-term success of the subscription model, with new leading KPIs such as active users, premium conversion rates, and churn rates.” – Florian Rachny, Head of Digital Business Processes, Siemens Healthineers
Siemens Healthineers’ mission is to enable healthcare providers to increase value by empowering them on their journey towards expanding precision medicine, transforming care delivery, and improving patient experience, all enabled by digitalizing healthcare. An estimated five million patients worldwide everyday benefit from the company’s innovative technologies and services in the areas of diagnostic and therapeutic imaging, laboratory diagnostics and molecular medicine as well as digital health and enterprise services. Siemens Healthineers is a market leader in diagnostic imaging offering systems for computed tomography, magnetic resonance imaging, molecular imaging, X-ray products, ultrasound and imaging IT.
Historically, the company has operated a transactional business model with one-off sales, selling both hardware, such as above mentioned imaging equipment and point of care systems, as well as on-premise software. But with advances in cloud computing and AI along with changes in customers preferences (from purchasing one-off products to investing in desired outcomes), they saw new opportunities that required new business models.
The opportunity in collecting and operationalizing vast amounts of imaging and other health data in the cloud, coupled with powerful AI-based solutions, triggered Siemens Healthineers to develop offerings like the teamplay digital health platform. AI-Rad Companion, is an AI-supported, cloud-based image interpretation tool for different modalities and body regions. It serves as a digital backbone for healthcare providers supporting decision-making along the entire patient pathway. In addition, AI-Pathway Companion, an AI-based software, facilitates personalized and standardized diagnosis and treatment decisions along disease-specific care pathways.
But to monetize these new products and unlock their full value, Siemens Healthineers realized they couldn’t sell and deliver these products as single transactions, spaced years apart. Multiple customer touch points and the ability to make continual updates and improvements are best served by a recurring revenue subscription model. Plus, as healthcare datasets keep growing, AI algorithms keep evolving, and customer’ preferences keep shifting, they needed an adaptable service model that could deliver value to customers in real time.
But, because a subscription model brings complexities like smaller payments (as opposed to a large CAPEX outlay for expensive equipment), increased volume, frequent subscription changes, and more — the back-office process requirements are different. And Siemens’ Healthineers existing IT systems, including their ERP, weren’t able to handle all this complexity in a fully automated fashion.
Enter Zuora.
“For several of our digital portfolio elements and continuously evolving offerings, we needed to transform underlying business models from transactional to recurring,” explains Rahma Samow, Head of Siemens Healthineers Digital Health Global Sales, Marketing and Digital Go-to-Market. A growing number of customers are looking for more flexible investment arrangements than mere up-front and rather large investments.”
Florian Rachny, Head of Digital Business Processes adds: “And to optimally support these proceedings with a state-of-the-art digital business process in the backend, we needed technical support for IT.” We really wanted to enable the new business model. Without Zuora, we would not be able to scale up going forward.”
To support the new business model, Siemens Healthineers added Zuora Billing and Zuora Revenue as a new system layer into its IT backbone to extend the traditional ERP structure and manage a parallel ongoing subscriber revenue lifecycle directly in their financial systems.
Zuora now powers back-office processes like tax calculation, accounting, invoicing, and license management. Zuora also helped the company institute new leading KPIs, such as the number of active users, premium conversion rates, and churn rates.
For some parts of its portfolio, Siemens Healthineers has also begun the transition from simple cost-plus pricing to pricing based on delivered value. “For example, the AI-Rad Companion is priced based on productivity savings and quality improvements in customer settings,” says Samow.
Zuora serves as the agility backbone to automate the entire order-to-revenue process. And the success has been considerable. Finance reduced the number of manual process steps by more than 60% and shortened the processing time by about 75%. Automation helps Siemens Healthineers to unlock productivity for their finance team and accomplish their larger strategic goals, and provides a foundation for scaling efficiently.
And their journey is only beginning. With a subscription model now established in the US, Siemens’ Healthineers next move is to launch in Japan, in January 2021.
“Adding Zuora to our IT backbone has unlocked hidden productivity and provided a foundation for scaling up efficiently in the future,” says Florian Rachny.
