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For some time now digitalization has taken hold in all sectors and branches of industry. New digital services / business models emerge not only from startups but from established corporations as well. The latter often think in larger terms. However, they tend to reach their limits when it comes to monetization. In these cases, the company Nitrobox GmbH, based in Hamburg – and which has developed a platform that allows innovative products such as subscriptions or usage-based services to be billed without overburdening a company’s finance department – is able to help.
In a recent interview, Nitrobox CEO Henner Heistermann explains why this can be a veritable question of survival for numerous corporations.
Mr. Heistermann, you are the co-founder of Nitrobox. What inspired you to develop an order-to-cash platform?
Henner Heistermann: My business partner and I started out with 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 companies reach their limits when they offer digital services?
Precisely. The company’s internal IT systems are often not able to do this because they do not 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. At that time, items such as “subscription” and “on-demand” did not 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.
So the Nitrobox platform was also able to connect to large ERP systems like SAP?
That’s right. The question would then be: What data does the respective ERP system 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 – and this is then handled by our solution. 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?
Interfaces are usually available, but traditional systems are unable to process thousands or even millions of transaction data in just a few minutes. But thanks to the Nitrobox platform they don’t have to. Because the principal burden is borne by our order-to-cash platform, which can be quickly scaled as a cloud solution. The company’s principal financial system then only needs to import the financial reports with regard to its digital offers once a month.
One of your prominent customers is Porsche AG of Stuttgart. Why does a supplier of automobiles in the premium price segment, in particular, need your solution?
We spend a lot of time in the automotive industry and see that this industrial sector in Germany is one of the ones most affected by digitalization and is therefore under the greatest pressure. Porsche has announced that it aims to become the leading upmarket mobility provider. This includes a wide range of digital services. Porsche also quickly recognized monetization as a strategic issue. In this case, we are involved in the “Finance Enabler” initiative.
What was the challenge at Porsche Connect?
There are various services behind this offer, such as an infotainment package that a Porsche owner can book online or a service that will offer digital payment for parking spaces in the future. These “Porsche Connect” services are already offered in more than thirty countries. Our Nitrobox platform ensures that all users worldwide receive a correct invoice: in the right language, with the individual price models, in the appropriate currency, and with the tax regulations. The challenge here is the high degree of complexity. Our platform processes the many thousands of invoicing processes and then provides Porsche with a convenient overview of all transactions without burdening its financial system.
What other advantages are there for corporate clients?
The processing costs would normally be far too high with conventional systems. Billing costs can be between eight and 25 euros per payment for corporations. When the Nitrobox platform is used the processing costs for many transactions are reduced to just a few cents. The next issue is speed. If a company wants to create such a solution on its own in order to monetize its new digital services, then this can take up to several 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 this 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?
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. 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.
So the flexible monetization of such services will play an increasingly important role for companies?
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. As a large 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 various corporations.