Blog
15/09/2017
How can CPQ solutions boost your bottom line?
6 minute read
Are you struggling with long offer lead times, high sales support, invoicing costs, or complicated and error-prone sales-to-delivery processes? Or are you just searching for ways to further automate your invoicing process? CPQ might be the answer.
CPQ markets have been fluctuating lately, with Oracle first buying Big Machines for 400m$ and more recently Salesforce acquiring Steelbrick (becoming Salesforce CPQ) for 360 m$. This demonstrates the business potential of CPQ. The reasons behind these acquisitions are evident: for example, Salesforce as a platform has expanded its reach from creating demand with Marketing Cloud applications all the way to taking care of the customer life cycle with Service and IoT Clouds. CPQ as a part of Sales Cloud ties up together both ends – bringing product knowledge to CRM, and enabling seamless offer making with the same user experience sales reps are used to when managing their sales cases. That’s the experience and the use case outline, and then there are the numbers: Gartner predicts that CPQ markets are going to grow 20% per year until 2020.(https://www.forbes.com/sites/louiscolumbus/2016/11/05/cloud-based-cpq-continues-to-be-one-of-the-hottest-enterprise-apps-of-2016/#3de9b2b56dc4)
It’s time for the ultimate question: can you really not jump on this train? At this point, CPQ can still provide competitive advantage, but most likely after some years you will just have to have it.
What is CPQ and what can it bring to your organization?
Configure, Price & Quote – that’s what’s included. Additionally, the term Quote to Cash extends functionality to also cover order and invoicing processes. CPQ applications provide the product & pricing knowledge and automate quotation generation, so the people creating quotes wouldn’t need to be product experts. What’s better, CPQ with guided selling features can guide users towards the right configuration by asking questions and automatically fetching information from customer characteristics. The following graph from Salesforce demonstrates the Quote to Cash process, the tools for which are provided by the Salesforce platform.
You might ask “So what, this can be made in existing applications?” That’s true, but the benefit of the CPQ is that all this information is located in the same system – and further, when CPQ is part of the Salesforce, all the information is usable in reports and transferable through existing interfaces.
User experience and fast configuration (also available on mobile) are already outstanding benefits of CPQ for sales reps, but from the business point of view CPQ means, for example:
- Faster offer making – quote lead time from weeks to hours in utmost cases
- Increased quoting accuracy – practically no mistakes in offers & deals – higher margins and higher customer satisfaction
- Faster and more accurate sales to delivery process – order from CRM to ERP with one click
…and much more. For example, for high volume and low complexity products the benefits might not come from preventing mistakes in configurations but automating order handling and invoicing, thus saving time and effort. For other benefits, check this article by Forbes that explains results from CPQ adoption study made by Accenture. (https://www.forbes.com/sites/louiscolumbus/2016/04/17/five-ways-cloud-based-cpq-increases-sales-effectiveness-and-drives-up-crm-adoption/#4c19bf6072e5).
CPQ Implementations – what can make them successful?
How to approach CPQ projects? They offer huge possibilities, but set extensive requirements as well. One approach is “Think big, start small”. If one wants to build a CPQ system that will stand the time and at later date be flexible enough to meet all the requirements of the company, one needs to consider all the required use cases and preferably create a roadmap to the desired state. However, when it comes to implementation, one – and often the most agile – way is to start from the smallest piece, which really makes a complete business case and is as profitable as a stand-alone CPQ solution.
- No matter how much and how well CPQ and the processes around it are specified, practice will always reveal new questions and needs. Most probably, it’s more efficient to build a minimum viable solution and learn about the needs by using it than trying to analyse and define everything thoroughly before the implementation.
- Starting small and learning to “do the things with the platform” before expanding the use vertically across the product offering and horizontally across the sales & delivery process is one way to approach the change – then it’s not needed to change everything at once.
In a greenfield project, everything starts from defining the sales & delivery process steps to which CPQ is related to, and, afterwards, the use cases around the process. When replacing existing systems, processes might be readier, but naturally the nest system gives an outstanding possibility to rethink them. All in all, implementation processes are different depending on the current state of process & product knowledge of the customer:
- For CPQ projects it is typical that the supplier implements the CPQ core functionality and probably some of the product models, then the customer can continue product modelling
- Other possibility is of course to source all configurations for the supplier – this requires deep product understanding from the supplier side
At Fluido’s CPQ team we are naturally emphasizing both technology knowledge and sales & product management process expertise. This allows us to take a larger role in configuration & maintenance, if desired.
A key to fluent CPQ implementations is starting with a definition phase, which brings the customer and supplier closer together in terms of product and technology understanding. This is an iterative process: when supplier learns more about customer’s products’ they are better able to define how the customer’s needs could be tackled with the platform-provided functionality. One possible approach to CPQ projects is as follows:
What’s outstanding in Salesforce CPQ is the way it offers comprehensive features out of the box. When complex product modelling (for example, for the manufacturing industry) is needed, it’s also possible to extend the solution with Tacton Salesforce Extension.
We are able to create a working proof of concepts in a short time to demonstrate e.g. user experience and configuration & pricing possibilities. This is something that really helps showcasing to users and management whether the CPQ is something that company needs. Furthermore, it provides a flying start for the actual implementation project.
Find more about CPQ products here!
Santtu Kumpulainen
Business Consultant - CPQ Specialist
Fluido
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