Once you’ve decided to pursue a CPQ solution, you’ll have an entire industry of solution vendors to select from. Above all, this is the single most important step in an enterprise CPQ project. The world of CPQ applications is definitely a buyer-beware market, and for good reason. There’s no such thing as a one-size-fits-all CPQ solution. So, how can you avoid pitfalls and ensure success for your CPQ project?
Key considerations before choosing your vendor:
- Determine company business requirements
The majority of Requests for Purchase (RFPs) that companies send to CPQ vendors consist of CPQ requirements that are far too generic. It’s important to conduct an in-depth evaluation of your company’s internal processes, products, and pricing. Without it, it’s nearly impossible to produce the most qualified CPQ application for your business. Often, companies do this by hiring third-party analysts and consultants who are qualified to help them identify their business requirements. Before contacting any vendors, you should be able to answer the question: “How will I know that I’ve selected the right CPQ vendor for my business?”
- Define the size and scope of your business problems
As part of your internal evaluation, you should try your best to monetize the cumulative effects of your business problems. How much money is being left on the table due to the inefficiencies throughout your sales process? Most companies do not know the true economic impact that common inefficiencies have on their business. In order to successfully implement a CPQ application, you need to fully understand the solutions that your individual business problems require. For example, a $20 million problem will not be solved by a $100,000 solution.
- Recognize how inevitable change will impact CPQ
Again, to avoid the hidden costs of keeping systems in sync with the key applications running your business, make sure you consider:
- What happens when you update other IT systems? Do you also have to update your CPQ solution?
- What happens when your price books or your product catalogues change or update in your back office system? How will you know that your approved pricing is reflected accurately in your CPQ system?
Change is inevitable in business, especially within a large multi-channel organization or a growing company. It may not be self-evident, but when change does occur, it’s important to understand whether or not it will come with a large price tag. As soon as a system is no longer relevant, it’ll be unable to quote the right products, making it impossible for end-users to use. We all know what that does to a business case. Low user adoption and low utilization leads to low probability of receiving ongoing funding for these projects.
- Be aware: Not all CPQ vendors can support multiple channels
CPQ can serve three unique sales channels: direct sales, indirect sales/distribution, and commerce channels/customer self service. However, there are some CPQ vendors that do not offer solutions that can serve all three. How will you provide quoting to independent dealers, resellers, and brokers that do not have access to your internal systems? With some ISVs, you’d be stuck providing separate quoting systems for them. It’s important to consider your respective business channels and if you need to pursue a vendor that offers omni-channel capabilities.
- Know the challenges of managing business definitions in back-office quoting systems
- Product definitions: You will need to consider the order of magnitude for the products, SKUs, or parts data kept in your ERP system and the level of sophistication that will be required to rationalize all of their possible configurations. Beyond the customer definitions kept in your CRM system, a comprehensive CPQ solution rationalizes data from across your organization to enable sophisticated features like guided buying and selling.
- Pricing definitions: Pricing definitions are yet another variable that needs to be assembled and locked down in any CPQ system of record for your organization. Price books can be maintained a number of different ways, but how often do they change in your organization? How are they updated? You need to be opportunistic in the market and react to competitive pressure to make pricing adjustments on the fly, not just four times a year. Be sure to recognize high-impact CPQ vendors that are able to handle this velocity of change.
Implementing a modern CPQ solution is bigger than solving a process automation problem. Done properly, the lasting transformative effects it will have on your business is enough to initiate a profitable era of accelerated growth. By understanding all the moving parts involved in a CPQ project, you’ll be able to create a successful recipe for starting a project of your own.
Thank you for reading the final post in this FPX Blog series, Discovering Modern CPQ. To read other posts in the series, return to the FPX Blog page.