The problems with off-the-rack CPQ software solutions are in what the software doesn’t address.

My analyst friends over at Silicon Valley’s Constellation Research just published a report called Configure, Price, Quote Tools Power Speed, and Transparency.  

As I’ve been involved in Configure, Price, Quote (CPQ) system design and implementation for more years than applications categorized as CPQ have been available, this report caught my eye. To quote part of the abstract:

Configure, price, quote (CPQ) capabilities streamline the selling process and improve the buying experience. To do that, these tools simplify product configuration, provide clarity on the nature and pricing of deals, and facilitate the production and approval of quotes. The overall process results in a higher number of more profitable deals, largely through symbiotic benefits to both buyers and sellers.

In this Market Overview, we concentrate on CPQ vendors serving complex midsize and large enterprises across a range of industry sectors.

While I’m not questioning Constellation Research’s findings, the abstract language strikes me as sounding like it came from the CPQ vendor’s sales brochures. The CPQ vendor theme is consistent; the business outcomes they promise to assist with all too often don’t materialize. Here are some important thoughts:

    • CPQ applications are enterprise applications–they aren’t an application deployed in the sales department if they are to deliver value. I wrote a book about this called: Mass Customization: An Enterprise-Wide Business Strategy. In it, I make the case for why CPQ must be approached across the enterprise.

       

    • Success (and the real challenge in gaining the business outcomes raised in the abstract) comes from connecting the dots across the enterprise, not fixing the sales process. And, therein lies the greatest challenge: you simply can’t “fix” the sales process without making changes across the enterprise.

       

    • It is likely the people deploying the CPQ application have no experience doing so with other CPQ applications or in other companies. The CPQ software isn’t self-implementing. When I last looked, about 80% of Customer Relationship Manager application deployments are considered failures by their executive sponsors. CPQ is infinitely more complex than CRM. In the movie Dirty Harry, the actor Clint Eastwood asks an injured felon: “You’ve got to ask yourself one question. Do I feel lucky? Well, do ya, punk?” It’s a good question.

       

    • I’ve never deployed an off-the-shelf CPQ application with a client. Most clients I’ve worked with assume they can’t achieve the business outcomes they need with an “off-the-shelf” application. So, far, they have been correct. That’s not to say that there may be an “off-the-shelf” application that will align well with a specific business’s application need. I’ve just not seen it up to this juncture for managing a complex configurable product or service environment.
    I’ve helped companies in different industries solve CPQ business challenges. I can tell you right now that the vendor application you chose is a small part of the solution. If you select an inappropriate tool, you will need a lot more than luck. If you get lucky and select an appropriate tool, there’s a lot more to implementing a coherent, end-to-end solution than the software by itself.

 

 


Dave Gardner

Dave Gardner is a management consultant, speaker, author, and blogger based in Silicon Valley. He's been in the front row for the birth and evolution of Silicon Valley, the innovation capital of the world. Since 1992, Dave Gardner focuses on making the complex simple around people, process and technology. Dave is the author of Mass Customization: An Enterprise-Wide Business Strategy - How Build to Order, Assemble to Order, Configure to Order, Make to Order, and Engineer to Order Manufacturers Increase Profits and Better Satisfy Customers.

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