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Defining The Configuration Lifecycle Management (CLM) Landscape, 2017

Bottom Line

Customers are driving an inflection point in how configurable products are customized and sold, fueling entirely new business models quickly. Capitalizing on these new business models takes an enterprise-wide focus on product configuration that flexes beyond CPQ boundaries. No longer complacent to just observe and get the occasional order status alerts on their smartphones regarding customized product orders, customers want to be collaborators in creation. To enable customers to own the process, existing sales and product configuration technologies need to scale beyond their limits today. Customers are driving traditional product and selling configurations strategies including Configure-Price-Quote and Quote-to-Cash (QTC) past their limits, forcing an inflection point in the market.

Customers Forcing An Inflection Point In Product Configuration Scale And Speed

The hard reality for every manufacturer is that their customer bases are changing their preferences for how, why, when and where they buy. The rapid proliferation of data, cloud-based apps, advances in smart manufacturing, and the creation of entirely new business models based on Internet of Things (IoT) further push the boundaries of product configuration far beyond what CPQ is capable of.

An Inflection Point has Arrived in Manufacturing

CLM Is Extending Beyond CPQ And Helping More Customers Excel Enterprisewide

There are over 50 different CPQ systems available today, the majority of which rely on CRM applications as their primary system of record. That’s great for manufacturers who produce products that have little if any variation in them. Assemble-To-Order (ATO) and Make-To-Stock (MTS) manufacturers whose product strategies and business models don’t include product variation can use any CPQ system available today. CPQ vendors know that ATO and MTS manufacturers won’t challenge their application technologies and constraints. As a result, CPQ vendors are slowly becoming complacent, not pushing themselves as hard as if they had to scale their applications to support customers’ entirely new approaches to selling customizable products. There are those CPQ vendors who are embracing intelligence, machine learning and Artificial Intelligence (AI) which is the future of CPQ. These forward-thinking CPQ providers reflect the future, yet the majority are clinging to outdated beliefs of what manufacturers’ customers want. Configuration Lifecycle Management (CLM) is designed to provide manufacturers with greater scale, speed and a simplified framework for developing and launching configurable products. In 2017 and beyond, the success of product configuration strategies for all manufacturers will be based on more open, scalable architectures, not tightly controlled, closed applications like CPQ alone. CPQ strategies are powerful yet slow to react to market needs, takes years to develop and require full regression testing especially at the model and author levels, Data architectures were built to scale CRM data as the system of record. The future of CLM is an open one. Capitalizing on a single product database as the system of record, CLM scales across the enterprise, past constraints that limit CPQ systems’ value.The CLM landscape today and into 2018 and beyond is going to reflect the graphic below. The future of successful product selling strategies and new business models is going to be driven by CLM’s more open, scalable architecture. Transforming product knowledge into revenue growth is possible when all there’s a scalable system of record of all product configuration data that can flex to customers’ changing product needs.

Product Platforms Must Scale Beyond CPQ to the Entire Enterprise

Key Inflection Points Defining The CLM Landscape In 2017 and Beyond

All manufacturers want to achieve greater revenue growth by winning new customers and delivering the highest quality products possible. By integrating PLM, ERP and CRM systems and relying on a system of record that scales from the shop floor to the top floor, manufacturers increase the odds of being successful. Selling, new product launch and service revenue growth need to be the catalyst driving technology selection and adoption first.The following are key inflection points defining the CLM landscape in 2017 and beyond:

  • Large configuration gaps exist in nearly all product strategies, and CLM will continue to flex to fill them. Scaling a product strategy to take into account all configuration gaps is beyond the scope of many CPQ and QTC systems. CLM is designed to fill these configuration gaps using a product-based system of record. Manufacturers need product configuration to be consolidated, not isolated as a sell-side or CRM strategy alone.
  • CLM sets the foundation for the future of selling by being able to transform virtual products into delivered ones quickly. Visualization of product designs in CPQ and QTC exist today, and these are effective tools for increasing deal win rates and accelerating sales cycles. It takes a CLM architecture to take the visualization, translate it into a Bill of Materials (BOM) and produce the product exactly to customers’ requirements.
  • Integrating sales, product configuration, design, and manufacturing tools into a single workflow reduces time-to-market, increases product quality and delivers perfect orders. Staying agile and able to flex to customers’ changing needs makes a unified workflow essential to compete for customized products sales.
  • Manufacturers will be flexing to support low-volume highly customized products to high volume, Assemble-To-Order ones in 2018 more than ever before. Customers are changing the cadence of manufacturing to the shop floor daily. Look for 2018 to be the year of flexible, agile configuration strategies as manufacturers go after new growth markets globally.