10 Warning Signs Your Product Configuration Strategies Need More Than CPQ

  • 83% of sales teams are using CPQ apps today based on Accenture Interactive’s recent study, Empowering Your Sales Force: It’s Not Just Automation, It’s Personal.
  • Configure, Price and Quote (CPQ) are transaction-driven while many product configuration strategies are by nature lifecycle-based, making manufacturers sacrifice scale for speed.
  • The majority of CPQ apps today can’t scale to support engineer-to-order workflows, attribute inheritance, constraint rules that require a more advanced configuration engine than many have.
  • Nearly all CPQ apps need to be customized to reliably generate an accurate Bill of Materials (BOM) for the many ERP systems they are integrated with.

CPQ’s most compelling successes are from manufacturers who are struggling to sell configurable products through multiple channels. Designed into CRM platforms as native apps, CPQ excels at making transactions efficient at the price of product depth and intelligence. Solving the selling pains manufacturers have, CPQ has emerged as one of the hottest CRM applications because its contributions are easily quantified. With the selling pain gone, manufacturers often settle back into their old process of managing product lifecycles while time and inertia rob them of achieving so much more with their product lifecycle and configuration management strategies.

Don’t Let CPQ Rob You From Achieving More

I’ve seen too many manufacturers do just enough to alleviate the selling pains they have and stop improving their product configuration and product lifecycle strategies. By not pushing beyond CPQ, these manufacturers are leaving their potential uncharted and unknown – they have so much more they could accomplish if they just went beyond solving the pains of selling. They’re being robbed of their potential by doing just enough to solve selling pains. Don’t settle for that, go after the potential your company has to excel beyond the constraints CPQ strategies alone create.

The following ten warning signs that your CPQ strategies are holding you back from growing and selling more:

  1. Your CPQ provider doesn’t have APIs or an integration strategy that you need to scale beyond selling and deep into manufacturing. The majority of CPQ vendors don’t have an API strategy ready today, and the majority that do are relying on Oracle, Salesforce, or SAP APIs. As CPQ vendors migrate to cloud platforms, this will become more and more the case. But it still begs the question: “How can I get a field-to-factory workflow created where the instant a quote is approved the BOM (Bill of Materials) is created and raw materials are reserved?” It is rare to find a CPQ vendor who can do this today without having a strong foundation of the product lifecycle and Configuration Lifecycle Management (CLM).
  2. Separate product models are required for each channel or localized instance of a CPQ application or platform. When CPQ vendors force this level of product duplication on a manufacturer, it’s a sure sign that it’s time to start thinking more about a configuration lifecycle management system. The more a product model gets duplicated and customized for a given channel or localization need the higher the potential for error. Getting to a higher level of performance starts by having a single system of record that all product configurations are driven from, globally, across all channels.
  3. Mediocre CPQ mobile apps that aren’t supporting responsive design and are de-featured compared to the full cloud and on-premise versions. Another way CPQ vendors are robbing manufacturers of more sales is by delivering mediocre mobile apps. Not making an effort to make them compliant with responsive design and removing features to improve mobile performance is a sign it’s time to move beyond CPQ to achieve more on mobile devices.
  4. Product sales catalogs that are designed to streamline quoting not your ability to customize them into your hierarchy or taxonomy. When any new CPQ app is designed, it’s the rules engine and workflows that get the majority of focus on product development. Catalogs rarely get a high priority, and for many CPQ vendors, this shows. What manufacturers need is the ability to create and grow hierarchies that reflect how their customers think. Hierarchies exist in catalogs to serve customers and help them find the products of interest, not make rules and constraint engines more efficient. Managing configurations over their lifecycles lead to more intelligent, scalable data structures that can flex any way you want them to.
  5. Little if any flexibility in customizing product models by selling channel and strategy. This is a sign that a CPQ vendor’s product strategy is stuck in the past and is relying on CRM systems as the only system of record instead of an ERP, PLM or CLM platforms. Product models need to be configurable by each selling channel, spanning direct sales, indirect sales including partners and Value-Added Resellers (VARs) and self-service channels. A GUI for an individual product or an entire product family needs to be so intuitive no software engineering or technical degrees are required to customize and use it. If a CPQ vendor can’t do this, you’re burning valuable time having product management teams customize GUIs by channel when they could be doing more profitable things with their time.
  6. Providing sales teams & customers with accurate order fulfillment status, the flexibility to cancel or change orders in process and apply change fees isn’t available. In a recent survey of the sales teams and VARs of a specialty vehicles and truck manufacturer, 70% asked for improvements in the real-time order status and fulfillment applications. Customers ranked order status and fulfillment as the highest priority with over 80% voting for this feature to be improved with expanded mobility support. Order status, fulfillment and modifying orders in progress reflect a CPQ vendor has the basics of ERP integration mastered. No manufacturer should have to pay extra to get these features; they should be included in any prebuilt integration for an ERP integration.
  7. CPQ apps whose constraints and rules engines that aren’t smart enough to stay in customer and transactional context, causing embarrassing errors in front of customers. Let’s face it, the majority of the previous generation and several of the existing CPQ apps in the market right now aren’t the most intelligent regarding contextual selling. The challenge is customers expect contextual intelligence and CPQ apps are now just catching up to this. Configuration rule engines and constraints need to take into account the full context of customers rather than treating every order as isolated.
  8. Doesn’t have any pre-built integrations for your ERP system and is requiring a professional services engagement to custom-build one to just support load item definitions, configuration rules, and BOM structures. Creating a custom-built adapter or connector for an ERP system just adds a level of unnecessary complexity to your product configuration strategy. This is another area where CPQ vendors are making it tougher for manufacturers to achieve their full selling and growth potential. In contrast, CLM platforms provide pre-built integrations that deliver data in real-time. Checking and reserving inventory, loading and importing configuration rules (as Configit supports with SAP Variant Configuration Extraction technology), loading item definitions and Bill of Materials (BOM) structure, and placing orders are all functions any pre-built ERP integration needs to support.
  9. Have product models designed to support pricing as a function of the combination of attributes with margin calculations and date effectivity included. Managing and improving the pricing of product configurations over their lifecycles is a challenging task. When product models support pricing as a function of the combination of attributes combined with margin calculations and date effectivity, quoting and order errors are reduced. This is an area where managing product configurations by lifecycles delivers more dollars, profits and growth. CPQ vendors who don’t support this are limiting their customers’ growth opportunities.
  10. Custom programming to change the user interfaces in the CPQ application and no support for creating Web Services specific to your business. One of the quickest ways to increase the adoption of any enterprise application is to provide users with the opportunity to customize the user interfaces they work with. Combining user interface customization and support for creating new Web Services are also key to growing any product configuration strategy.

Bottom line: Push beyond just solving sales pains with CPQ to longer-term sales and profit gains using by managing configurations across their lifecycles.