Delivering great customer experiences is no longer a differentiator; it’s a given.
B2C and B2B customers expect to be able to customize their products and service choices in a seamless experience, no matter the sales channel. From a customer perspective, this is natural and logical, but delivering this kind of customer experience is far from trivial.
While most product vendors and service providers already have the key systems in place to support multi-channel sales, such as Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) systems, supporting customization can be a challenge. It requires that key systems like ERP, CRM, and Product Lifecycle Management (PLM) support configurable product variants.
Product variants are necessary to provide choices to customers as well as configurable parameters so that products can be adjusted to meet customer requirements. This includes ensuring that when they are available and that they meet local market expectations. For example, making sure the steering wheel on a car is on the right in the UK and on the left in Germany.
While, at first glance, this would seem to be a straightforward process, the number of variants, parameters and rules governing how choices can be combined (the configurations) quickly grows beyond what can be easily remembered by a human and even what can be accommodated in an Excel workbook. This leads to the wrong choices being presented to customers, inconsistencies on what is being offered on different sales channels or across geographic regions as well as delivery of the wrong product or even no product to customers as the configuration was never valid.
It’s at this point that product vendors and service providers must begin to consider how configurations are defined, validated, and managed for the lifecycle of products and services offered. This is when things get really complicated as there are multiple ways in which to manage configurations.
- PLM systems – As this is where products are designed and engineered, it is natural to consider this system as the home for product configurations. While PLM systems do offer product variant management and even configuration management modules, this is typically focused on engineering needs, such as technical choices during design and engineering of the product. Sometimes these are exposed as choices to end users, but for the most part, they are only interesting to engineers. Rules and choices related to market availability, localizations etc. are not included, as these are usually outside the scope of work for the engineers.
- ERP systems – This is where product managers and product marketers often define market availability rules, pricing, and other commercial characteristics of the product. ERP systems do provide modules for managing product variants and configurations either as an add-on to the ERP system itself or through CPQ modules and third-party system integrations where customers can configure a product to their needs, see the price of the configuration options and get a quotation.
- CRM systems have also added CPQ functionality in a similar way, either as add-on modules or third-party integrations. In both cases, performance has proven to be an issue as customization requirements from customers can lead to a large number of product variant choices as well as hundreds and even thousands of configuration options. Quotations of over 100 pages are not uncommon.
- CPQ Systems – Performance challenges led to the emergence of independent CPQ systems that manage all aspects of the configuration, pricing and quotation process based on extraction of information from PLM, ERP and CRM systems. This allows the performance of the CPQ process to scale independently of PLM, ERP and CRM systems meeting the increasing needs of customers.
While CPQ systems are increasing in sophistication with 3D visualization and AR, AI/ML predictive guided selling and more, they are still struggling to keep up with the need for customization and configurable product and service complexity.
While pricing and quotation can be complex, the real bottleneck to performance is product configuration management. This is why a separate system solution is needed to define and manage product configurations. With such a system, it is then possible to define product configurations once and then make them available to multiple systems and sales channels.
The advantage of this approach is that it ensures consistency using reliable, up-to-date information across the multiple sales systems and channels. In essence, it is what enables product vendors to move from multi-channel sales to omni-channel sales where consistent user experiences need to be guaranteed.
This is leading to a whole new category of solutions called Composable Product Configurators. First defined by Gartner, Composable Product Configurators focus on the “C” in CPQ by freeing this functionality from CPQ systems and managing and providing it independently.
What makes a configurator ‘composable’ comes down to the principle of modular architectures where “best-of-breed” components or systems designed and focused on addressing a specific part of the overall challenge are integrated to provide a solution. As complexity and performance challenges can be very different for each part of the overall architecture, it makes sense that the individual systems are allowed to scale according to the challenge they are facing.
The reference to “Product Configurators” can be misleading, as it suggests that the system provides the actual configurator, but this does not need to be the case. There are some vendors who will take this approach, while others will provide web-based API services that allow bespoke product configurators to be created or existing CPQ, ERP, CRM or even PLM systems to access, manipulate and validate configurations with high performance and response.
At Configit, we have promoted the need for end-to-end Configuration Lifecycle Management (CLM) for almost two decades and the Composable Product Configurator concept is one example of CLM in action addressing the need for scalable, high-performance omni-channel sales solutions.
For vendors of complex products and services, like asset-intensive manufacturers, the Composable Product Configurator approach ensures that performance can scale with demand, inconsistencies are removed and zero errors are made in delivering configurations to customers.
As the evolution of product configuration management and emergence of the need for Composable Product Configurators shows, there is a growing need for CLM solutions in general to ensure customer satisfaction.
About the Author
Daniel Joseph Barry is VP of Product Marketing at Configit. Dan Joe has more than 30 years of experience in engineering, sales, marketing, product management and strategy roles within IT and telecom companies.