Configure Price Quote (CPQ) solutions have been around since the 1980’s and have been widely adopted by organizations that need to ensure the accuracy of quotations in the sales process.
By 2016, an Accenture survey showed that 83% of companies were using CPQ solutions. Today, that market continues to grow with Gartner reporting that the CPQ application market grew 14.1% in 2021 to $1.5 billion.
The heart of every CPQ solution is its configuration engine, capturing product models and rules that define valid combinations of product options. With changing market preferences and increasing customer demands for customization, manufacturers increasingly expand their product portfolio to offer more and more complex products with greater personalization. As the number of these options grow, so do the number of potential combinations. In fact, it is not uncommon for complex products to have more than a million potential configurations.
With these thousands, and even millions, of potential combinations, ensuring that there are no errors or misconfigurations can become a major challenge.
Effective management tools are required for modeling, maintaining and debugging product configuration information, underlining the advantages of a CPQ and Configuration Lifecycle Management (CLM) integration.
Unfortunately, standard CPQ systems on the market today can only handle a limited number of product options and configurations before the process starts to weigh down performance. This can lead to poor user experience, lost sales or limiting product offerings to stay within what their off-the-shelf system can handle.
The result is a simple CPQ software that becomes a bottle neck across the organization for sales, innovation and more.
Frustrated with commercial offerings, organizations sometimes set off to develop their own custom CPQ software. However, this can be a major investment requiring specific development competencies that are difficult to secure. While building your own CPQ can provide a solution that is better tailored to your needs, there is still a risk that the finished product will not deliver better performance than commercial solutions already tested.
For example, the larger the number of product configurations, the longer it can take to check whether a given product configuration, combination or choice is valid or not, using conventional database technology. This leads to delayed sales processes and poor customer experience.
Key challenges when selecting a CPQ platform are many, but deciding to combine your existing CPQ and Configuration Lifecycle Management (CLM) would deliver the scale manufacturers need to not only keep pace with industry trends, but to do so with the least amount of disruption to day-to-day activities and still maintain robust top and bottom-line revenue.
The Configuration Lifecycle Management (CLM) platform is designed to manage product configuration information with specific focus on providing fast validation of product configurations. Not relying on conventional database technology, today’s modern Configuration Lifecycle Management platform uses Virtual Tabulation®, a multi-patented compilation-based technology that enables rapid calculations and validation of all correct product configurations.
Designed to be integrated with existing IT systems including Product Lifecycle Management (PLM), Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and Configure Price Quote (CPQ) systems, the Configuration Lifecycle Management (CLM) platform centralizes product configuration data from each of these systems, creating a single source of truth that can be shared throughout the entire organization. This ensures that all functions that work with products – Engineering, Sales, Manufacturing and Service – receive the same reliable and up-to-date information at the same time.
With Configit’s Virtual Tabulation® technology, it is possible to create a repository for all potential product models based on rules specific to your needs. This defines a solution space of all potential product configurations where rules can be used to limit the combinations to reflect both technical and commercial rules. For example, cars with steering wheels on the right can only be sold in specific countries, like the UK.
The advantages of Configit Virtual Tabulation® are that it can scale to millions of combinations and once all product models and configurations have been compiled, it provides extremely fast performance allowing real-time validation of a specific product configuration. A developer can use their own rule modeling system or can use Configit Ace Model® to define highly complex rules using logical expressions and if-then conditional logic both for individual products and systems of products.
Before you decide to execute a new CPQ implementation plan, or replace your existing CPQ software, consider the benefits of using the Configuration Lifecycle Management platform to enhance your existing CPQ investment.