Configure, Price, Quote (CPQ) is a technology that helps companies accurately configure, price and quote their products and services more efficiently and with greater accuracy so that their sales teams can focus on the business of selling. Once in place, sales can be turned around faster, renewals and renewal rates can be improved, pricing optimization can be enhanced, and the sales teams can better manage the overall customer relationship. From a profitability perspective, CPQ reduces errors and the time to sale, helping businesses improve productivity across the board, reducing overall business costs.

To summarize, CPQ has the capability to help meet your productivity, sales and operations goals while significantly increasing profitability. However, while this type of metamorphic power is within reach, we should be aware that these are generally major transformational initiatives with a lot of moving parts.

To ensure that you start off on the right foot, I recommend paying close attention to the following 5 things:

• Have a clear vision of the solution and KPIs that can be used for measuring success along the way.
• Be aware that this type of disruption will require changes to the business process. When done right, this is where we see a major part of the cost reduction.
• In many cases, it is about simplifying the solution and rationalizing the steps along the way. 
• Make sure the stakeholders fully buy into the vision and what the vision will deliver. 
• Integration and data are key areas where many have failed. When this is done in a planned manner, the risks drop down quite a bit.

Before jumping into the implementation phase of a transformational effort such as this, it is always very important to define how to measure success. This will not only be used at the end of the project to determine if the project goals have been achieved but it will also be used throughout the project to help keep things focused and on track by driving prioritization decisions.

It is important that this whole process is started with a strategy phase of some kind where research into the wants and needs that will help define the problem has been completed and from this has emerged a vision. Along with this vision, there will be goals and objectives. Now during the implementation phase, we can align this next phase to the relevant goals and objectives and define specific KPIs to enable the measurement of success. Each associated KPI should be SMART (Specific, Measurable, Attainable, Realistic, and Time-base) and each KPI should be benchmarked prior to the start of this phase of the CPQ project. Examples of possible CPQ KPIs include:

• Reduce time to quote from A to B by end of 1st year
• Reduce discounts by x% in the next 3 years
• Increase service attach rates by y% year over year
• Increase renewal rate by z% each quarter for the next 8 quarters

#2 Assuming it is all about the technology

One challenge customers come up against is realizing that transformational change does not just come magically with a new technology. Transformational change is more than technology based. To achieve a successful business transformation, processes and organizational structure also need to be addressed.

CPQ is critical in optimizing the customer experience and can enable greater productivity and efficiency, but this goes beyond CPQ technology and requires rethinking the processes as well. Businesses need to look internally and from a holistic perspective, at how they may need to re-engineer some of their processes and organizational structure to remove any and all non-value-added steps, such as optimizing the Sales and Quoting processes or simplifying Legal & Contract processes.

#3 Not taking the time to simplify & rationalize the different elements of CPQ

In line with the above, it is important to re-assess some of the core elements that make up the foundation of the solution. These underlying components will be the key to ensuring the overall success of your future solution.Therefore, taking steps to do proper analysis and to align them with the company’s future state vision is critical. A key goal should be to simplify and rationalize wherever possible. Keeping things simple makes it more likely to be able to keep things “out of the box”. Staying as close to standard functionality as possible for your CPQ solution should be one of your top priorities.

Below are some common examples of components to assess:

• Product catalog should be designed as a selling catalog to enable sellers & buyers to navigate options and optimize transactions
• Product complexity and SKU proliferation can reduce the efficiency and effectiveness of a company's Quote to Cash processes
• If your pricing and/or discounting is too complicated, your buyers will just get confused and it will be harder to implement so try and keep it simple.
• Work across organizations to try and standardize contracts & templates as much as possible.

It is very important to involve user teams starting at the very beginning of the process. Be sure to identify global/regional champions for each user group to lead the transformation. Yes – Sales is a major stakeholder/user of a CPQ solution, but many other teams are also impacted. They all must be represented, and it is essential to make sure you include checkpoint reviews with these champions throughout the project so that they can validate all assumptions at every phase.

• User experience is also a critical success factor to ensure user adoption and satisfaction. Below is a checklist of some of the items to be sure and keep in mind from a UX perspective: The end-to-end flow should be intuitive for a first-time user
• All user interfaces should be neat and easy to navigate for users with intuitive fields and calculations
• The design should optimize the number of clicks throughout the solution
• Appropriate validation rules should be used to ensure users adhere to expected parameters and to reduce re-work

#5 Not having a comprehensive Data and Integrations Plan

CPQ is a data heavy solution and as the saying goes “garbage in garbage out”, so it is critical to make sure the data sources are defined, and the data model is well documented and the data itself is clean. There needs to be a Master Data Management plan that includes specification of the SSOT for all key data elements (such as Customer, Pricing, Product, etc.) All Integration touch points and hand-offs need to be included with the data mapping logic and data integrity processes, rules and middle-ware controls (if required). CPQ solutions are expected to integrate with front-end CRM and back-end ERP systems as well as many other supporting systems. The goal is to design your solution to do so seamlessly in order to optimize upstream, downstream and midstream processes simultaneously.

Bottom Line

It is evident that successfully implementing a CPQ solution consists of several moving parts and has several pitfalls that should be avoided. There is, however, a way to ensure success of your efforts so long as you keep the below in mind.

1. Make sure you define success upfront.
2. Take business process into consideration and do not focus on technology only.
3. Simplify and rationalize the different elements of CPQ.
4. Actively engage all the stakeholders in the project.
5. Have a thoughtful data and integrations plan.
   
   

Get a functional view of Configure-Price-Quote (CPQ) and cognitive commerce, with Wipro & Apttus. Listen to our webinar on “Transformation towards digital and automated ordering process”:

Kathy Gilbert-O'Neil

Global Practice Director–MAS Consulting | Wipro Limited

Kathy brings over 20 years of experience in Consulting and Technology Transformation for Wipro’s Modern Applications Consulting Division. She specializes in Consulting, Advisory, and Technology delivery. Kathy is adept at devising future strategy & IT competency roadmap for enterprise transformation with hands-on management style and deep focus on business analysis, solution blueprinting, process modeling, execution planning, and consensus building.